The opinion of the court was delivered by: Honorable Mikel H. Williams United States Magistrate Judge
AMENDED MEMORANDUM DECISION AND ORDER*fn1
Currently pending before the Court for its consideration is Defendant's Motion for Summary Judgment (Dkt. 37), filed December 17, 2010.
Plaintiffs Marisa Lane and Carrieanne Kowalczyk (collectively, "Plaintiffs") filed this lawsuit against Defendant Humana Marketpoint, Inc. ("Humana") alleging violation of the Fair Labor Standards Act (FLSA) for failure to provide overtime compensation for hours worked in excess of forty (40) hours in a week and also alleging violation of the Idaho Wage Laws for failure to pay wages due and owing.
Humana is a health benefits company that sells health benefit and insurance products, such as Medicare. Plaintiffs were hired by Humana in 2005 as Sales Representatives.*fn2 Plaintiff Kowalczyk began employment in September 2005 and Plaintiff Lane in October 2005. Both Plaintiffs' employment with Humana ceased in February 2009. Plaintiffs were compensated in the form of a base salary, plus commission on their sales. In 2007, Plaintiff Lane's commissions represented 68% of her $65,682.98 in earnings and in 2008, commissions represented 65% of her $74,268.01 in earnings. For Plaintiff Kowalczyk, commissions represented 69% of her $67,678.41 in earnings in 2007 and 68% of her $78,157.21 in earnings in 2008.*fn3 As part of their commission, Plaintiffs received a retention commission each month for every customer who continued in the plan.
While they worked at Humana, Plaintiffs primarily sold Humana's Medicare products. Due to the general enrollment season for this product, the busiest time for sales was between November 15 and March 31. However, Sales Representative could sell Medicare products all year to individuals who were "aging in" to Medicare eligibility, moving into a new geographic area, or had otherwise become newly eligible. Plaintiffs were also required to sell other products year-round, such as life insurance, long-term care, annuities, and indemnity plans.
Prior to their employment with Humana, Plaintiff Lane held sales positions for five years and Plaintiff Kowalczyk sold insurance products and held various sales positions earlier in her career. Both Plaintiffs were licensed to sell insurance products prior to their hire by Humana.
When Plaintiffs were first hired in 2005, they reported directly to sales manager Julia Fenwick. In July 2007, Troy Buss replaced Ms. Fenwick as sales manager for western Idaho and eastern Oregon and became Plaintiffs' direct supervisor. Upon their hire, Plaintiffs attended a three-week training course on selling Defendant's products, including training on sales techniques. In addition to this initial training, they attended several sales training meetings throughout their employment. The contents of these trainings included: product requirements and information, maintaining the book of clients and not losing clients, conducting grassroots marketing, developing trust and rapport with customers and prospects, recognizing different client personality types to be able to best help them find the products that best fit their needs, and answering questions and objections from prospects with respect to new products. Plaintiffs were also required to engage in continuing education to maintain their licenses to sell insurance. In conjunction with their sales training throughout their employment with Humana, Plaintiffs also received customer service training. (Lane Dep. at 115; Kowalczyk Dep. at 62-65.)
Plaintiffs also attended weekly sales meetings with their Sales Manager. At these meetings, attended by other Sales Representatives, they discussed issues such as new product rollouts, sales numbers, any issues coming up, and trends in the area.
Plaintiffs were provided with a wide assortment of "sales tools" including brochures, pens and giveaways. For work equipment, they were provided a laptop computer, a printer, and a projector and screen. They were also reimbursed for numerous sales activities, including the purchase of meals for seminars and items for health fairs. They were given a car allowance of $350 per month because their positions required them to travel. Humana also provided a software program in order to assign sales presentations and seminars to its Sales Representatives and to provide them with a tool in which to track and schedule sales-related activities, including maintaining a database of their customers, creating mass mailings, and managing their prospects.
As part of their duties, Plaintiffs sold Humana's insurance products by conducting individual presentations to potential customers. Each presentation lasted two to three hours. The public location of the presentations varied, often at a customer's home, a sales seminar or a location such as a coffee shop. They never occurred at Plaintiffs' homes, which operated as their offices. Plaintiffs also conducted sales presentations in group settings, called seminars. These seminars were sales presentations to a group that could be as large as 30 to 50 customers, depending on the venue. The seminars often took place in restaurant settings, hotel meeting rooms, and other public locations.
