12 Litigating CA Wage & Hour and Labor Code Class Actions (22nd Edition) Seyfarth Shaw LLP | www.seyfarth.com not whether an employee is essential to the business, but rather whether her primary duty goes to the heart of internal administration—rather than marketplace offerings.”59 This “not so distinct from production” standard highlights the limitations of the administrative/production dichotomy and runs afoul of its intended purpose. For example, the Department of Labor’s 2004 regulations have made clear that this “dichotomy has always been illustrative—but not dispositive—of exempt status.” The dichotomy “is only determinative if the work ‘falls squarely’ on the production side of the line.”60 Certainly, work that “is not so distinct” from the production side of the line is a far cry from work that “falls squarely” on the production side of the line. But a finding that work is not so distinct from production, though virtually meaningless, is all that Provident Bank seems to require. Provident Bank’s finding that underwriting work “is not so distinct from production” work has little to do with the test for administrative exemption or the Department of Labor’s explanation of the limitations of the administrative/production dichotomy. Yet Provident Bank threatens to flip the dichotomy on its head, as Provident Bank could be read to require an employer to show that that the work “falls squarely” off “the production side of the line” rather than establishing merely what the FLSA requires: that the employee performed office or non-manual work related to the management or general operations of the employer. Provident Bank creates more uncertainty for employers seeking to classify their workforce, and calls out for Supreme Court review or Department of Labor clarification on how courts should apply the administrative/production dichotomy. D. The Outside Sales Exemption The outside sales exemption is the broadest of all exemptions in that it exempts employees from all provisions in the Wage Orders, even minimum wage protections, and the outside sales exemption does not require that employees be paid on a salary basis.61 To qualify as an outside salesperson, an employee must “customarily and regularly work more than half the working time away from the employer’s place of business selling tangible or intangible items or obtaining orders or contracts for products, services or use of facilities.”62 This definition is slightly different from the definition of an outside salesperson under the FLSA, which provides that an employee is an outside salesperson if (1) the employee’s primary duty is making sales (as defined in the FLSA), or obtaining orders or contracts for services or for the use of facilities for which a consideration will be paid 59 Id. at 855 (emphasis added). 60 69 Fed. Reg. 22122, 22141 (Apr. 23, 2004). 61 IWC Wage Order 1-2001(1)(c) (“the provisions of this order shall not apply to outside salespersons”). By contrast, the white collar exemptions exempt employees only from Section 3 through 12 of the Wage Orders and other exemptions exempt employees only from Section 3 (governing hours of work). 62 IWC Wage Order 1-2001(2)(J) (defining “outside salesperson”).
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