More than half. That’s the line California draws for the outside salesperson exemption, and it’s measured in hours, not job titles. Under the wage orders, an outside salesperson is someone who “customarily and regularly works more than half the working time away from the employer’s place of business selling” or obtaining orders. An employee who meets that test falls outside the overtime and break rules of the wage order. Reps who spend most days in the office or on delivery routes usually don’t qualify.
What does the outside sales exemption cover?
Most of California’s wage and hour rules. Labor Code section 1171 says the chapter covering wages and hours “shall not include any individual employed as an outside salesman.” The industry wage orders say the same thing. Wage Order 7, for example, states that “The provisions of this order shall not apply to outside salespersons.”
That’s broader than the other white-collar exemptions. An executive or administrative employee is exempt from parts of the wage order, but an outside salesperson is outside the order altogether. There’s also no minimum salary requirement, which is why the exemption is attractive for commission-heavy sales roles.
Not everything goes away, though. Labor Code section 2802 still requires reimbursement of necessary business expenses, which for a rep on the road means mileage and phone costs. And Labor Code section 2751 requires a written contract whenever the pay plan involves commissions. Those two statutes produce claims against outside sales teams even when the exemption holds.
How does California’s test differ from the federal one?
California counts hours. Federal law looks at the main job. In Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785, the Supreme Court of California explained that the state definition “takes a purely quantitative approach, focusing exclusively on whether the individual ‘works more than half the working time . . . selling … or obtaining orders or contracts.’”
The federal rule, at 29 C.F.R. section 541.500, asks whether the employee’s “primary duty” is making sales or obtaining orders and whether the employee is “customarily and regularly engaged away from the employer’s place or places of business.” A rep who qualifies under federal law may still be covered by California’s overtime rules. Multistate employers get caught here when a national sales job description is applied to California staff without a separate hours analysis.
Which activities count toward selling time?
Time spent on sales activities, not everything a sales employee does. Ramirez involved a route driver who both sold and delivered bottled water. The court held that delivery “is not a sales activity in the conventional meaning of the word,” and compared it to “an attorney’s preparation of a legal brief” written to keep a client.
That example gives a rough sorting rule. Prospecting, presenting, negotiating, taking orders, and closing are sales. Delivering, installing, collecting payments, stocking shelves, and handling service calls usually aren’t, even if they keep the customer happy. How to count drive time between sales calls is a frequent point of dispute, so the facts of each route matter.
The location half of the test matters too. The work has to be done away from the employer’s place of business. Hours a rep spends at the company office building proposals, attending meetings, or making calls from a desk don’t count toward the outside half, even if they’re sales-related.
What if the employee doesn’t spend enough time selling?
The court looks at the realistic requirements of the job, not only the timecards. Ramirez recognized two opposite risks. An employer can’t make someone exempt just by writing a job description. But “an employee who is supposed to be engaged in sales activities during most of his working hours and falls below the 50 percent mark due to his own substandard performance should not thereby be able to evade a valid exemption.”
The court told trial courts to consider, above all, “how the employee actually spends his or her time,” and then whether the employee’s practice “diverges from the employer’s realistic expectations,” and whether there was “any concrete expression of employer displeasure over an employee’s substandard performance.”
That last factor is the employer’s best evidence. A rep who claims to have spent 70 percent of the time in the office will have a harder case if there are emails, call-activity reports, and performance reviews telling the rep to get out in the field. Without those documents, the case comes down to the employee’s testimony about how the days were spent.
Why are outside sales claims hard to defend?
Because the employer has the burden. Exemptions are affirmative defenses, and California courts construe them narrowly against the employer. Outside reps also don’t punch a clock, so there are rarely precise records of where their hours went. The plaintiff testifies to an estimate, and the employer has to rebut it.
The size of the dispute can be large. In Ramirez, the court noted on remand the trial court might have to resolve the difference between the employee’s claim “that he spent only 150 minutes a week on direct door-to-door sales” and the employer’s claim of 850 minutes. Gaps that wide are typical, and the answer drives the overtime claim, meal and rest premiums, and derivative penalties for the whole class period.
Records from the field have changed these cases. CRM entries, GPS mileage logs, calendar invites, and expense reports place reps in time and space. A defense that reconstructs a sample of weeks from those sources is far stronger than one that relies on a manager’s general impression.
The same records can hurt. If the CRM shows most logged activity happening from the office, or expense reports show few miles driven, the employer learns that early, before deciding whether to fight the classification or resolve the claim. That early look is worth more than any other step in these cases, because it tells the employer which kind of case it has. Employers who keep using the exemption should also run that check on current reps every year, because roles drift toward inside work as accounts mature and sales tools move online.
Steps for an employer facing an outside sales misclassification claim
Most of these cases are decided on how the rep’s days were actually spent. The firm’s California employment defense page explains how misclassification claims are evaluated.
- Preserve CRM data, calendars, mileage and GPS logs, expense reports, call reports, commission plans, job descriptions, and the emails about field-time expectations.
- Note the deadline on the complaint, demand, or PAGA notice, and check for an arbitration agreement and an EPLI policy, including any requirement to report the claim promptly.
- Identify the sales managers who set expectations and reviewed performance, and don’t take any action against the rep or coworkers that could look like a response to the claim.
- Rebuild a sample of representative weeks, sorting time into outside selling, inside work, and nonsales tasks such as delivery or service.
- Get counsel’s advice before reclassifying the role or changing commission plans, since timing and messaging can affect how the change is used in the case.
Outside sales exemption questions
Does a remote sales employee working from home qualify?
Not automatically. The wage order test asks whether more than half the working time is spent “away from the employer’s place of business” selling. A home office isn’t the employer’s office, but a rep who sells only by phone and video from home is a weak fit for the traditional understanding of outside sales. Treat these roles as open questions, and analyze them before relying on the exemption.
Is a route driver who also sells an outside salesperson?
Only if selling, not delivering, takes up more than half the working time. Ramirez involved exactly that kind of hybrid role, and the court held that delivery is not sales. Route-sales employees are among the most frequent plaintiffs in outside sales cases for that reason.
Is there a salary minimum for outside salespeople?
No. Unlike the other white-collar exemptions, the California outside sales exemption has no salary requirement. Many outside salespeople are paid mostly or only in commissions. If the exemption fails, though, those commissions have to be used to calculate the regular rate for the overtime owed.
Can an employee be exempt in some weeks and not others?
The definition looks to what the employee “customarily and regularly” does, so a short stretch of office work won’t automatically defeat the exemption. A lasting change in the job, such as moving a rep to an inside role, will. Reclassify when the job changes, not after a claim arrives.
If a sales employee claims they were misclassified
If a current or former sales rep has sent a demand, PAGA notice, or lawsuit claiming overtime and break premiums, the records showing where the rep’s hours went usually decide whether the exemption holds. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving misclassified outside sales employees. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The statutes are Labor Code section 1171, section 2751, and section 2802. The regulations are IWC Wage Order 7 (Cal. Code Regs., tit. 8, § 11070), sections 1(C) and 2(J), and 29 C.F.R. section 541.500. The decision is Ramirez v. Yosemite Water Co. (1999) 20 Cal.4th 785.
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.