A federal appeals court has upheld a decision that F.W. Webb Co. wrongly exempted inside sales representatives from overtime pay. The ruling, issued on August 1, 2024, by the U.S. Court of Appeals for the First Circuit, affirms a summary judgment from the U.S. District Court for the District of Massachusetts.
The case originated in July 2020 when the U.S. Department of Labor’s Wage and Hour Division conducted an investigation into F.W. Webb Co., a wholesale distributor based in Bedford, MA. The department alleged that Webb violated the Fair Labor Standards Act (FLSA) by classifying its inside sales representatives as exempt administrative employees and failing to pay them overtime premiums for hours worked beyond 40 hours per week. Additionally, it was claimed that Webb did not maintain adequate and accurate records of hours worked.
In June 2023, the district court ruled in favor of the Department of Labor on both the exemption issue and claims related to overtime and recordkeeping. By August 2023, a consent judgment was entered that allowed Webb to appeal while resolving other outstanding issues in the case.
On appeal, the First Circuit concluded that Webb’s inside sales representatives could not be considered administrative employees under FLSA guidelines because their primary duty was making wholesale sales—a business function rather than an administrative one. The court stated that these duties were not "administrative" in any sense.
Webb petitioned for a rehearing en banc by the First Circuit, which was denied on September 4, 2024. Approximately $4.2 million in back wages has been deposited with the district court to be distributed to over 700 affected employees if no further appellate review is sought by Webb.
“This decision solidifies the law in the 1st Circuit governing when employees may be administratively exempt from the Fair Labor Standards Act’s minimum wage and overtime protections,” said Regional Solicitor Maia S. Fisher in Boston. “Through this case and our litigation in the Unitil case, we have successfully obtained decisions clarifying the 1st Circuit law regarding the FLSA’s administrative exemption.”
Wage and Hour Division Regional Administrator Mark Watson Jr., based in Philadelphia, added: “Employers should know that the U.S. Department of Labor takes very seriously the incorrect classification of employees as exempt from the Fair Labor Standards Act’s wage requirements because such actions deny employees the wages to which they have a legal right.”
