Thursday, January 29, 2009, 12:13 PM

Winning Is Not Everything

Whether or not Vince Lombardi actually said "Winning isn't everything - it's the only thing" (see http://aafla.org/index/FootballStudies.html), making sales isn't necessary to establish the outside sales exemption to the Fair Labor Standards Act. That's the lesson of Gregory v. First Title of America, Inc., decided by the US Court of Appeals in Atlanta on January 27. Nelda Gregory, who had been marketing director for a Florida title insurance company for slightly over 6 months, was initially paid $1000 per week but switched, at her own request, to a commission-only compensation plan based on 50% of closed orders. She was never paid extra for overtime.

After she was fired, she filed suit, contending she was entitled to additional compensation under both her employment contract and the FLSA. Her argument was, in a nutshell, that she couldn't and didn't "sell": Her work consisted of trying to generate business by urging lenders and real estate salespeople to refer business to her employer, and she even lacked a license to sell title insurance. Apparently unimpressed with that position, the District Court threw the case out.

Although it took the Court of Appeals 24 pages of analysis, summary judgment was affirmed. Deeming the question of whether Gregory was an exempt outside salesperson to be "a close one" requiring the court "to navigate between a rock and a hard place (or Scylla and Charybdis, for students of the classics)," the per curiam opinion resolved the issues in the employer's failure, but Gregory proved to be her own worst enemy in the process. In fact, you could as easily say Gregory failed to prove, because she offered no evidence of the overtime hours she had worked and hadn't even informed her employer of her assertions in this regard until just before the axe fell. She simply said the employer "should have known." On that basis, the court found it unnecessary to resolve the tough question and send Ms. Gregory on her way.

While the results were favorable for First Title, the lessons are clear: Make sure your exemption is borne out by the facts and the law (it's the employer's burden to prove exemption as an affirmative defense), and never trust that your opponent won't put together the best case possible; hope is not a strategy (which is, after all, the title of a popular book on - you guessed it - sales).

1 Comments:

Blogger Texas Wage-Hour said...

Gee, you would think that Supreme Court precedent mandating that the employee be "unmistakably" within the terms of an exemption in order to be denied overtime, a "close case" wouldn't go to the employer. Also, who would've thought you don't have to "make sales" to be an outside salesperson. This decision seems remarkably result oriented and, as you point out, unnecessary in light of the weak showing by the plaintiff.

January 31, 2009 at 1:34 PM  

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