Labor Law/New Overtime Regulations: Professional Exemption for Paralegals?

Factual Questions
1

The new Dept. of Labor regulations regarding eligibility for exemption from overtime pay will become effective on Aug. 23rd, and they include a rather substantial revamping of the definition of who is considered an exempt professional. I’m a paralegal, and the management of my firm has been in quite a tizzy trying to figure out whether they need to revamp their overtime policies to comply with the new regulations, and if so, how. We’re having a big meeting about it tomorrow morning, and it could get innnnteresting, to say the least.

(Others among you who are currently classified as exempt at your current jobs may find this interesting, too: the whole fact sheet about the new regs is online at http://www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm)

Currently paralegals at my firm are considered exempt, and we put in significant amounts of unpaid overtime. However, practically all the other mainstream, reputable firms in my firm’s legal specialty either pay overtime to paralegals, or paralegals actually work something resembling 9-5.

The crux of the issue, from my brief and not terribly well-informed reading of the new regulations, has to do with whether paralegals can legitimately be classified as “learned professionals.” The definition, from the Dept. of Labor website:

http://www.dol.gov/esa/regs/compliance/whd/fairpay/fs17d_professional.htm
“Learned Professional Exemption
To qualify for the learned professional employee exemption, all of the following tests must be met:
§ The employee must be compensated on a salary or fee basis (as defined in the regulations) at a rate not less than $455 per week;
§ The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
§ The advanced knowledge must be in a field of science or learning; and
§ The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction. “

Now we do make more than $455 a week, but the remaining prongs of the test are awfully fuzzy.

-On one hand, as paralegals, we are not allowed to operate without the close oversight of an attorney, and all our work must be reviewed and approved by an attorney before it goes anywhere. We are not allowed to make legal judgments independently. However, we do keep the cases moving and balance workloads, that sort of thing. A couple of very senior paralegals are, in effect, managing client accounts, and could conceivably fall under a different overtime exemption (the administrative/managerial one).

-On the other hand, I’d like to think the work I do requires the use of a brain, and possibly even some intellect or judgment here and there.

-The paralegal field is one which is in the process of professionalizing; there are paralegals with no post-secondary education who have learned on the job, there are ones who are putting themselves through law school, there are ones with unrelated or semi-related degrees (like yours truly; yay liberal arts!), and there are ones with what is becoming the standard, which is a bachelor’s degree in paralegal studies or a bachelor’s in something else plus a post-bachelor’s paralegal certificate. Occasionally you’ll find someone with a foreign law degree who hasn’t managed to be admitted to the bar in the U.S. In my office, we have everything ranging from someone with no degree but lots of experience and who is really sharp, to someone with a Ph.D. in linguistics. So there is no single educational path that leads to my position, or to many other paralegal positions at other firms or within other companies.

I’d tend to think we should not be classified as exempt, but I suspect management would disagree. What do you think, and what is your reasoning? Case law citations would be greatly appreciated.

2

[bump]

Well, it wasn’t as interesting as I expected – basically they just said that the new regs were taking effect on Monday, but that the firm is still consulting with outside employment counsel to figure out how to handle the overtime issue, but that it was likely that at least some of us would be making some more money. (Our network administrator was there, too, as there are some very clear overtime requirements for certain IT employees.) Pending further developments, on Monday we are supposed to start tracking our hours, which we’ve never had to do before. (Our practice bills on a per - project basis, not hourly, so we just stay until our stuff is done.)

I expect a bit of dislocation and upheaval as they figure out how to track and approve overtime and adjust compensation accordingly. And a bit of flak from any very senior paralegals who manage large client accounts and therefore end up being classified as managers rather than as regular paralegals. It’ll be interesting to see how it all hashes out.

In the meantime, has anyone else had discussions at work about the new overtime regs? If so, what is your position, and what was the content of those discussions?

3

Interesting. Most people would have agreed under the old rules that paralegals were not exempt. Most people are wringing their hands about their status under the new exemption. Most people are using weasel words like most, because the test is fuzzy and does not yield clear answers. You won’t find interpretive case law until the reg is actually in effect.

http://www.legalassistanttoday.com/issue_archive/my_opinion_so03.htm

http://hr.cch.com/hhrlib/issues-answers/New-overtime-regulations-Who-is-exempt-who-is-not.asp?date=July-26-2004

This discussion provides a lot of detail.

The general weasel answer is this:

Section 541.301(e) (7).

Good luck

4

Here is a link to the final rule.

5

Hmmmm…from your link, it looks like I should poke into Illinois law as well. (I’m in Chicago, but my firm has offices nationwide, and I’m sure state law is also playing into this debate as my firm tries to standardize classifications, job descriptions/titles, and such across all its offices.)

Thanks. I’ll keep poking, because this looks like this will be an ongoing debate involving lots of litigation.

6

Thanks for posting this. I’ll be making my way into the paralegal world next year.

I have mixed opinions about this.

One, I think there should be a standard that people should meet to become an “official” paralegal. Maybe a “baby bar” exam. Let’s face it, paralegals do 95% of their boss’ work and, after a few years on the job, know as much as the lawyers do about the law. Being a paralegal these days can mean anything from you’re a college grad with a criminal justice degree to being a high school graduate with 20 years experience working in a law firm.

I would be cool with being exempt from overtime as a “learned professional” if I am treated the same as other LP’s. I don’t see many law firms willing to give their paralegals keys to the executive washroom, though, or paying for country club memberships, etc. If we’re not going to be treated the same in the office, I don’t see why they should be able to claim we’re “equals” when it comes to payday.

7

Let me put my analysis in English for those who don’t get the jargon.

  1. The Fair Labor Standards Act is a federal law that controls when an employer must pay an employee overtime.

  2. The FLSA requires overtime for employees who work overtime unless the employees are exempt.

  3. The Department of Labor is broadening the categories of exempt employees, which means that fewer employees will be entitled to overtime pay.

  4. Under the previous regulations and the new regulations, paralegals are not exempt as professionals (one of the categories of people who are exempt), which means that they are entitled to overtime. Depending on their job resonsibilities, they might fall under another exemption.

  5. Some law firms don’t pay their paralegals overtime and little has been done about it.

  6. Under the new regulations, the DOL has repeated that** paralegals are not exempt**, but left plenty of room for law firms to argue that the general rule (paralegals not generally exempt) does not apply to *their * paralegals or that their paralegals fall into some other exemption, like the Administrative employee exemption. Also, the regulations can be challenged in court. So the law firms that currently currently treat their paralegals as exempt will probably continue to do so.

Some jurisdictions require certification or registration. It helps a little, IMO.

Well yeah. Don’t hold your breath, though.

8

Don’t forget that whether you’re exempt or not, you probably still have a good chance of getting paid overtime. It’s supply and demand. If you don’t get overtime at company A, company B will give it to you, so you leave. Company A ends up paying more for new employee training, and so on and so forth.

The other option, of course, is forming a union. (in this particular case, you can see that people have left [supply and demand], while other discontents don’t see that even though we’re exempt, we get some overtime – it’s just not enough, I guess.)