Outside sales exception – Does it apply to people working from home?

If you are a salesperson working from home, California’s outside sales exemption (OSE) applies to you if you spend more than half of your working time away from home making sales or obtaining orders.¹

So if you work primarily in your home office in California, then you would not be exempt under the OSE.

What is the outside sales exemption in California?

Under the outside sales exemption (OSE), you are classified as an exempt employee if you are a salesperson who spends more than 50% of your time outside of your employee’s place of business. Your home office is considered part of your employer’s “place of business.”²

As an exempt employee, you would not be entitled to such wage and hour benefits as:

• minimum wage;
• time-and-a-half overtime pay; and
• rest and meal breaks.³

What is an outside salesperson?

California law considers you an outside salesperson if you meet three conditions:

1. Being at least 18 years of age;
2. Customarily and regularly working more than 50% of your working time outside of your employer’s place of business (including your home office); and
3. Selling items or obtaining service orders.⁴

The classic example of an outside salesperson is a door-to-door salesman. Other examples of outside sales activities are:

• commuting to and from a customer’s home or office,
• meeting with a customer outside of your office,
• loading a car with products to be sold, and/or
• doing promotional work outside of your office

What about inside salespeople working from home?

If you work as an inside salesperson in California, you are an exempt employee if the following three conditions are met:

1. More than 50% of your compensation is from commissions;
2. You earn at least 150% more than minimum wage; and
3. You work in either:

• • the mercantile industry;
  • a mechanical occupation;
  • a clerical occupation;
  • a technical occupation; or
  • a professional occupation⁵

It does not matter whether you work from your employer’s office or your home office.

Note that unlike most exempt employees, exempt inside sales employees are entitled to rest breaks and meal breaks.⁶

What can I do if I am misclassified?

If you are an outside salesperson who spends at least 50% of your working time at your employer’s place of business (which includes your home office), then you may qualify for non-exempt employee status in California.

If your employer insists on misclassifying you as exempt under the outside sales exemption, then you can either:

• file a wage claim with the Labor Commissioner, or
• bring a traditional wage and hour lawsuit.⁷

A California labor law attorney can help you decide which is the best route for you to take. In either case, your attorney would help you fight for all the back pay you are entitled to.

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Legal References