This week the Supreme Court delivered an opinion in which it held that "sales" activities would be broadly defined in applying the outside sales exemption under the FLSA. The case involved pharmaceutical sales representatives, who did not actually "sell" anything but rather marketed the pharmaceutical company's products to doctors. The sales representatives claimed that their employer's use of the outside sales exemption was improper since they did not "sell" anything and thus they were entitled to millions in overtime. The Supreme Court disagreed with the employees and interpreted the term "sales" broadly to encompass the activities of the pharmaceutical representatives.
Unfortunately, the decision does not have any significant direct benefit for the mortgage industry. Indeed, the problem for lenders in applying the outside sales exemption is the question of whether originators are "outside" employees—not whether they are "sales" workers. In other words, the difficulty in applying the outside sales exemption to originators is the question of whether they are engaged in company business outside a place where they regularly engage in the employers' business. Remember, a place of regular business can include a home office. Hence, the issue for lenders is where the work is performed—not they type of work performed.
Obviously, any win for employers (especially one that flatly rejects an interpretation urged by the Department of Labor) is something to be applauded. However, lenders should be careful not to read the headlines and believe that the outside sales exemption is the long awaited solution to the problems caused by overtime regulations. In many respects the Supreme Court decision does not really change anything for lenders when it comes to addressing the challenges posed by the Fair Labor Standards Act.
