27 F.4th 53
1st Cir.2022Background
- Summit Retail Solutions hires "Brand Representatives" to set up displays and demonstrate products in third-party retail stores (Costco, Sam’s Club, BJ’s) and to persuade shoppers to take products into their carts.
- Brand Reps do not ring up purchases; store cashiers complete transactions at registers. Reps may be credited for sales generated at their assigned stores but cannot ensure every shopper actually purchases after leaving the display.
- Summit sets schedules, assignments, and display requirements; Brand Reps submit time-stamped photos and have hours tracked. Pay is hourly ($10–$15) plus commission-style "true-up" bonuses tied to percentage of store sales attributable to the rep.
- Plaintiffs sued alleging unpaid overtime (FLSA and state analogues), claiming the true-up system discouraged accurate hour reporting. Summit defended under the FLSA outside-sales exemption and moved for summary judgment.
- The district court granted summary judgment for Summit; the First Circuit (majority) affirmed, holding Brand Reps fall within the outside-sales exemption. Judge Thompson dissented, arguing Brand Reps are non-exempt promotional workers entitled to overtime.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Brand Reps are "outside salesmen" under the FLSA (primary duty = making sales; customarily work away) | Modeski: Reps do not "make sales" because they do not obtain binding commitments and do not complete transactions at point of contact | Summit: Reps perform the final persuasive sales effort in-store; customers manifest intent by placing items in carts and reps are generally credited for resulting sales | Court: Reps do "make sales" within §203(k)/29 C.F.R. §541.500(a); exemption applies (affirmed) |
| Whether Christopher v. SmithKline Beecham controls or is limited to regulated industries | Modeski: Christopher was tied to the regulated pharmaceutical context and should not be broadly applied | Summit: Christopher supplies the correct, pragmatic functional inquiry for "making sales" across industries | Court: Christopher’s functional approach applies beyond pharmaceuticals; its reasoning supports finding Brand Reps make sales |
| Whether lack of traditional "external indicia" (low pay, employer control, supervision) undermines exemption | Modeski: Reps lack indicia of salespeople (low earnings, controlled schedules), so they are non-exempt promotional workers | Summit: Indicia are mixed but secondary; the dispositive question is whether reps make sales, which they do | Court: External indicia considered but did not overcome the conclusion that reps make sales; exemption governs |
Key Cases Cited
- Christopher v. SmithKline Beecham Corp., 567 U.S. 142 (2012) (adopts functional inquiry; "other disposition" in §3(k) supports broad definition of "sale")
- Long Island Care at Home, Ltd. v. Coke, 551 U.S. 158 (2007) (FLSA leaves definitional gaps to Secretary of Labor/regulations)
- Flood v. Just Energy Mktg. Corp., 904 F.3d 219 (2d Cir. 2018) (Christopher’s reasoning has broader applicability beyond pharma)
- Hurt v. Commerce Energy, Inc., 973 F.3d 509 (6th Cir. 2020) (solicitors without binding commitments not making sales; emphasis on obtaining commitments)
- Beauford v. ActionLink, LLC, 781 F.3d 396 (8th Cir. 2015) (brand advocates who only promoted products and trained store employees were non-exempt)
- Gregory v. First Title of Am., Inc., 555 F.3d 1300 (11th Cir. 2009) (no intervening sales effort between agent’s sales work and consummation supports outside-sales exemption)