Plumbing Supply Firm Fights Sales Reps’ Court Award of $3.2M Overtime Wages

The U.S. Department of Labor expects to recover more than $3.2 million in overtime back wages for more than 700 inside sales representatives of the F.W. Webb plumbing supply company.

DOL has accused F.W. Webb of misclassifying its inside sales reps, denying them overtime pay, and not keeping records of hours worked.

The expectation of recovery follows a federal district court ruling on June 16 in DOL’s favor but a consent order implementing that win has been stayed pending the company’s appeal of the court ruling,

In its case, the DOL argued that the inside sales representatives (ISRs) for the wholesale plumbing and heating supply company are not exempt from overtime pay like insurance company marketing reps or Harley-Davidson customer satisfaction specialists because they are primarily involved in product sales, which is F.W. Webb’s primary purpose.

Under the federal Fair Labor Standards Act, when employees work more than 40 hours during the workweek, their employer is obligated to pay them at a rate not less than one and one-half times their regular rate. The FLSA’s overtime requirements have exemptions, including for employees in a primarily administrative role. To satisfy this exemption an employer must prove, among other things, that the employee’s primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers. When an employee is covered by the FLSA’s overtime requirements, the employer is obligated to keep records tracking the hours that employee spent working.

DOL argued that the ISRs are ineligible for the administrative exemption because their primary duty is to produce sales, Webb’s principal business is producing sales, and the ISRs are not predominately engaged in administrative work.

Webb argued that the ISRs are covered under the administrative exemption because their primary duty is providing solutions to Webb’s customers, they help develop strategy, and they enjoy broad discretion and authority on matters of significance as part of their role.

On June 16, the federal district court in Massachusetts concluded on summary judgment that the Bedford, Massachusetts-based company misclassified the employees as administrative employees. The district court concluded that the ISRs were not administratively exempt because they perform the very work that is F. W. Webb Co.’s primary business purpose, namely producing wholesale sales. The district court also found that the company had failed to pay the affected workers overtime back wages since August 2018 and violated recordkeeping provisions of the FLSA.

After the federal court ruling, the parties agreed to resolve the remainder of the case via a consent judgment. On Aug. 24, 2023, the court entered a consent order incorporating the summary judgment decision. In addition to payment of the back wages owed from Aug. 4, 2018, through June 30, 2023, the order prohibits F.W. Webb Co. from future violations of the FLSA’s overtime, recordkeeping and anti-retaliation provisions. It also forbids the company from retaliating unlawfully against employees who exercise their rights to raise wage complaints with the department.

Under the consent judgment, F.W. Webb Co. preserved the right to appeal the court’s summary judgment decision. It.is appealing to the U.S. Court of Appeals for the First Circuit.

The court also stayed certain aspects of the consent judgment, including the requirement that Webb pay any overtime wages during the pendency of any appeal. Webb has paid the more than $3.2 million in overtime back wages owed and will pay future overtime wages that accrue during the period of any appeal into an account with the court. Those wages will be distributed to employees if Webb’s appeal is unsuccessful.

The court in June said the courts must examine the employee’s primary duty. The primary duty is the main, or most important, duty, that the employee performs and “generally means that the employee spends at least 50% of his or her time performing the duty.” To meet that requirement, “an employee must perform work directly related to assisting with the running or servicing of the business, as distinguished, for example, from working on a manufacturing production line or selling a product in a retail or service establishment.”

Following this analysis, the court determined that the ISRs’ duties were essentially selling products to customers; sales, which is the company’s main purpose; they were evaluated based on their sales; and the job description and title cited sales. It agreed with DOL that F.W. Webb misclassified its inside sales reps, denied them overtime pay, and did not keep records of hours worked.

The court let a fourth claim, one alleging the company retaliated against employees who spoke with DOL investigators, survive for a jury to decide based on the evidence.

“Employees have a right to be paid their wages, to seek those wages and cooperate with investigators without fear of employer retaliation. The court’s summary judgment decision upholds the FLSA’s protections against employers misapplying the law’s administrative exemption to avoid paying overtime to employees and now opens the way for more than 700 F.W. Webb inside sales representatives to receive their hard-earned overtime wages,” said Wage and Hour Division Regional Administrator Mark Watson Jr. in Philadelphia.

Based in Bedford, Massachusetts, F.W. Webb Co. sells HVAC and plumbing and heating supplies, bathroom fixtures, pipe valves and fittings, and related equipment to contactors, industry professionals and homeowners. It has wholesale establishments located in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.

Topics Massachusetts