Inside Sales vs. Outside Sales Job Classification in California: Know Your Rights

If you’re in sales, your paycheck, eligibility for overtime, and other legal protections regarding your wages and breaks may depend heavily on whether you’re labeled as “inside sales” or “outside sales.”

California’s laws are quite different from federal laws, and getting classified incorrectly happens a lot, putting your earnings in jeopardy. I’ve noticed violations across various industries, whether it’s a car salesman at a dealership or workers who deliver products for a company but aren’t actually making any sales. Here’s what you should be aware of.

The Critical Classification: Inside vs. Outside Sales

California defines outside salespeople as employees who meet the following criteria:

• Are 18+ years old.
• Spend over 50% of their working time away from the employer’s place of business.
• Primarily sell products/services or obtain contracts/customer orders. However, sales work does not include when you are delivering pre-ordered items (for which you did not obtain the orders).

Inside salespeople work primarily from the employer’s physical location (like an office or store) or from their home. Even if you’re working from home, your home office can be considered the “employer’s place of business.”

To be properly classified as “inside sales,” you need to make at least 1.5 times the minimum wage for the hours you work, and over half of your earnings must come from commissions.

Rights for Outside Sales Employees

If a worker is correctly classified as outside sales, the following rules apply:

• No overtime pay, no matter how many hours you work per day or week.
• No mandatory meal/rest breaks.
• There are no minimum wage guarantees. Compensation is typically commission-based, and as a result, it can be below minimum wage (depending on commissions earned that pay period) without any violation of the law.

But beware: Employers often misclassify workers. If you spend over half your time in the office (or at home) making calls or performing administrative tasks, or if the work you do is not really “sales” work (or not primarily sales) but instead is more about delivering pre-ordered items or restocking shelves based on an existing contract, you’re likely not an outside sales employee and are owed back wages and other items.

Rights for Inside Sales Employees

Most inside sales roles are nonexempt, meaning:

• You earn at least California’s minimum wage ($16.00/hour in 2024).
• You get 10-minute rest breaks and 30-minute meal breaks.

Exception: Inside sales staff can be overtime-exempt only if:

• They earn at least 1.5x minimum wage (e.g., ≥$24/hour in 2024 and $24.75 in 2025) for their hours worked.
• Over 50% of their income comes from commissions.

Some employers pay potentially inside sales employees a commission, but also have a provision saying if they do not meet the above, that week they will be paid 1.5 times the minimum wage for each hour worked or some other formula.  However, others simply assume the employees will qualify and do not even track their hours.

Remote Work and Sales: A Gray Area

Working from home? Your residence can be considered the “employer’s place of business.” To qualify as outside sales, you must spend >50% of your time conducting sales away from the employer’s place of business, so whether it qualifies can affect whether you are misclassified.

You should speak with an attorney to confirm whether your home is considered the employer’s place of business in your specific situation.

Enforcement: Reclaim Your Wages

Misclassification is costly. You should consult with an employment attorney if you were denied overtime or breaks.  The attorney may then help you do one of the following:

• File a wage claim with the California Labor Commissioner.
• Sue for back pay, including up to three years of unpaid wages and penalties, meal period and rest break premiums, overtime premiums, etc.

The right California employment law attorney will work with you to hold your employer accountable and ensure you receive the compensation you deserve.

Take Action to Protect Your Wages

There are actions that you can take to document your situation and start moving toward a successful resolution.

• Track your time: Note hours spent on sales activities outside the office versus in the office, as well as non-sales activities.
• Challenge misclassification: If your role doesn’t meet the outside or inside sales requirements above, demand correct payment.
• Consult a lawyer: Many firms, such as Bisnar Chase, offer free evaluations for wage theft.

California’s laws favor workers—not employers. Arm yourself with knowledge, document your work, and reclaim what you’ve earned. You can trust Bisnar Chase to help you.

Our firm has a 99% success rate and over $1 billion recovered for our clients across decades in business. We also have a dedicated department focusing on labor law cases and employment class actions. You can contact us for a free consultation to find out if you have a case.