As seen in the January, 30 2012 CT Law Tribune

Editor’s Note: This is the fifth in a six-part series examining how employment law is­sues specifically affect law firms. Next week’s article will focus on how keeping proper pa­perwork is crucial to demonstrating legal compliance and minimizing litigation.

Editor’s Note: This is the third in a six-part series examining how employment law issue s specifically affect law firms. Next week’s article will focus on how keep­ing proper paperwork is crucial to demon­strating legal compliance and minimizing litigation.

Most lawyers, and probably most Americans, are familiar with the basic concepts prohibiting workplace discrimination and harassment.  But many employers are unfamiliar with the scope of their obligations and fail to take adequate preventative steps to reduce the risk of liability.  As a recent $95 million sexual harassment verdict demonstrates, the stakes can be high.  Below is a basic overview of your law office’s obligations as employers and strategies for avoiding some common pitfalls.

Legal Basics

We have all heard discrimination is illegal, but what is “discrimination” under the law?  Employees can successfully claim discrimination in two basic instances: 1) where they suffered an adverse employment action, or 2) where they were subjected to a hostile work environment, so long as the discrimination is based on an employee’s membership in a protected class. 

Consider the New York partner who constantly berates Red Sox fans.  While she is not making many friends in Connecticut, this is not illegal discrimination since Red Sox fans are not a protected class.  However, the list of protected classes in Connecticut is extensive:  age, ancestry, citizenship, color, disability, marital status, national origin, race, religion, sex, status as a Vietnam era or Special Disabled Veteran, sexual orientation, present or past history of mental disability, “mental retardation,” learning disability or physical disability, family violence victims, and prior criminal record, just to name a few.  

Even an employee’s family medical history as well as the employee’s genetic make-up is protected under the Genetic Information Nondiscrimination Act (“GINA”) and the new regulations recently implemented. 

Mandatory Training

Connecticut mandates employers with at least 50 employees worldwide provide sexual harassment prevention training to all supervisors.  If this rule applies to you, why limit training to only sexual harassment?  Since you can get sued for harassment based on any protected class, your training should cover all protected classes.  Also, since you do not need to have 50 employees to face a discrimination lawsuit (Connecticut law requires only three employees), training is a smart idea even if it is not mandatory. 

Recruiting and Hiring

We all want to know as much as we can about a candidate before making a decision to hire.  However, since employers are prohibited from relying on information regarding protected classes, it is important to avoid such information.  For example, avoid interview questions that elicit information about membership in any protected classes.  And if you do come upon such information, do not create the smoking gun that documents you uncovered this information. 

This risk of obtaining too much information is especially relevant given the world of social media.  The hiring manager may check Facebook for insight into the candidate’s personality, but may also discover protected classifications, e.g., an applicant’s charitable endeavors and religious associations.  Once the cat is out of the bag, it is hard to argue you did not rely on it if the applicant is not hired. 

Uniform Enforcement of Policies

You can have the best employment policies in the world, but they will not help unless you are consistent.  When you make an exception, although you may have the best intentions, you may be accused of illegal discrimination.  For example, you might have spared Attorney A a written warning because “he is one of our top performers,”  but when Attorney B gets a written warning for the same conduct, she may claim the disparate treatment was because Attorney A is a young heterosexual white male, and Attorney B is a 50 year old homosexual Hispanic female.  

Harassment from Clients

We all know the customer is always right.  But when a client harasses your employees, you must respond or face liability.  A few guidelines are in order.  Make sure employees know the firm does not tolerate harassment even by clients and if employees feel harassed, they should report it immediately.  Next, as with all workplace harassment, you must fully investigate it and take appropriate action.  Finally, what about the client?  A first step may be to contact the owner and explain your mutual problem.  But if the harasser is the owner, or the owner just does not care, maybe it is time to fire your client and look for business elsewhere. 

As a lawyer, your job is to juggles many balls; but as an employer lawyer, you have a few extra issues to address.  By taking the time now to outline sound policies, and administer those policies evenhandedly you can avoid these common pitfalls and foster a positive work atmosphere where all your employees feel safe coming to work each day and are ready to support the firm, not attack it.

Editor’s Note: This is the third in a six-part series examining how employment law issues specifically affect law firms. Next week’s article will focus on law firm discrimination and harassment issues.

