The Salesperson Exemption in Employment Law: What Happens When Your Office is a Phone?
- Trudy Seeger & Tony Wong
- Jul 22
- 12 min read
Updated: Aug 4
In today’s fast-paced digital world, the traditional idea of an office is being turned on its head. Gone are the days when salespeople were confined to cubicles and landlines. Now, your entire office might fit in the palm of your hand—a smartphone that connects you to clients, coworkers, leads, and customers anytime, anywhere.
This shift has also sparked legal questions around employee classification and compensation, especially when it comes to the salesperson exemption in employment law. If you’re a mobile salesperson, working entirely through your phone or laptop, are you still exempt from overtime pay and minimum wage protections under labor laws? Or does this new digital dynamic change your rights?
Let’s unpack how employment laws handle mobile and remote sales jobs, what the "salesperson exemption" really means, and how the modern phone-based workforce is challenging traditional legal boundaries.
An article by Tony Wong (Canadian Content) and Trudy Seeger (everything else)
A. Independent Contractor vs. Employee
Before examining salesperson-specific exemptions under the ESA, it is essential to understand the fundamental distinction between an "employee" and an "independent contractor." This classification is paramount, as it determines the applicability of the ESA and other labour laws.
Take a look at the following articles for an in-depth discussion of this topic:
B. What is the Salesperson Exemption?
I. The Situation in USA
Under U.S. federal law governed by the Fair Labor Standards Act (FLSA)—certain workers are exempt from overtime pay requirements. One major category is the "outside salesperson."
Definition of Outside Salesperson (FLSA):
According to the FLSA, an employee qualifies as an “outside salesperson” if:
Their primary duty is making sales or obtaining orders/contracts for services or products; and
They are regularly engaged away from the employer’s place of business.
In simpler terms, these workers are out in the field meeting clients, attending sales pitches, and conducting business face-to-face. Because they manage their own time and often receive commission-based pay, they are exempt from standard wage and hour protections like overtime pay.
In Canada, employment law is governed provincially, which means rules for exemptions can vary from one province to another. That said, Canadian law tends to offer stronger employee protections compared to the U.S., making it crucial for employers to avoid vague classifications or exploitative terms in contracts.
II. The Situation for Federally Regulated Employee in Canada
Recent changes, effective June 20, 2024, in federal jurisdiction (under the Canada Labour Code) now presume that workers are employees unless the employer can prove otherwise. This legislative shift places the burden of proof on the employer to demonstrate independent contractor status. While this directly applies to federally regulated workplaces, it signals a broader legislative trend towards worker protection. This indicates a policy direction aimed at strengthening worker protections by placing the onus on employers to justify non-employee classifications. This shift makes it more challenging for entities to avoid statutory obligations merely through contractual labeling, compelling them to align the de facto working relationship with the declared status.
The ability to seek a ruling from the Canada Revenue Agency (CRA) on a worker's employment status for Canada Pension Plan (CPP) and Employment Insurance (EI) purposes using Form CPT1 highlights that worker classification has implications across multiple regulatory domains.
Take a look at the following article for an in-depth discussion of this topic:
III. The Situation in Ontario Under the ESA
While the Employment Standards Act (ESA) generally applies broadly, specific provisions within Ontario Regulation 285/01 carve out exemptions for certain types of salespersons, impacting their entitlement to various statutory protections. These exemptions are categorized based on the nature of their work and remuneration. The "Hospitality services and sales" category is where specific exemptions and special rules apply, affecting entitlements such as minimum wage, hours of work, overtime pay, public holidays, and vacation time.
a. Commissioned Travelling Salespersons
This extensive exemption is explicitly outlined in O. Reg. 285/01, section 2(1)(h). This exemption applies to salespersons, other than "route salespersons," who receive all or part of their remuneration as commissions. A critical criterion for this exemption is that their sales or offers to purchase goods or services are "normally made away from the employer's place of business". This clause is crucial and creates a significant distinction; it is not merely about being paid commission, but where the sales activities primarily occur. This prevents employers from simply labeling office-based sales staff as "commissioned salespersons" to bypass ESA obligations.
b. Commissioned Automobile Salespersons
This extensive exemption is explicitly outlined in O. Reg. 285/01, section 28. Unlike general commissioned travelling salespersons, commissioned automobile salespersons are generally entitled to minimum wage. However, they are subject to specific rules regarding their pay structure:
Their pay period cannot exceed one month.
