A major pest control company recently learned a tough lesson about the difference between sales activities and services, as well as how much misclassifying employees as overtime exempt can cost.
Here’s what happened: Terminix allegedly required trainees, who perform termite inspections, to work long hours – especially during its “swarm season” in late spring/early summer – without the overtime, rest breaks and meal periods that state law requires. The company claimed that its termite inspections are sales activities exempt from overtime. But a judge ruled the inspections were actually services and trainees were owed overtime payments.
In the end, Terminix settled the lawsuit for $1.5 million and updated its policy to classify trainees as overtime-eligible.
