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Finally, a court has set a precedent for an issue that's been plaguing paralegals for years -- should paralegals be exempt or nonexempt from overtime pay? Or is it a precedent? Here's what happened.
On September 22, 1994, the United States Department of Labor (DOL) abandoned its appeal with prejudice in DOL v. Page & Addison P.C., U.S. Dist. Court, Northern District of Texas, Dallas Division No. 3:91-CV-3655-P (Page & Addison). There will be no written Fifth Circuit Court decision filed in New Orleans Appellate Court No. 94- 10435 affirming or overturning the district court's jury finding that 23 paralegals at the ten-lawyer firm are exempt from the overtime requirements of the Fair Labor Standards Act enacted in 1938 (FLSA). The jury's decision, entered on March 10, 1994, is binding. Its decision is based upon the administrative exemption as set forth in 29 CFR 541.1 and 541.101 through 541.119. Exempt status applies to Page & Addison's paralegals because each one was found to exercise independent judgment and discretion when she performed her duties and fulfilled her responsibilities, even though a supervisory attorney must approve or reject the paralegal's work.
The Page & Addison is fact-specific; it relates only to paralegals employed by that firm. This decision may trigger additional litigation to exempt paralegals from overtime on a case-by-case basis because a decision from the Untied States District Court, Northern District of Texas, may have no effect upon paralegals in other parts of the country. At this time, no opinion letter of the Wage-Hour Administration exempting paralegals as a class from the Act is forthcoming. The DOL considers paralegals as a class nonexempt from the FLSA. If other court cases are decided in the future, the DOL may schedule comment periods or hearings to propose a change to the Regulations. The DOL might re-examine the issue to clear guidelines for a firm to make a reasonable determination about the status of its paralegals. Each law firm would have to determine its paralegals' status based upon job descriptions and the duties it delegates to paralegals.
Surveys show that about 50 percent of employers pay paralegals for overtime and the other half do not pay them overtime for the same tasks. The surveys also indicate that exempt paralegals are not necessarily delegated more responsible tasks than are nonexempt ones. Attorneys do not distinguish between exempt and nonexempt tasks. Thus, it has not been determined if exemption for paralegals as a class will expand duties in the paralegal profession.
Paralegals favoring overtime pay contend that exempt paralegals are not paid at a higher rate to compensate them for the added hours worked. According to the July 1994 Law Office Management & Administrator Report, exempt paralegals average $32,798 per year and nonexempt paralegals average $30,312. Although it appears that the FLSA intended exempt employees to be paid more than an average salary, the regulations requiring a minimum of $250 per week ($13,000) per year) be paid to exempt employees have not been changed since 1974 due to political reasons.
Some paralegals are not convinced that they gain the financial rewards, status and the perceived professional image that goes along with exemption from the Act. The price of giving up overtime pay, mastering the knowledge necessary to perform profitable tasks for their employers, and taking the risks necessary to excel to top-notch levels in this profession may not reward paralegals their expected benefits.
Because no clear consensus on this issue exists among paralegals and their employers, NFPA delegates have decided to continue monitoring the issue and not to take a formal position on it yet. Paralegals and legal administrators could work with their employers on defining the issue. Unless government regulations are changed, other law firms may find themselves in the same position as Page & Addison. At this point, paralegals and attorneys nationwide must accept the DOL's policy of nonexempt status for paralegals as a class. If a law office or department is not paying its paralegals overtime, it should review its policies to ensure it complies with federal and state laws. The prudent employer must use not only the Page & Addison court decision, but also the regulations or an amendment to statutes as guides to avoid exposing its firm to noncompliance.
With the absence of regulations that apply specifically to the paralegal profession, it is up to the employer to delegate appropriate tasks to its paralegals to allow exemption from the FLSA on a case-by-case basis and to comply with 29 U.S.C. 213(a)(1). The employer always carries the burden of proving the exemption. An employer who repeatedly and willfully violates the Act could be subject to a fine or $10,000 and imprisonment of up to six months. The employer violating the Act is potentially liable to the employee in the amount of overtime, together with an additional amount as liquidated damages and a reasonable attorney fee.
This article was prepared by Dorene Ridgeway, chair of NFPA's Ad Hoc Committee on Exempt/Nonexempt Status and has served on various committees with the Washington State Paralegal Associaton since 1980. A collection and commerical litigation paralegal at the Seattle law firm Lane Powel Spears Lubersky, she holds a B.S. in Business and Legal Administration.
From The National Federation of Paralegal Associations
Post Office Box 33108 Kansas City, Missouri 64114
Tel.: 816-941-4000 Fax : 816-941-2725
[I-L Note: This is an excellent organization who could use your support. Check out their Web Site at http://www.paralegals.org]
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