Takeaway: Employers should take steps to ensure they have actual knowledge of their employees’ daily job responsibilities and evaluate whether their exempt employees meet the job duties requirements of any applicable exemptions under the Fair Labor Standards Act (FLSA) and relevant state laws.

Inside sales representatives (ISRs) of an industrial product wholesaler did not qualify for an overtime exemption under the Fair Labor Standards Act (FLSA) because the company’s core business purpose was to sell its products and the ISRs’ primary duty was to make sales by servicing the company’s customers, the 1st U.S. Circuit Court of Appeals recently ruled.

Acting U.S. Secretary of Labor Julie Su filed a lawsuit in federal district court, alleging that F.W. Webb Co. misclassified its ISRs as exempt under the FLSA’s administrative exemption.

The parties did not dispute that the ISRs met the salary basis test and that they exercised discretion and independent judgment with respect to matters of significance. However, the district court concluded that the ISRs were nonexempt because their primary duty was not directly related to the management or general business operations of the employer. The district court granted summary judgment to Su on the FLSA overtime claims.

On appeal, the 1st Circuit affirmed the district court’s summary judgment ruling. The appeals court explained that it recently clarified that, in analyzing the applicability of the administrative exemption, “it is often...

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