In the last article, we began discussing wage and hour issues relevant to law firms.  We began with the basic rule that non-exempt employees must receive overtime for all hours over 40 and reviewed the three exemptions most relevant to law firms: executive, administrative, and learned professional.  Here we focus on whether office managers and hourly, document review lawyers are exempt, plus a review of two common administrative issues: payment frequency and meal breaks.  

Office Manager

Office managers are hard to classify as they come in many varieties.  Some may essentially be secretaries who keep the office tidy and files in order.  Others may have significant responsibilities such as handling some aspects of HR, business development, and/or accounting. 

Still others may run all aspects of the business other than the provision of legal services.  Since exempt status is determined by employees’ primary duties, it is no surprise some office managers are exempt while others are not. 

Consider an office manager with a bachelor’s degree and extensive knowledge of accounting, financial and other non-legal administrative services.  He exercises discretion and independent judgment in coordinating meetings and interviews with clients, agencies, medical providers, investment advisors, insurance companies and institutional representatives and preparing corporate reports and minutes.  Most of his time is spent on activities related to direct client services or to direct support of executives in the firm.  Lastly, he develops his own procedures, assesses alternatives and provides a recommended course of action.  Exempt?  In a 2003 opinion letter examining these facts, the U.S. Department of Labor said no.

The issue was whether the administrative exemption was met.  As a reminder, administrative employees perform office work directly related to management policies or general business operations of their employer and regularly exercise discretion and independent judgment with respect to matters of significance.  On these facts, the Labor Department concluded the employee did “not appear to have the authority or power to make independent choices free from immediate direction or supervision with respect to matters of significance.  Nor [did] he appear to be formulating policy or exercising the type of authority within a wide range that could commit [the] firm in substantial respects financially or otherwise.”

Rather, he was only “carrying out the day-to-day functions of [the] firm rather than its management policies . . . .”  The lesson is that the more authority and autonomy an office manager has in terms of running the firm’s business (and not providing the firm’s services), the more likely he or she will satisfy the administrative exemption. 

While the administrative exemption is generally the most relevant, an office manager regularly supervising at least two employees and who has authority to hire and fire may qualify as a supervisor/executive.

Document Review Attorneys

In our prior article, we noted that lawyers typically meet the duties test for the learned professional exemption.  We also noted that to be exempt, employees generally must receive a salary.  What about document review attorneys who are often paid hourly?  Fortunately, there is a regulation which states employees are exempt from the salary rules if they have a license to practice of law and are “actually engaged in the practice thereof.” 

What constitutes the practice of law can be a thorny question, and whether these attorneys are doing so has not been litigated in this context.  However, if the document review work is only being performed by attorneys (e.g., not paralegals), it should generally be tough to argue they are not actually practicing law. 

A Note on Titles

With regard to the exempt classification, the law is clear: titles mean nothing.  However, when dealing with a Labor Department investigator, you do not want an inconsistent title to confuse him or her.  For example, the office manager in the above opinion letter was called an “Administrative Assistant.”  While it may not have carried the day, it would not have hurt to call him “Office Manager” or “Director of Administration.”  If you have exempt employees, give them exempt-sounding titles.

Payment Frequency

Employers are often surprised to discover Connecticut law requires weekly pay by default.  Permission to pay less frequently may be granted by the Commissioner of Labor, and permission for bi-weekly pay is routinely granted in white-collar settings. 

Permission for semi-monthly pay can be trickier because the government is concerned about proper overtime pay (which must be calculated weekly, not twice a month) for nonexempt employees.  However, if most of the law firm’s employees are lawyers, this should not be a problem unless there is a lot of overtime worked by nonexempt workers.

Meal Breaks

State law requires employers to grant a 30-minute meal break (which can be unpaid) to employees working 7.5 hours or more.  While many lawyers routinely work through lunch, this is typically not an issue as long as it is voluntary. 

Be careful when letting nonexempt staff work through lunch as employers are required to accurately record their hours and pay them for all time worked.  For a person normally working 8-hour days, working lunches can result in 2.5 hours of overtime per week.

Conclusion

Wage and hour issues can be complex, even for lawyers.  By spending some time up front to properly classify workers and establish compliant policies, you can minimize your firm’s exposure to potential investigations and claims.

Editor’s Note: This is the second in a six-part series examining how employment law issues specifically affect law firms. Next week, the authors will focus on issues involving office managers and hourly doc­ument review lawyers.