The sale of Medicare products is regulated by the Centers for Medicare and Medicaid Services (CMS), part of the United States Department of Health and Human Services. The CMS classifies events as either sales events or educational events. Plaintiffs' Sales Manager, Troy Buss, testified that in his experience, Humana has only done sales events. At sales events, Sales Representatives can talk about the product, hand out their business cards, pass out flyers, and set up sales appointments.
There are two subsets of sales seminars that were also reported to CMS. One type is the New Member Orientation (NMO). The purpose of this type of seminar is to reacquaint the customers with the program for which they had signed up and be available as a point of contact within the community for people who may have questions in the future. These NMOs were instrumental in retaining customers in the programs. Additionally, sales prospects often attended the NMO seminars with their friends who were already customers. Plaintiff Kowalczyk testified that she would make sales to these prospects at a NMO from time to time.
Another subset of seminars was the Annual Notification of Change (ANOC). These would take place in October to alert existing customers about changes in the product for the upcoming year. Then, beginning on November 15, customers had the option to renew or not renew with Humana. Plaintiffs attended these seminars with their customers which sometimes resulted in follow-up meetings if the customer was considering switching plans. When an existing customer switched plans, the Sales Representative would receive the same commission for that sale as he or she would for bringing in a new customer.
Plaintiffs also engaged in other marketing efforts, such as going to doctors' offices and senior centers so that if any issues arose, the Sales Representative would be the point of contact. Plaintiff Kowalczyk testified to marketing through doctors' offices and pharmacies. Plaintiffs also attended community events and ice cream socials to prospect for potential sales customers. Even during the times of year when Plaintiffs were not allowed to make sales to the general population, they were encouraged to be out soliciting and keeping their leads. (Fenwick Dep. (Dkt. 37-7), attached as Ex. 4 to Coleman Aff. at 53-54.) Plaintiffs also used mailings and other literature as part of their marketing efforts. These items would educate their customers and prospects about new products, invite them to a community event, or ask them to attend a seminar.
Both Plaintiffs were required to keep hours at Walmart during the week, for approximately three or four hours a day.*fn4 These hours were fixed and mandatory. While at Walmart, the Sales Representatives could give a sale presentation if the environment was conducive to that or schedule appointments to give presentations to potential customers in their homes. Also during this time, Plaintiffs were required to deal with all customer issues that arose, including those of other agents' customers. After their Walmart hours, Plaintiffs would conduct sales appointments, meet with existing customers, and do marketing. Plaintiffs would also work on Saturdays, doing sales presentations in customer's homes or at coffee shops and attending ice cream socials or other public outreach events.
Plaintiff Kowalczyk testified that during the peak sales season, she spent approximately 50 percent of her time doing sales presentations, 5 percent of her time completing applications for new sales, 10 to 15 percent on marketing efforts, and 30 to 35 percent assisting customers with service issues. (Kowalczyk Dep. at 96-97.) She testified that approximately 90 percent of the customer service work was done for her own customers. In the off-peak season, Plaintiff Kowalczyk testified that she spent approximately 25 to 30 percent of her time doing sales presentations. The rest of the time she characterized as "customer service." Included in that time were her Walmart hours, which resulted in referrals, and her marketing efforts. (Kowalczyk Dep. at 94-97.)
Both Plaintiffs used their homes as their offices and were not required to check in at Humana's regional office. They were not required to be available during any specific time, other than scheduled events and meetings. Sales Representatives worked on their own for their sales work and sales presentations, other than the occasional ride-along with their Sales Manager for feedback. Their supervisors would, however, deliver leads to Plaintiffs, schedule and track their appointments and seminars, and monitor their daily reporting. The Sales Manager would engage in required weekly meeting with their Sales Representatives and required specific time-frames for responding to calls and e-mails. Plaintiffs' former Sales Manager, Julia Fenwick, testified that if a Sales Representative met their sales quota for the week, it did not matter how much they worked for the rest of the week. (Fenwick Dep. at 30-31.) The Sales Representatives had several performance measures, including sales activities and timely submission of sales applications. Responding to customer service issues was not a performance measure and not monitored, with the exception of customer complaints. Plaintiffs' most recent supervisor, Troy Buss, monitored the Walmart hours and would require a ...