Door-to-door solicitors ineligible for outside salesman exemption from FLSA

Door-to-door solicitors weren’t subject to the “outside salesperson” exemption under the Fair Labor Standards Act (FLSA), the U.S. 6th Circuit Court of Appeals (which covers Michigan and Ohio, as well as Kentucky and Tennessee) recently decided, affirming a jury verdict.

Facts

A group of employees went door-to-door to solicit customers for Commerce Energy, Inc., an energy supply company that provides electric power and natural gas. They were paid solely on a commission basis and didn’t receive a minimum wage or overtime. A typical day began with a morning meeting at the employer’s facility before supervisors drove them into the field for the door-to-door sales. Field supervisors controlled all their work breaks.

When the employees met with a potential customer, they were obligated to follow a script. If the customer was interested in the employer’s product, they completed a signed “customer agreement,” which was nonbinding. They then placed a verification call to a third party from the premises using the customer’s phone to confirm the agreement.

Even after the verification call, the sale wasn’t final. Commerce was able to reject any contract submitted by an employee at its sole discretion. Often, they weren’t told why the applications were rejected or why they weren’t paid commissions. Evidence submitted at trial showed 69% of employees made less than $1,000 and 62% made less than $500 in compensation, and some earned nothing despite submitting customer agreements to the employer every day.