Homebuilder’s agent challenges industry pay program - Houston Chronicle

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A lawsuit filed in the Southern District of Texas challenges the way some homebuilders pay their sales representatives.

Those representatives, who show model homes and sample options such as carpet and paint to prospective buyers, are often paid solely on sales commissions, without overtime, just like real estate agents who sell existing homes. But Adenikke Sanni, a Beazer Homes sales counselor living in Fort Bend County, alleges in the suit that the nature of her work qualifies her for overtime guaranteed by federal law.

It is one of a number of suits made by home sales counselors in recent years; another, against KB Home, ended in a $3.4 million settlement.

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The argument hinges on whether the sales representatives are exempt from the Fair Labor Standards Act, which guarantees minimum wage and overtime. When the law was created in 1938, explained local wage-and-hour attorney Rex Burch, it included an exemption for outside salespeople, such as door-to-door salesmen.

“The thinking was… the employer is not there, they don’t know how many hours they’re working, they have no way to control how much they’re working,” he said. In such situations, a commission-only system is allowed without guaranteeing minimum wage or overtime.

But in her suit, Sanni lays out the argument that she shouldn’t qualify for such an exemption. She says there was no requirement for her or other sales counselors to leave the model homes they use as their sales offices in order to conduct out-of-the-office sales — something that would be needed to be considered an outside salesperson. What’s more, she alleges it was a job duty to always be present at the model home to welcome walk-ins and answer phone calls.

Beazer Homes, based in Atlanta, declined to comment. It has a dozen projects in the Houston area, with prices ranging from the low $200,000s to more than $600,000.

If a judge rules that Beazer Homes sales counselors are not exempt from the Fair Labor Standards Act, the homebuilder could find itself on the hook for overtime compensation. Nonexempt employees would have to be guaranteed minimum wage, even in weeks when they made no commission, plus be paid any overtime earned.

For homebuilders to properly claim exemptions, Burch explained, they can give employees the freedom to leave the office to make sales, which also gives them greater control over their schedules.

Generally, he said, labor laws don’t require drastic changes in pay. But they do require consideration of the hours an employee works and the weekly pay they’re able to earn. “What the FLSA does is it makes the employer pay attention to its workers,” he said.

rebecca.schuetz@chron.com;

twitter.com/raschuetz

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