How do I determine if my inside sales employee is exempt or non-exempt?

Your inside sales employee is likely non-exempt, although it's possible they could be classified as exempt if they meet the federal and state-specific criteria.

Determining Exempt vs. Non-Exempt

Whether an employee is exempt or non-exempt, according to the Federal Labor Standards Act (FSLA), is determined by three things:

• the type of work the employee does
• their specific duties
• their compensation

Check out more information on exempt vs. non-exempt employees.

Inside Sales

Inside sales employees are generally classified as non-exempt. However, they're considered exempt if they satisfy all three of the following:

• The employee works at a retail establishment (which means 75% of the establishment's gross annual revenues must be sales to an end user, as opposed to wholesale).
• They regularly get more than half of their compensation from commissions.
• They receive at least 1.5 times minimum wage for all hours worked (this is a partial exemption which only impacts the requirement that exempt employees don't receive overtime compensation).

State Laws

Be sure to check with your state's laws because they can sometimes be more rigorous than federal laws. For instance, in California, generally, exempt employees must earn a minimum monthly salary of no less than two times the state minimum wage for full-time employees.

Final Tip

Each exempt or non-exempt status should be checked on a case by case basis.

Helpful Links:

Exempt vs. Non-Exempt Checklist - hrspecialist.com

Overtime Laws, US Department of Labor - DOL.gov

FSLA Occupational Index - DOL.gov

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