As published in the July 18, 2011 Connecticut Law Tribune
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.
