Direct Selling Association Supports H.R. 3522: The Preserving Direct Seller Independence Act

The Fair Labor Standards Act (FLSA) should be amended to more clearly define direct sellers as independent contractors for these individuals to have the freedom and flexibility to continue engaging with this viable dynamic retail channel.

Recent class action and wage and hour lawsuits, have been filed under the FLSA against companies, including gig/sharing economy companies that are utilizing independent contractors in new and different ways. 

Direct sellers currently rely on the outside sales exemption under FLSA to be defined as independent contractors since these individuals sell products and services away from the customer’s home and other non-retail locations. 

The language relied on by direct sellers is not perfect and could be misinterpreted by courts as not applicable to these transactions. A clearer standard is needed for direct sellers. 

For over thirty-five years, the Internal Revenue Service Code (26 U.S.C. § 3508) has defined direct sellers as statutory non-employees. Similar language is needed under FLSA to provide entrepreneurs with the same clarity and protection. 

Adding specific language under FLSA is not new. The statute currently contains thirteen classes as exempt. By incorporating 26 U.S.C. § 3508 by reference into FLSA, direct sellers can be the fourteenth.