[Congressional Record Volume 147, Number 77 (Wednesday, June 6, 2001)]
[Extensions of Remarks]
[Pages E1036-E1037]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          INTRODUCTION OF THE SALES INCENTIVE COMPENSATION ACT

                                 ______
                                 

                         HON. PATRICK J. TIBERI

                                of ohio

                    in the house of representatives

                        Wednesday, June 6, 2001

  Mr. TIBERI. Mr. Speaker, I am pleased today to join my colleague, 
Representative Rob Andrews from New Jersey, in the introduction of 
``The Sales Incentive Compensation Act.'' This is a very narrow, 
technical amendment to the Fair Labor Standards Act of 1938. The 
purpose of the legislation is to clarify the treatment of certain types 
of sales employees under the federal minimum wage and overtime 
requirements.
  Technological advances have dramatically changed the way in which 
sales employees perform their jobs. Companies now compete in a global 
market where many business transactions occur through use of the 
Internet, faxes and the telephone.
  This bill is specifically written for the so-called ``inside sales'' 
employee, who works primarily at the employer's facility, using the 
phone, fax and computer connections to communicate with non-retail 
customers. Many of these employees are professional sales people who 
deal with very sophisticated products or function as both a consultant 
and salesperson to customers, yet they are not covered by any of the 
current exemptions from minimum wage and overtime.
  The treatment of inside sales employees under the law has only become 
an issue in recent years, as the courts have reached differing 
conclusions about whether inside sales employees qualify for any of the 
current exemptions. Since many of these employees are covered by a 40 
hour workweek, current law has the unintended effect of placing a 
ceiling on their income because they do not have the flexibility or the 
choice to work additional hours in order to generate more sales and 
earn more commissions.
  The Sales Incentive Compensation Act takes into account the changes 
that have occurred in the workplace since the law was enacted in 1938. 
The legislation would update the law to more accurately reflect the 
duties and functions of inside sales employees. By doing this, 
employees would have the opportunity to increase their wages.
  In order to qualify for this exemption, an employee must meet the 
requirements in the bill that outline the specific functions and duties 
of the job. An employee would have to have a detailed understanding of 
the customer's needs and specialized or technical knowledge about the 
products or services being sold. The employee must sell predominately 
to repeat customers--in other words, the exemption would not apply to 
telemarketers or sales employees who primarily ``cold call'' customers. 
In addition, the employee must have a detailed understanding of the 
customer's needs.
  The legislation ensures protections for the employee in that it 
requires the employer to pay a minimum amount of base compensation. The 
remainder of the employee's compensation would be derived from 
commissions on sales. So employees would be provided with a base 
salary, an additional amount of guaranteed commissions, and continued 
incentives for increased earnings. Employees who choose to work longer 
hours in order to

[[Page E1037]]

make more sales are therefore guaranteed to have financial 
reimbursement for the additional hours in the form of commissions.
  The Sales Incentive Compensation Act is carefully crafted bipartisan 
legislation that many Members supported during the last Congress when 
it was considered and passed by the House. I urge my colleagues to 
support expanding worker opportunity and providing sensible reform to a 
1938 law.

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