Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
In the last days of the Bush administration, the Department of Labor (DOL) issued an opinion letter, recognizing that insurance agents might qualify for the FLSA’s outside sales exemption and/or the administrative exemption. In its letter, which came in response to a request from a trade association representing life insurance companies, the DOL cautioned that such a determination would depend on the specific facts of the particular case. FLSA2009-28.
With respect to the outside sales exemption, the DOL noted that insurance agents who are responsible for making sales and obtaining orders for life insurance and other financial products could qualify for the exemption. In general, to qualify for the outside sales exemption, the agent must “normally and recurrently” – meaning every workweek – meet with clients face-to-face and engage in sales or solicitations away from their employer’s place of business. The performance of some activities at the employer’s workplace, such as sending e-mails, making telephone calls and preparing for meetings, will not jeopardize the exemption, provided this work is merely incidental to and in conjunction with the qualifying outside sales activity.
With respect to the administrative exemption, the DOL noted that insurance agents responsible for advising clients on various insurance and financial products best-suited to the client’s specific needs, goals and risk tolerance—as opposed to simply making sales—could qualify for the exemption. Promoting business and marketing different financial products constitute “servicing the employer’s business,” the DOL found. By analyzing client information and developing individualized advice, the agents exercise discretion and independent judgment, one of the hallmarks of the administrative exemption.
While this opinion letter is good news for insurance companies, it must be emphasized that the courts will continue to evaluate exemptions to the FLSA’s overtime provisions narrowly and based on the specific facts of each case.
This entry was authored by Shannon Patton.