The employer must ensure that at least minimum wage is paid for each pay period.
Employers are required to reconcile payments with earned commissions in each three-month reconciliation period (starting January 1, April 1, July 1, and October 1 annually) to ensure correct wages are paid.
Balances cannot be carried forward to the next reconciliation period; if the employer owes commission, it must be paid by the end of the current reconciliation period.
If a draw exceeded total commission earned, the employer cannot carry forward the loss and must still pay at least minimum wage, even if commissions earned were less than the draw.
c. Real Estate Salespersons and Brokers
This extensive exemption is explicitly outlined in O. Reg. 285/01, section 2(1)(g). Real estate salespersons and brokers, as defined in the Real Estate and Business Brokers Act, 2002, are largely exempt from many ESA provisions. Please note that the exemption applies narrowly to Real Estate ONLY, and DOES NOT apply to mortgage or insurance salespersons or brokers.
d. The "Route Salesperson" Distinction
The term "route salesperson" is crucial because, unlike other commissioned salespersons, they are not exempt from statutory holiday and vacation pay requirements. "Route salesperson" is NOT defined in O. Reg. 285/01, and is actually a common law concept.
Courts assess the level of employer control over several aspects of the salesperson's work to determine if they qualify as a "route salesperson". The less control an employer exerts, the less likely the employee will be classified as a route salesperson, making them ineligible for statutory holiday and vacation pay. Key factors considered in this judicial interpretation include:
Scheduling: The extent to which the employer dictates or influences when the salesperson works.
Sales Calls: Whether the employer dictates, monitors, or directs the specific sales calls made by the employee.
Overall Work Structure: The employer's influence on the general organization and execution of the salesperson's duties.
The substance of the working relationship, particularly the degree of employer control, is paramount. Employers cannot simply label an employee as a "commissioned salesperson" to bypass entitlements if the reality of their work contradicts the exemption criteria.
A relevant case illustrating this is Fiber Shield (Toronto) Ltd. v. Gail Bevilacqua (2024 CanLII 98805). In this case, the Ontario Labour Relations Board determined the employee was a route salesperson, despite some autonomy, because:
She was required to visit 12 major clients three to four times a year.
She was required to work at the office at least two to three days per week.
The employer monitored the movements of its sales staff.
These conditions indicated "significant employer control," leading to her entitlement to statutory holiday and vacation pay. This ruling highlights that even with commission-based pay, if the employer maintains significant control over the salesperson's activities, the exemption for commissioned travelling salespersons may not apply.
Table 1: Summary of ESA Exemptions for Salespersons in Ontario
Salesperson Category | Key Defining Criteria | ESA Entitlements Exempted From | ESA Entitlements Not Exempted From |
Commissioned Travelling Salespersons | Remuneration by commission; Sales normally made away from employer's place of business; Not a "route salesperson" | Minimum Wage, Hours of Work Limits, Daily Rest Periods, Time Off Between Shifts, Weekly/Bi-weekly Rest Periods, Eating Periods, Overtime Pay, Public Holidays/Pay, Vacation with Pay | None (if criteria met) |
Commissioned Automobile Salespersons | Sells automobiles; Remuneration by commission | Hours of Work Limits, Daily Rest Periods, Time Off Between Shifts, Weekly/Bi-weekly Rest Periods, Eating Periods, Overtime Pay, Public Holidays/Pay, Vacation with Pay (Implicitly, as special rules apply) | Minimum Wage (subject to reconciliation rules) |
Real Estate Salespersons and Brokers | Duly registered salesperson or broker under Real Estate and Business Brokers Act, 2002 | Minimum Wage, Hours of Work Limits, Daily Rest Periods, Time Off Between Shifts, Weekly/Bi-weekly Rest Periods, Eating Periods, Overtime Pay, Public Holidays/Pay, Vacation with Pay | None (if criteria met) |
Route Salespersons | Commissioned salesperson where employer exerts significant control over scheduling, sales calls, and overall work structure (e.g., specific routes, required office time, monitoring) | None (if criteria met), and depends on the level of control | Minimum Wage, Hours of Work Limits, Daily Rest Periods, Time Off Between Shifts, Weekly/Bi-weekly Rest Periods, Eating Periods, Overtime Pay, Public Holidays/Pay, Vacation with Pay |
Table 2: Factors Determining "Route Salesperson" Status
Factor | Indication of "Route Salesperson" Status | Source/Basis |
Employer Control over Scheduling | Employer dictates or significantly influences when the salesperson works. | Judicial interpretation (e.g., Fiber Shield case) |
Employer Control over Sales Calls | Employer dictates or monitors specific sales calls or client visits. | Judicial interpretation (e.g., Fiber Shield case) |
Employer Control over Overall Work Structure | Employer influences the general organization and execution of the salesperson's duties (e.g., required office presence, monitoring movements). | Judicial interpretation (e.g., Fiber Shield case) |
IV. Consequences of Misapplying Salesperson Exemptions or Misclassifying Workers
Misclassifying a worker, whether by incorrectly applying a salesperson exemption or by treating an employee as an independent contractor, is not a minor administrative oversight; it is considered a serious breach of law with significant ramifications for employers. The severity of potential penalties underscores the government's commitment to protecting worker rights and ensuring compliance with employment standards.