In our last article, we provided a self-audit for lawyers to assess their proficiency as employers.  The next two articles cover many of the pay-related issues common to law firms.  We begin with an overview of federal and state overtime requirements, including relevant exemptions, plus an analysis of one hard-to-classify employee: the paralegal.

As you probably know, the Fair Labor Standards Act (FLSA) and Connecticut’s wage and hour laws require most employees (called “non-exempt”) receive minimum wage plus overtime at time-and-a-half for all hours worked each week over 40. 

Also, employers must maintain records of all hours worked by non-exempt employees.  “Exempt” employees are exempt from those requirements.  In a law firm, where 9-5 hours are not the norm, it is important to know who is exempt and who is not, especially with rising wage and hour investigations and class actions. 

Exemptions

While several exemptions exist under the FLSA and Connecticut statutes, the ones most relevant to law firms are the “executive,” “administrative,” and “learned professional.”  As lawyers, we know words have different meaning in the law than in everyday life.  So you should not be surprised that under the FLSA, your firm’s “administrative professionals” (i.e., secretaries) are likely neither “administrative” nor “professional” employees.  Qualifying as exempt requires passing two tests: the salary test and the primary duties test.

The salary test is usually straightforward: exempt employees in Connecticut must receive a minimum salary of $475 per week.  As a salary, it must be paid regardless of the number of hours worked and may be subject to only a few statutorily permitted deductions (e.g., full-day absences for reasons other than sickness or accident).

The primary duties test requires careful analysis and is where many employers make mistakes.  To qualify as exempt, employees’ duties must match those in the statutory definition of “executive,” “administrative,” or “learned professional.” 

In general terms (there are extensive regulations), executive employees primarily manage the business, and regularly direct the work of two or more employees.  Administrative employees perform office work directly related to management policies or general business operations of their employer and regularly exercise discretion and independent judgment.  Learned professionals primarily perform work requiring knowledge of an advanced type in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction and study.  Lawyers performing lawyer work are a classic example of learned professionals.

But What About Paralegals

Consider a paralegal with a two-year legal studies degree and eight years of experience in legal research and analysis.  Ninety percent of the paralegal’s time is spent analyzing facts, identifying the legal issues involved, and then providing an interpretation of the law in memorandum format for attorneys to review.  Although attorneys suggest deadlines, the paralegal works very independently. 

Ten percent of the paralegal’s time is spent reviewing new materials, analyzing costs of current resources used in the department, drafting plans for cost savings for the department, training various personnel on the use of legal resources and legal research in general, and performing other miscellaneous tasks.  Exempt?  According to a 2006 opinion letter by the U.S. Department of Labor, the answer is no.

The Labor Department first evaluated whether the administrative exemption applied and found the work was not “directly related to the management policies or general business operations” of the firm.  Examples of qualifying work include tax, accounting, auditing, and human resources activities.  Thus, administrative work is different from the “production” work of the business.  Since what the paralegal did was part of the firm’s “product,” it did not qualify as administrative. 

Also, there was no discretion in “matters of significance” such as the formulation, interpretation, or implementation of management policies or operating practices.  The Labor Department stated, “It has long been the position of the [department] that the duties of paralegal employees and legal assistants generally do not involve the exercise of discretion and independent judgment of the type required by the administrative exemption.”

Are Paralegals ‘Professionals?’

Citing a specific regulation on paralegals, the Labor Department found the learned professional exemption generally does not apply because although many paralegals have four-year degrees, “an advanced specialized academic degree is not a standard prerequisite for entry into the field.” 

One bit of good news is paralegals with “advanced specialized degrees in other professional fields [e.g., law, science, or medicine] and [who] apply advanced knowledge in that field in the performance of their duties” may qualify as learned professionals.  The regulation provides as an example an engineer/paralegal providing “expert advice on product liability cases or to assist on patent matters.” 

Paralegal Supervisors

Incidentally, although this did not come up in the opinion letter, paralegals might meet the executive exemption if they are supervisors (supervising at least two employees) and spend the majority of their time doing this. 

Conclusion

If you just realized your 60-hours-a-week paralegal is non-exempt, you’re probably wondering what to do.  Employers in similar situations have used several approaches, but suffice it to say, this must be handled delicately. 

In close cases, minor changes in duties may satisfy an exemption.  However it is likely the paralegal will need to be reclassified.  In that case, how you communicate the change can help minimize exposure. 

Also remember not to create a “smoking gun” by documenting possible violations.  Consider working with employment counsel to develop the best strategy for your specific circumstances.