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Not Covered by Overtime Pay: Field Workers

Greg is an author of two self-published titles on Amazon, and an avid follower of the NBA.

Paying workers for overtime work during the pandemic has been tricky.

Paying workers for overtime work during the pandemic has been tricky.

There used to be a time when field workers thrived. We know this time as the era of door-to-door salesmen, workers wearing coat and tie knocking on the door of people’s homes. They would pitch a product or service they were selling, and if interested, the homeowner would even let them inside to explain further what they were offering.

This mode of selling was pretty common before the internet age – even the founder of Starbucks was himself a door-to-door salesman for the company Xerox. This I read in Howard Schultz book, From the Ground Up, a lengthy memoir of how the long-time CEO grew up and how he came to transform Starbucks to the company it is today.

Starbucks history lessons aside, field workers are often seen as the epitome of hustle culture, where one’s livelihood depends a lot on one’s personal drive. These field salesmen usually earned their salary solely via commission, and getting rejected by customers along the way was part of the job. Today, door-to-door salesmen still exist, but surely not in the same numbers they used to. Can you imagine door-to-door salesmen thriving in an age where we especially don’t want to physically meet strangers, for fear of Covid?

In the Philippines, like in some other countries, there are some field workers who are paid a basic salary on top of their commission. While it’s not required in every work arrangement, the basic salary would at least ensure that the worker had a living wage and wasn’t completely relying on making a sale just to put food on the table. And so, what if under this arrangement, the field worker’s hours of work exceeded the normal eight hours? Should the employer pay the field worker for overtime, given that the worker ‘hustled’ and went beyond his usual hours of work to drive more revenue for the business? Let’s examine the case of San Miguel Brewery vs. Democratic Labor Organization (G.R. No. L-18353).

San Miguel Brewery v. Democratic Labor Organization

I find it rare to read a relevant labor law case that pre-dates the Labor Code of the Philippines, but such was this case filed by the labor organization Democratic Labor Association. In the organization’s complaint, they embodied twelve demands. One of those demands was regarding overtime compensation for their field salesmen.

These field salesmen were not exempt from the morning roll call, but they didn’t have any daily time cards. After their roll-call, they leave the company’s plant to go on their sales routes for either soft drinks trucks or for beer trucks.

(They’re the Philippines’ mini version of a long-haul trucker, except that the hauls are often short and the products are limited to beer and/or soft drinks).

These salesmen’s routes were so planned that they could normally complete it within 8 hours, or that the employees could make their sales on their routes variable, where sometimes the route was done within 6 hours or 7, or more. Sometimes, when the sales are completed, they go back to the plant to reload on beer or soft drinks and make another round of sales. These employees receive monthly salaries and sales commissions in variable amounts.

The contention of the company, San Miguel Brewery, was that since the employees were paid a commission on the sales outside of the required 8 hours besides the fixed salary that was paid to them, the commission they’re paid already takes the place of overtime compensation. That their situation can be likened to an employee who is paid on piece-work, “pakiao”, or commission basis, which was expressly excluded from the operation of the Eight Hour Labor Law.

Should San Miguel’s field salesmen still be paid for overtime, on top of their basic salary plus commission? Hopefully the Eight Hour Labor Law can shed some light on this issue.

The Eight-Hour Labor Law was enacted not only to safeguard the health and welfare of the worker, but in a way to minimize unemployment

The Eight-Hour Labor Law was enacted not only to safeguard the health and welfare of the worker, but in a way to minimize unemployment

The Eight-Hour Labor Law

The Eight-Hour Labor Law, which is currently enshrined under Art. 83 of the Labor Code, ‘Normal Hours of Work’, was enacted not only to safeguard the health and welfare of the worker, but in a way to minimize unemployment by forcing employers, in cases where more than 8-hour operation is necessary, to utilize different shifts of laborers or employees working only for 8 hours each.

This means that the crafters of this law intended to have this law enforced for the promotion of employment and to create more jobs in our jurisdiction. And for companies to not rely on as few people as possible (although this is directly more profitable to do so) to get the job done.

But the Eight Hour Labor Law unfortunately doesn’t make clear if field workers should be paid for overtime. Let’s see how the Court ruled in the case of San Miguel Brewery below.

Why Field Workers Are Not Covered

Old as this case may be, it continues to hold as a legal precedent. The Supreme Court ruled that the field workers in this case were NOT entitled to overtime compensation, citing an American case, Jewel Tea Co. v. Williams:

“The reasons for excluding an outside salesman are fairly apparent. Such salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compensation. He works away from his employer’s place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day.”

Further, the Court cited the Director of the Bureau of Labor Standards:

“Moreover, when a fieldman receives a regular monthly salary plus commission on percentage basis of his sales, it is also the established policy of the Office to consider his commission as payment for the extra time he renders in excess of eight hours, thereby classifying him as if he were on a piecework basis, and therefore, technically speaking, he is not subject to the Eight-Hour Labor Law.”

Wow. Before I read this case, I didn't realize that field workers could be considered ‘piece workers.’

The Supreme Court denied the claim for overtime pay, even if some of the workers went beyond the normal eight hours of work – because they were exempt from the Eight-Hour Labor Law, being piece workers themselves. This despite reporting daily to their office at about the same time for the morning roll call, and returning there once the routes were completed.

Should All Remote Workers be Paid for Overtime?

Pre-pandemic, I never would have given much attention to this case. But some of the excerpts of the cases the Supreme Court cited struck a nerve, especially since a huge portion of the workforce now works remotely.

Remote workers may not generally be called ‘Field workers’ – the former is probably not a blanket term to cover all workers who work outside of their employer’s place of business.

But think of it this way – employees working from home may not be physically working inside their employer’s place of business; however, virtually, in a way, they are. The virtual tools and overall environment that’s brought into the home of the remote worker nowadays is often comprised of a closed ecosystem where only employees, and sometimes customers, can have access to. Currently working from home myself, whenever I open my work laptop and get sucked into the company’s environment, I feel like I am inside my employer’s place of business – because the business is now run remotely.

The offices may still exist somewhere and definitely still appear on Google Maps, but most of the business is not really run inside these offices.

This is why overtime compensation in the age of remote work has become trickier. Unless your role is similar to that of a customer service agent or that of a technical support representative where you’re expected to be on the phone, or be reachable for a predetermined duration, it becomes very difficult and confusing to identify what constitutes ‘working beyond the normal hours of work.’

As burnout and overwork continue to plague the industry, along with it comes a difficulty to appropriately compensate for extra hours.

Comments

Cynthia from Philippines on September 21, 2021:

Thanks for sharing

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