The financial penalties for misclassification can be substantial, including:
Back Pay Liabilities: Employers may be liable for unpaid wages, including minimum wage, overtime pay, vacation pay, and public holiday pay, that should have been provided under the ESA.
Statutory Deductions and Remittances: Misclassification can lead to the failure to withhold and remit necessary payroll taxes and contributions, such as Canada Pension Plan (CPP) contributions, Employment Insurance (EI) premiums, and income tax. Employers found to be non-compliant can face significant penalties, interest, and liability for both the employer and employee portions of these unremitted amounts.
Fines and Legal Costs: Governments levy financial penalties against organizations found guilty of misclassification. These fines can range from substantial amounts for unintentional errors to severe penalties for intentional violations, potentially including criminal charges and imprisonment for egregious cases. Employers may also face significant legal costs associated with defending against claims and lawsuits.
Take a look at the following article for an in-depth discussion of this topic:
Relevant Articles that You Might Be Interested In:
C. Mobile Sales: A Gray Area in Employment Law
Now that mobile technology allows people to perform virtually all job functions via smartphone, the "place of business" becomes increasingly ambiguous. If you're making sales calls, closing deals, managing your pipeline, and generating reports—all from your iPhone—are you still caught by the "salesperson" exemption?
This is where the line blurs.
Questions Employers and Legal Experts Face:
Is working from a mobile device considered “working away from the employer’s place of business”?
What if the salesperson never physically meets clients and does all outreach via phone, text, or email?
Should someone be exempt if they never leave their home, yet still actively sell products or services?
Legal Interpretation:
Courts typically lean on whether the employee’s core duties align with the intent of the exemption. If a person works remotely but doesn’t conduct in-person sales visits, they may not qualify for the exemption. In other words, phone-based or virtual sales may not meet the threshold.
D. The Role of Technology: When the Phone Becomes the Office
Sales technology has advanced rapidly, enabling employees to:
Run CRM systems via mobile apps
Conduct Zoom calls and product demos
Finalize e-contracts with digital signatures
Track KPIs and performance metrics in real time
Because of this, some workers spend 100% of their time working from their phone or laptop, often with no office visits or face-to-face interactions.
Pros of a Mobile Sales Setup:
Flexible schedules and remote work options
Lower costs for companies (no office space or travel)
Greater access to nationwide or global markets
Legal Risks for Employers:
Misclassification lawsuits if the employee is deemed to be an employee instead of an independent contractor
Penalties for unpaid overtime or back pay
Increased audits from labor departments
In some landmark legal cases, courts have ruled that remote phone-based salespeople are not covered under the "salesperson" exemption if they don’t engage in physical, off-site visits.
E. Case Study: Remote Sales Roles in Practice
Let’s say you’re working as a B2B software sales representative from home in Canada. Your employer pays you commission only, claiming you’re exempt from overtime because you’re a “salesperson.”
However:
You never travel to client sites.
You only contact leads via email, phone, and video chat.
You don’t have a company-provided workspace—your phone is your office.
In this case, a labor board might determine that you’re misclassified and therefore entitled to overtime, minimum wage, and possibly benefits.
