Darren Stemple worked as a “Business Development Representative” for RingCentral, Inc., a company which sells cloud-based telecommunications systems such as video and audio conferencing, and business app integration software. Its clients include healthcare, finance, real estate, retail stores, and enterprises all over the country and the world.
Stemple's main duty was to cold-call potential buyers of RingCentral's products to sell products and services. The company provided Stemple with names and contact information of potential buyers. RingCentral has other employees who also sell its products to its clients from inside its offices. Although the employees are known by different titles such as Business Development Representatives, Sales Development Representatives, or Account Executives, they are really inside salespersons. The employer paid these employees a fixed salary and did not pay them overtime.
These inside salespersons were regularly required to work more than forty (40) hours in a workweek without receiving proper overtime compensation. The employer also routinely provided lunch to them. As a result, these employees often worked through their lunch breaks. The employees were required to meet quotas for their sales work that necessitated overtime work, and having to work while eating their lunch.
Stemple, together with other co-workers, sued RingCentral for misclassification, claiming that they were owed back wages for the overtime work they performed and for the meal periods they missed. Their main task was calling potential clients to sell RingCentral's products. They did not have the authority to determine what products were offered or what price to charge. The inside salespersons' duties were substantially similar, regardless of their specific job title, office location, supervisor, or assigned sales territory.
Under federal law, an employee who qualifies as an outside salesperson is exempt from overtime. However, the following conditions must be met:
- The salesperson' primary duty must be (a) making sales or (b) obtaining orders or contracts for services, which would be paid for by the clients and customers; and
- The salesperson is customarily and regularly engaged away from the employer's place of business while performing their primary duty. This means that the salespersons makes sales at the customer's home or place of business.
If the employee does their sales work in the employer's place of business, the employee is considered an inside salesperson. Unlike an outside salesperson, an inside salesperson is not exempt and should be paid overtime.
In distinguishing between inside and outside sales, the most important consideration is the location of where employees actually spend their time. Job titles does not determine exemption. For employees to be correctly exempt, they must actually work more than half of the working time away from the employer's place of business selling.
Before the case could go to trial, the parties agreed to settle. The employer agreed to pay the employees approximately $2.7 million in damages.