90 | Massachusetts Wage & Hour Peculiarities, 2025 ed. © 2025 Seyfarth Shaw LLP The second Massachusetts outside sales exemption applies only to the Commonwealth’s overtime pay requirements, and therefore an employee who meets the requirements of this exemption but not the Massachusetts exemption explained above must be paid at least the Massachusetts minimum wage. This exemption specifically states that the Massachusetts overtime provisions are not “applicable to any employee who is employed . . . as an outside salesman or outside buyer.” 504 This second exemption for outside salespersons is typically easier to meet because there is no restriction on how often sales employees may visit their employers’ places of business.505 Because the Massachusetts exemption appears to be analogous to the federal exemption, employees who satisfy the federal outside sales exemption requirements likely satisfy this Massachusetts exemption as well. 2. Federal Commissioned Inside Sales Exemption Under the FLSA, certain retail and service employees who work on commission are exempt from federal overtime requirements.506 Massachusetts law does not contain a similar exemption for inside sales employees. Retail and service employers should consider whether employees who satisfy the federal exemption satisfy a different state exemption. To qualify for the federal exemption, a business must be considered a “retail or service establishment.”507 In order for a business to meet this requirement, (1) the business must be recognized as a retail sales or service provider in its particular industry and (2) 75 percent of its annual dollar volume of sales of goods or services must not be for resale.508 Additionally, retail and service employees must satisfy the following two requirements: (1) their regular rate of pay must be at least one and one-half times the federal minimum wage;509 and (2) more than half of the employee’s compensation for a “representative period” of not less than 504 M.G.L. ch. 151, § 1A(4). 505 See, e.g., Jinks v. Credico (USA) LLC, No. 1784CV02731-BLS2, 2020 WL 1989278, *8-10 (Mass. Super. Feb 28, 2020) (declining to incorporate the daily report requirement from M.G.L. ch. 151, § 2 into § 1A(4) because the language is not included in the statute and to do so would render the two provisions duplicative); Youssefi v. Direct Energy Bus., LLC, No. SUCV201803809-BLS1, 2020 WL 2193677, *2 (Mass. Super. Feb. 28, 2020) (holding that, based on the FLSA definition of “outside salesman,” the plaintiff was exempt from M.G.L. ch. 151, § 1A(4)). 506 29 U.S.C. § 207(i); 29 C.F.R. § 779.414. The federal inside sales exemption was enacted to relieve employers from the requirement of paying overtime to retail and service employees who are paid primarily on commission. These employees generally work in “big-ticket” departments or establishments where commissions have traditionally been used to compensate employees. Examples include departments or establishments selling furniture, bedding and home furnishings, floor coverings, draperies, major appliances, musical instruments, radios and televisions, men’s clothing, women’s ready to wear clothing, shoes, corsets, home insulation, and various home custom orders. 29 C.F.R. § 779.414. Additional examples of retail and service establishments include grocery stores, coal dealers, restaurants, hotels, watch repair establishments, and barber shops. 29 C.F.R. § 779.318. See also DOL Wage & Hour Opinion Letter FLSA2006-33 (Sept. 14, 2006) (propane gas dealers); DOL Wage & Hour Opinion Letter FLSA2006-22 (June 23, 2006) (plumbing repair service companies); DOL Wage & Hour Opinion Letter FLSA2006-9 (Mar. 10, 2006) (health club/fitness facilities); DOL Wage & Hour Opinion Letter FLSA2005-44 (Oct. 24, 2005) (carpet and upholstery cleaning services). 507 29 C.F.R. § 779.411. 508 29 C.F.R. § 779.411. 509 29 U.S.C. § 207(i)(1); 29 C.F.R. § 779.412(a). The regular rate of pay is computed by dividing the total number of hours worked into straight-time earnings for those hours. 29 C.F.R. § 779.419. For example, if an employee earns $400.00 and works forty hours, the regular rate of pay is $10.00 per hour.
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