In Ontario, the ESA (Employment Standards Act) acknowledges that an employee's home can be considered a workplace under certain circumstances, particularly when an employee performs work there. This recognition is solidified by the Working for Workers Act, 2023, which amended the ESA to include an employee's private residence as a "location at which an employer carries on business". This means that even when working from home, employees are entitled to certain protections and entitlements under the ESA.
F. Recommendations for Employers and Employees
For Employers:
Conduct a job audit to ensure the position truly qualifies as “exempt.”
Maintain clear documentation about the nature of duties and sales activities.
Update employment contracts to reflect the modern, digital working environment.
Consult a labor lawyer if unsure—misclassification can be costly.
For Employees:
Keep records of hours worked, especially if you’re commission-based and using your own phone.
Ask for written clarification on your job classification and exemption status.
Don’t assume you’re exempt just because you work independently.
Reach out to a labor standards office if you suspect your rights are being violated.
G. Is It Time to Rethink the Definition of Sales Work?
The line between traditional and digital workplaces is fading fast. From gig workers selling through apps to remote reps closing deals via smartphone, the way we define sales roles and employment law needs to evolve.
In a world where your phone is essentially your desk, computer, and office phone rolled into one, employment classifications must consider not just where work is done, but how.
F. The Sustainability Side: Selling and Upgrading Devices Responsibly
If your phone is truly your office, then keeping it functional, fast, and up to date is non-negotiable. But that doesn’t mean old phones should end up in the trash.
Many mobile sales professionals choose to sell their old phones to upgrade to the latest models without contributing to e-waste.
If you're considering a change, you can easily sell my phone through reputable trade-in platforms or certified refurbishers. These options offer cash-back or credit toward new devices while promoting sustainability.
And if you’re in the market for a reliable upgrade without breaking the bank, check out trusted sources for sell my phone montreal. These certified pre-owned phones are fully functional, cost-effective, and environmentally conscious.
G. Final Thoughts
As sales roles continue to adapt to the remote work revolution, the legal definitions surrounding employment status and labor rights must catch up. Phones may now serve as the modern salesperson’s primary tool—but that doesn’t mean all mobile workers fall under old exemptions.
Understanding your rights as a worker—or your obligations as an employer—can prevent costly mistakes and ensure fairness in the digital age of work. And if your phone is doing double duty as your office, make sure it’s up to the job—and that you're getting paid fairly for every call, text, or click you make.
The salesperson exception under Ontario's Employment Standards Act, 2000, as detailed in Ontario Regulation 285/01, introduces significant nuances to the general principles of employment law. The consequences of misclassification or misapplying these exemptions are severe, ranging from substantial financial penalties (including back pay, unremitted taxes, and fines) to significant legal liabilities and reputational damage. These risks are compounded by the interconnectedness of various regulatory bodies, where a misstep in one area can trigger liabilities across tax, employment standards, and workplace safety domains.
For employers, proactive and continuous due diligence in worker classification, coupled with seeking expert legal and HR guidance, is essential for compliance and risk mitigation. For salespersons, understanding that their actual working conditions dictate their rights, and knowing the avenues for seeking clarification or redress, empowers them to protect their entitlements. Navigating these intricate legal distinctions requires a thorough understanding of both the legislative text and its judicial interpretation, ensuring fair treatment for workers and legal certainty for businesses operating in Ontario.
You may want to consult with an experienced employment law firm, such as HTW Law, to learn about the DO and Don't in employment law context to ensure that all angles are covered as an employer.
On the other hands, as an employee you MUST be made aware of your legal entitlements in a sale of business / change of business ownership context to safeguard your employment rights.
Speaking with an employment lawyer who understands the nuances of employment law in Ontario in light of a change of ownership will go a long way. If you are in doubt, it's essential that you reach out for help as soon as possible right away.
Click here to contact HTW Law - Employment Lawyer for assistance and legal consultation.
Author Bio:
Trudy Seeger is a seasoned freelance content writer with extensive experience in crafting insightful articles for prominent legal blogs and websites. He specializes in creating content that simplifies complex legal topics, ranging from personal injury and employment law to contract disputes and intellectual property. With a keen focus on how legal developments impact businesses and individuals, Trudy has a proven track record of delivering well-researched, engaging, and informative legal content.
Staff Writer - Tony Wong
