Plumbing firm loses appeal against overtime pay for sales reps

A federal appeals court has upheld a district court’s ruling that a wholesale distributor of sanitary supplies wrongly exempted its inside sales representatives from overtime pay for years.

The First Circuit Court of Appeals denied FW Webb’s motion for a new hearing. As a result, the US Department of Labor (DOL), which sued the firm in 2020, will recover $4.2 million in back pay for overtime from the plumbing supply firm for more than 700 sales representatives in inside the company.

The department alleged that Webb violated the Fair Labor Standards Act by treating its inside sales representatives (ISRs) as exempt administrative employees and not paying them overtime premiums for their hours of work in excess of 40 hours in a week of thing. The department also alleged that the employer failed to keep adequate and accurate records of hours worked.

The DOL held that ISRs are not eligible for administrative relief because their primary duty is to produce sales, Webb’s primary business is to produce sales, and ISRs are not predominantly engaged in administrative activities.

Webb argued that ISRs are covered by the administrative exemption because their primary duty is to provide solutions to Webb’s clients and that they help develop strategy and enjoy broad discretion and authority on important matters as part of their role.

In June 2023, the district court granted summary judgment in favor of the DOL on the relief issue as well as the overtime and recordkeeping claims. The district court concluded that the ISRs were not administratively exempt because they perform the very work that is the primary business purpose of FW Webb Co., namely the production of wholesale sales. The district court also found that the company failed to pay the affected workers additional wages for overtime since August 2018 and violated the record-keeping provisions of the FLSA.

In August 2023, the district court entered a consent judgment and stay order that preserved Webb’s right to appeal the district court’s summary judgment ruling on administrative relief and resolved all other outstanding issues in the case.

Webb appealed the summary judgment decision to the US Court of Appeals for the First Circuit in September 2023.

On August 1, 2024, the First Circuit affirmed the district court’s summary judgment decision, agreeing that the Webb ISRs are not exempt administrative employees under the FLSA. The First Circuit said that “the primary duties of affected employees are not “administrative” in any sense of the word.” Webb then petitioned the First Circuit to rehear the case en banc, which the First Circuit denied on September 4, 2024.

According to the DOL, Webb has filed about $4.2 million in back wages with the district court that the DOL will distribute to more than 700 employees if Webb no longer seeks any appellate review.

Based in Bedford, Massachusetts, FW Webb Co. sells HVAC and plumbing and heating materials, bathroom accessories, valves and pipe fittings and related equipment to contractors, industry professionals and homeowners. It has wholesale facilities in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.