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Outside Sales Exemption

Outside Sales Exemption – A Quick Guide for New York Employers

Most New York employers are subject to both federal and state minimum wage and overtime requirements. Usually, this means the employer must pay its employees at least the minimum wage for all hours worked and time-and-a-half for hours over 40 in a week. There are, however, many exceptions to these requirements. This post addresses the outside sales exemption under both the Fair Labor Standards Act (FLSA) and New York law.

Employers sometimes rely on the “outside sales” exemption to cover all categories of sales employees. But the “outside” component is critical for exemption. Sales employees who do not qualify under the outside sales exemption may still qualify for another exemption, such as the executive or administrative exemptions.

Learn more through this free webinar: Overtime Exemptions for New York Employers: What You Don’t Know CAN Hurt You!

FLSA Outside Sales Exemption

To qualify for the outside sales exemption under the FLSA (the federal minimum wage/overtime law):

  1. The employee’s primary duty must be 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
  2. The employee must be customarily and regularly engaged away from the employer’s place or places of business.

Unlike the administrative, executive, and professional exemptions, the FLSA salary requirements do not apply to the outside sales exemption.

An outside salesperson must travel to customers, usually at their places of business or homes. Selling solely by phone, mail, or the Internet does not qualify as outside sales.

“Sales” includes any sale, exchange, contract to sell, consignment for sales, shipment for sale, or other disposition. Promotional work that is related to the employee’s own outside sales or solicitation efforts qualifies as exempt work.

New York Outside Sales Exemption

The FLSA and New York outside sales exemptions are very similar.

Under New York State law, employees can be exempt from minimum wage and overtime requirements if they are customarily and predominantly engaged away from the premises of the employer and not at any fixed site and location for the purpose of:

  • Making sales;
  • Selling and delivering articles or goods; or
  • Obtaining orders or contracts for service or for the use of facilities.

Like the FLSA, New York has no salary requirement for outside sales employees. However, New York does require that commissioned salesperson have a written agreement establishing the terms of their compensation. For outside sales employees whose primary compensation comes through a salary or hourly wage, employers still must satisfy the State’s wage notice requirements.


In the past, this exemption covered more employees who actually went “door-to-door” or at least made home sales calls. Now, since most consumer purchases occur through the Internet, the exemption it is more prevalent among business-to-business sales employees.

But remember, the outside sales exemption only applies to certain employees whose actual job situations meet the requirements! Job titles do not automatically determine exemption, nor does the fact that the employee is involved in making sales.

Employers should periodically review employees’ job duties to determine whether they qualify for exemption.

To learn more, check out my related webinar: Overtime Exemptions for New York Employers: What You Don’t Know CAN Hurt You!