In the mortgage industry there is a trend to convert commissioned loan officers from independent contracters to W-2 or employee status to avoid any potential legal probelms from misclassifying an IC.

We do this by making them W-2 and designating them them "outside sales" as their only time in the office is for daily sales meetings doing email/minor paperwork.

The only requirements I can find for the outside sales classification are:
a) 18 years old+
b) 50% of time out of the office
c) selling tangible or intangible products

Under this classification we do not pay minimum wage or overtime (or reimburse for travel).

However, the FSLA outside sales exemption also requires the salary basis test. So what are the guidelines for establishing commission only type positions under FSLA (or other laws)? Are commisions considered as "salary", and if so must they be audited for a certain minimum earnings under the salary basis test to them as outside sales?

Under FLSA, exempt outside sales reps do not have to meet any salary test, unlike the other exemptions.

http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17f_outsidesales.htm

I can't address any special requirements that California might have. Nothing would surprise me.

http://www.dir.ca.gov/IWC/IWCArticle4.pdf

OT here, but, Patty, how can employers comply with the requirement, clearly printed on the first page, that the order be "posted where employees can read it easily?"

I can't read a paper copy of it easily without the aid of a magnifying glass!

Patty, I appreciate the resource, however they omit outside sales as an exempt position and only list executive, administrative, and professional.

The link to Federal website was very helpful. Thanks to all!

There are references to "does not apply to outside salespersons".

There are references to "does not apply to outside salespersons".

Yep, you have to read way into the document to find that (with your magnifying glass). Later, under Definitions (I think that was the term), it defines who is an outside sales rep, using the exact language the OP used (and not the same as FLSA).

scottb: how can employers comply with the requirement, clearly printed on the first page, that the order be "posted where employees can read it easily?" I can't read a paper copy of it easily without the aid of a magnifying glass!

The Wage Orders come in "poster size" -- considerably larger and better formatted than the paper copies you print off the DLSE website.

There is no outside sales exemption for travel reimbursement- you still need to pay that.
Where are these employees working? If they are traveling from client to client, then outside sales will apply. If they are working from home or satellite offices, I would be concerned.