Plumbing Supply Firm Loses Appeal Over Sales Reps’ Overtime Pay

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

The 1st Circuit Court of Appeals denied F.W. Webb’s request for a new hearing. As a result, the U.S. Department of Labor (DOL) which sued the firm in 2020, will recover $4.2 million in overtime back wages from the plumbing supply firm for more than 700 inside sales representatives of 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 failing to pay them overtime premiums for their hours worked over 40 hours in a workweek. The department also alleged the employer failed to keep adequate and accurate records of hours worked.

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 and that they help develop strategy, and enjoy broad discretion and authority on matters of significance as part of their role.

In June 2023, the district court granted summary judgment in favor of DOL on the exemption 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 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.

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 decision on the administrative exemption and resolved all other outstanding issues in the case.

Webb appealed the summary judgment decision to the U.S. Court of Appeals for the 1st Circuit in September 2023.

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

According to DOL, Webb has deposited approximately $4.2 million in back wages with the district court that DOL will distribute to the more than 700 employees in the event that Webb does not seek any further appellate review.

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 contractors, industry professionals and homeowners. It has wholesale establishments in Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont.