Many roofing and siding businesses employ canvassers. These employees canvass neighborhoods to promote the company’s products. However, they do not make sales. Canvassers refer interested consumers to salesmen, who follow up and attempt to procure a sale. Sometimes employers pay canvassers on a pure commission basis, without regard to minimum wage or overtime. This blog post highlights the riskiness of that practice.
The legal issue is whether employers can classify canvassers as exempt from the minimum wage and overtime requirements of the Fair Labor Standards Act. If an employee is “exempt,” that means the minimum wage and overtime protections of the FLSA do not apply to the employee. The employer can pay the employee on a commission basis (or on any basis) as it sees fit. But if the employee is not exempt, then the employer must comply with the FLSA’s minimum wage and overtime requirements in its compensation of the employee.
Employers commonly classify canvassers as exempt outside sales employees. Click here for a U.S. Department of Labor factsheet on that exemption. In a nutshell, the outside sales exemption excuses an employer from paying minimum wage and overtime compensation to any employee (a) whose primary duty is making sales, or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer; and (b) the employee must be customarily and regularly engaged away from the employer’s place or places of business.
Several court cases have questioned whether employers may classify canvassers as outside sales employees. While canvassers are customarily and regularly engaged away from the employer’s place of business, they do not make sales. A New York federal court recently ruled that the plaintiff, as a “canvasser and canvass manager,  did not attempt to complete sales. Rather, her work is best characterized as promotional activity designed to stimulate sales made by someone else, which is explicitly not exempt under the Secretary of Labor’s regulations.” Slow v. Prestige Marketing Co., Inc., 2011 WL 4373516 (E.D.N.Y. Sept. 19, 2011).
The result of such a misclassification is that the employer must pay all unpaid minimum wage and overtime to the misclassified employee, going back as far as three years. If you are an employee or an employer with questions about the outside sales exemption, or the FLSA in general, you should contact competent employment law counsel.