No. 23–1793

JULIE A. SU, Acting Secretary of Labor, United States Department of Labor,

Plaintiff, Appellee,

v.

F.W. WEBB COMPANY,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Angel Kelley, U.S. District Judge]

Before

Barron, Chief Judge, Selya and Kayatta, Circuit Judges.

Rachel Cowen, with whom James M. Nicholas, Henry Leaman, and McDermott Will & Emery LLP were on brief, for appellant.

Joseph E. Abboud, Attorney, U.S. Department of Labor, Office of the Solicitor, with whom Seema Nanda, Solicitor of Labor, Jennifer S. Brand, Associate Solicitor, and Rachel Goldberg, Counsel for Appellate Litigation, were on brief, for appellee.

August 1, 2024 KAYATTA, Circuit Judge. The Acting Secretary of Labor brought this action against F.W. Webb Company ("Webb"), an industrial product wholesaler, alleging that Webb misclassified its Inside Sales Representatives ("ISRs") as exempt administrative employees in violation of the Fair Labor Standards Act's overtime and recordkeeping requirements. The district court granted judgment to the Secretary on both claims, finding that the ISRs did not qualify for the exemption because their "primary duty" is not "directly related to the management or general business operations" of Webb or its customers. See 29 C.F.R. § 541.200(a)(2). For the following reasons, we are unpersuaded by Webb's appeal from that judgment.

I.

A.

Webb is a wholesale distributor of engineering and construction products including plumbing, heating, cooling, and PVF (pipes, valves, and fittings) equipment and fixtures. Webb's principal business is to make "wholesale sales of those products to contractors in various industries, government organizations, institutions such as universities and hospitals, industrial buyers, and other customers who work in construction, building maintenance, and infrastructure." Su v. F.W. Webb Co., 677 F. Supp. 3d 7, 11–12 (D. Mass. 2023). Webb generates its revenue from three categories of employees "who directly sell the products

- 2 - to customers": ISRs, outside salespersons, and counter salespersons. Id. at 12.

Webb's principal office is in Bedford, Massachusetts, but it also operates more than a hundred storefront locations across nine states in New England and the mid-Atlantic. Id. During the relevant period of the Secretary's investigation, Webb employed over 600 ISRs across those nine states. Id. Webb employs far more ISRs than it does outside or counter salespersons, which number around 300–350 and 100 respectively. During the period in question, Webb classified all of its ISRs as administrative employees exempt from the Fair Labor Standards Act's ("FLSA") overtime requirements, and at least some ISRs worked over forty hours during some workweeks without receiving FLSA overtime premiums. Id.

It is uncontested that Webb generates revenue from its ISRs though the sales transactions they complete with customers. Id. It is also uncontested that the ISRs directly interact with customers throughout the sales process, from a customer's initial contact to the delivery of purchas