Espinoza v. Warehouse Demo Servs., Inc., 86 Cal. App. 5th 1184 (2022)

Georgina Espinoza, an employee of Warehouse Demo Services (“Warehouse”), worked in a Costco and performed demonstrations of products. Warehouse did not lease the space, but instead collects floor space on behalf of the companies whose products are demonstrated and then remits payment on their behalf to Costco. Espinoza brought a class action complaint alleging numerous Labor Code violations. Warehouse, however, argued that Espinoza fell within the outside salesperson exemption, which exempts workers from statutory overtime, minimum wage, and meal and rest break requirements, because she was engaged in selling outside of Warehouse’s place of business. The trial court held that the Espinoza was covered by the exemption because Warehouse did not own or lease the site at which Espinoza worked. However, the Court of Appeal reversed, holding that the correct inquiry is the extent to which the employer maintains control or supervision of the employee’s hours and working conditions. The Court of Appeal held that the exemption reflected the fact that such outside salespersons generally control their hours and are paid by commission. In “stark contrast,” Espinoza was assigned to work in a small, designated area at a fixed site; she was required to clock in and out for each shift; and she could not leave the area during her shift unless another employee relieved her, which does not comport with the purpose of the exemption.