This case examined whether Webb, a wholesale distributor of plumbing equipment and fixtures, misclassified its 350 inside sales reps under the FLSA as exempt administrative employees, and therefore owed them unpaid overtime.
To qualify as exempt under this category, the inside sales reps' (ISRs) primary job duties must involve performing work "directly related to assisting with the running or servicing of the business." According to the 1st Circuit, the ISRs interact directly with customers throughout the sales process, including assisting in identifying the right products for their needs, processing orders, creating transfers, sourcing materials, recommending and pricing bids, exercising discretion and authority to deviate from the pricing matrix, managing deliveries, and addressing customer service issues. Their main focus is building strong customer relationships to ensure repeat business.
Webb argued it properly classified the ISRs as administratively exempt because they provide "high-level customer service" as "advisors, consultants, and concierges" to deliver "solutions" and ensure customer satisfaction. The 1st Circuit disagreed:
To qualify as exempt under this category, the inside sales reps' (ISRs) primary job duties must involve performing work "directly related to assisting with the running or servicing of the business." According to the 1st Circuit, the ISRs interact directly with customers throughout the sales process, including assisting in identifying the right products for their needs, processing orders, creating transfers, sourcing materials, recommending and pricing bids, exercising discretion and authority to deviate from the pricing matrix, managing deliveries, and addressing customer service issues. Their main focus is building strong customer relationships to ensure repeat business.
Webb argued it properly classified the ISRs as administratively exempt because they provide "high-level customer service" as "advisors, consultants, and concierges" to deliver "solutions" and ensure customer satisfaction. The 1st Circuit disagreed:
"Much the same could be said of the many salespersons in many industries who advise customers in selecting a product with the aim of at some point making a sale. Consider salespersons in a clothing store. They can be said to provide high-level customer service advising clients on size and style choices to ensure customer satisfaction by providing clothing solutions. Yet these individuals are clearly not exempt under the FLSA." Because the ISRs have no "policymaking authority within Webb apart from providing information to those formulating policy," or "managerial duties over other employees," Webb misclassified them as exempt.
Unless your inside salespeople are involved in high-level policymaking within the organization or managing others, think long and hard before classifying them as exempt. It could prove to be a costly mistake.