Sunday, January 24, 2010

The sales director will get her overtime

The Fair Labor Standards Act is the law that gets you minimum wage and overtime if you work more than 40 hours per week. But not everyone gets overtime. The FLSA contains exemptions, including an exemption for bona-fide executive, administrative and professional employees.

This law has been on the books for decades. You'd think every nuance has been ironed out by the courts. But the courts are still filling in the blanks. The Second Circuit did so again in Reiseck v. Universal Communications of Miami, decided on January 11.

Reiseck worked for the magazine Elite Traveler. She was responsible for generating advertising sales. She got no overtime. The employer said she wasn't entitled to any because her primary duties were "directly related to management policies or general business operations of" Universal. If the employer is right, then Reiseck loses. As the Second Circuit frames the issue:

On the one hand, plaintiff was a salesperson responsible for selling specific advertising space, and so seems to fit comfortably on the 'sales' side of the administrative/sales divide. On the other hand, Reiseck also 'promoted sales' in some sense, and thus seems to have performed administrative operations. We are required to resolve this apparent contradiction. Whether advertising salespersons are administrative employees for the purposes of the exemptions to the FSLA's overtime pay provisions is a question of first impression for this Court.

The Second Circuit (Cabranes, Parker and Amon [D.J.]) sides with the plaintiff. The Court turns to the Third Circuit, which provided some "helpful guidance" on the issue in Martin v. Cooper Electric Supply Co., 940 F.2d 896 (3d Cir. 1991). "According to the logic of the Third Circuit, which we now adopt, an employee making specific sales to individual customers is a salesperson for the purposes of the FLSA, while an employee encouraging an increase in sales generally among all customers is an administrative employee for the purposes of the FLSA." Judge Cabranes asks us to consider a clothing store: "The individual who assists customers in finding their size of clothing or who completes the transaction at the cash register is a salesperson under the FLSA, while the individual who designs advertisements for the store or decides when to reduce prices to attract customers is an administrative employee for the purposes of the FLSA."

As Reiseck's primary duty was to sell specific advertising space, she was simply a member of the sales staff, not the marketing staff. This makes her a salesperson under the FLSA. True, she developed new clients in order to increase sales, but this was not her primary duty. The employer cannot invoke the exception, and the case is remanded to the district court with instructions to reconsider her motion for partial summary judgment.

No comments: