Marketing/Sales exempt or non-exempt?

HR in Okla · May 2003

We are a retirement center selling, not real estate, but contracts for "Life Care." A prospect purchases a contract to live in independent living and receive certain services for a monthly fee, then they have the right to move to assisted living, and later nursing home care for basically the same monthly fee. Our marketing staff works on-site for the most part, with regular hours, although they may schedule an appointment with a prospect for an evening or weekend.

Everyone here wants them to be exempt, but they don't seem to me to fall in the "outside" sales classification. Can anyone give me guidance on classifying them? Right now one is non-exempt, but for some reason we set the other one up to be exempt. She was doing a lot of off-site marketing when first hired, but now they do the same thing. Help please.

HR in Okla.

Doug · May 2003

Suggest you use the new, proposed FLSA guidelines as they are much clearer on this issue. Also, they will probably be implemented without too many changes in this area.

In the new regs, you have at least two options. The first is "outside sales" which will restrict exempt status to sales in the client's home or in a hotel lobby for a truly traveling salesperson (section 541.502). The second incolves a wage test and is a bit trickier (section 541.601). If a person is guranteed a minimum salary equal to 1 1/2 times minimum wage (approximately $16,100 a year), and their commissions are more than 50% of their income, then they can be designated as exempt.

Our company is in the new homes business and our sales people work in model homes. We have paid them on a commission basis only and they were exempt due to an interpretation made years ago by someone in the DOL. We will probably have to go to a draw against commission basis with a low draw rate and use the wages test for the exempt designation. The draw will have to be forgiven if someone leaves and has received more than they earned.

HR in Okla · May 2003

Thanks for the information. Since the proposed regs are still only "proposed," I'm reluctant to base a decision on them. Also, I have read a lot of commentary on them, but haven't seen the actual regs. I'm to attend a meeting next week where they will be discussed, maybe I'll have a better idea after that.

Thanks again. Anyone else out there have an idea?

valentine · June 2003

We are also a life care community very similar to yours. Our marketing director is exempt, the marketing associates are not.

HR in Okla · June 2003

I spoke with an attorney who spoke at a recent HR meeting I attended. His topic was the proposed regs. He said, based on the current administrative exemption, with discretion and independent judgement, they could be exempt. We are in the process of rewriting job descriptions and clearing this up. Thanks for your input.

Don D · June 2003

I agree with Valentine and would like for her to reserve a nice suite with a window for me. I don't think these sales persons are exempt any more than those people who work for a funeral home talking to people on the phone (or walk in) about burial insurance.

HR in Okla · June 2003

My contention, Don, has always been non-exempt. Thanks for your input.

Marketing/Sales exempt or non-exempt?

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