Can I pay outside salespeople a salary instead of a commission and follow the minimum salary rules for exempt employees?

Yes, it is OK to pay outside salespeople a salary instead of a commission. Actually, an outside salesperson may be paid in any manner, including hourly.

Outside salespeople do not need to meet the minimum salary requirement that covers the executive, administrative and professional exemptions, if they meet the outside salesperson exemption.

Any individual properly classified as an outside salesperson is exempt from coverage of Section 1 of the Wage Orders, meaning that the rules regarding minimum wage, overtime, meal and rest breaks, timekeeping, etc., do not apply.

In addition, the salary deduction rules for exempt administrative, executive​ or professional employees do not apply to an outside salesperson who is paid a salary.

When paying a salary, it is best to consult legal counsel to develop an agreement that defines how the salary will be paid. What are the expectations? Will the salary be a based on a certain number of hours per workweek with deductions for absences, or will it be a guaranteed salary with no deductions for absences?

Although outside salespersons are not subject to the time record requirements, it is always OK to require a time record.

For more information, including the criteria for properly classifying an outside salesperson, visit the Outside Salesperson Exemption​​ in the HR Library.