Why Most Employees In Sales Development Positions Should Be Paid Overtime

Sales Development is a common job function at many companies.  Employees in this role may be referred to as Sales Development Representatives (SDRs), Business Development Executives (BDEs), Sales Advisors (SAs), Account Executives (AEs), or Account Managers (AMs).  The common thread among these positions is that they involve one of two core tasks:

  • Using online databases and cold calling to locate prospective customers who are then connected to members of the company’s sales team;
  • Servicing existing customers and, in the process of doing so, educating them about additional services that the company offers (upsells).

Sales Development employees spend most of their time in an office and commissions generally do not make up 50% or more of their compensation. Thus, they cannot be exempt from overtime under the commission or outside sales exemptions.  Furthermore, few Sales Development employees spend any significant part of their time managing others.  So they cannot be classified as exempt from overtime under the executive exemption.  Moreover, none of the professional exemptions apply because Sales Development does not involve creative work.  Nor does it require a long education in a recognized field of science or learning.

Thus, the administrative exemption is the ONLY exemption from overtime, meal and rest periods that could, conceivably, apply to an employee in a Sales Development role.  The administrative exemption is complicated and difficult to satisfy and more information is available here.  But, to summarize, the administrative exemption will be inapplicable in California unless it is affirmatively shown that a Sales Development employee:

  • Regularly exercises discretion with respect to matters of significance;
  • Spends more than 50% of their time engaged in work that is of “substantial importance” to the company’s general business operations;
  • Less than 20% of their time involves routine work;
  • The employee works “along specialized or technical lines requiring special training, experience or knowledge.”

Confused? Admittedly, the law and regulations are not models of clarity.  They were drafted many years ago and do not directly address Sales Development roles.However, it’s fair to say that Sales Development work rarely involves the exercise of significant and real discretion with respect to important matters–which is the touchstone of the exemption.

Rather, much of an Sales Development employee’s day-to-day work involves mundane tasks like assembling relatively uncomplicated lists and cold calling using standard talking points.  Further, no specialized training is required.  Neither is any particular academic background.  Although there are certainly exceptions, most Sales Development positions will not satisfy the foregoing criteria.  Indeed, courts that have considered this issue concluded that Sales Development employees should not be classified as exempt from overtime (as well as meal and rest periods).  See, e.g. Talamantes v. PPG Industries, Inc., Case No. 13-cv-04062-WHO (N.D. Cal. April 30, 2014); Misra v. Decision One Mortg. Co., LLC, 673 F. Supp. 2d 987 (C.D. Cal. 2008).

Accordingly, absent an exceptional situation, an employee in a Sales Development position should be paid overtime and receive daily meal and rest periods.  Many employers, however, do not follow this practice.  Instead, they classify their Sales Development team as exempt from overtime in an attempt to save money and avoid the administrative hassles attendant to engaging non-exempt employees.  Employers often avoid liability for this sort of willful misclassification because Sales Development employees are often recent college graduates who are not educated about their rights under the California Labor Code.

However, the consequences of applying an incorrect classification to a Sales Development employee can be significant.  They include unpaid overtime and compensation for missed meal breaks, rest periods and other penalties.  The statute of limitations for unpaid overtime claims in California is effectively four years so recoveries can be significant–easily exceeding $100,000 if the employee was paid a high salary and frequently worked more than eight hours per day over a long period of time. A summary of potential remedies and hypothetical recoveries is available here.  Thus, it is often worth speaking with a lawyer to understand whether a claim against an employer may exist.

If you held a Sales Development position but were not paid overtime, do not hesitate to contact Sebastian Miller Law for a no-fee consultation.

Disclaimer: All materials have been prepared for general information purposes only to permit you to learn more about Sebastian Miller Law, P.C, its services and experience.  The information presented is not legal advice, is not to be acted on as such, may not be current and is subject to change without notice.

After you have typed in some text, hit ENTER to start searching...