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Given the demands of clients and the press of business, lawyers and law firms frequently overlook the fact that they too are employers, subject to the often-confusing myriad of workplace regulations imposed by the state and federal employment laws. A recent administrative determination by the United States Department of Labor reaffirming its position that paralegals are eligible for overtime pay is yet another reminder that lawyers should heed the admonition of Benjamin Franklin: “Mind thy shop, and thy shop will mind thee.” On Jan. 7, 2005, the Labor Department’s Wage and Hour Division issued an opinion letter reaffirming its longstanding position that most paralegals and legal assistants do not qualify for the learned professional exemption under the Fair Labor Standards Act, 29 U.S.C. �� 201-19, and are therefore eligible to earn overtime pay. By way of background, the FLSA, the federal statute which governs the payment of wages to employees, classifies all workers into two broad categories: (1) “nonexempt,” i.e., the employee must be paid at least the minimum wage for all hours up to 40 in a workweek and a premium of one and one-half times the employee’s regular rate of pay for all hours in excess of 40 hours a week; or (2) “exempt,” i.e., the employee is paid on a salary or fee basis and is not eligible for overtime for work hours exceeding 40 in one week. 29 U.S.C. � 207(a)(1). The statutory presumption is that all employees are nonexempt unless they fall into one of the specific exemptions set forth in the FLSA and its accompanying regulations, which cover many executive, administrative, and professional employees, as well as outside salespersons and some computer professionals. At issue for paralegals and legal assistants is the question of whether they fall under the FLSA’s exemption for “learned professional” employees. 29 U.S.C. � 213(a)(1). As defined by the Labor Department’s regulations, for an employee to be “employed in a bona fide professional capacity,” the employer must show that: (1) he is compensated on a salary or a fee basis at a rate of at least $455 a week; and (2) his primary duty is performing work that requires knowledge of an advanced type in a field of science or learning that is customarily acquired by a prolonged course of study or specialized intellectual instruction; or requires originality, invention, imagination, or talent in a recognized field of artistic or creative endeavors. 29 C.F.R. � 541.300. Unsurprisingly, lawyers are viewed as a classic example of an “exempt professional.” Failure to meet just one prong of the exemption’s test will result in the employee being classified as nonexempt and eligible for overtime. To better understand this test, performing “work requiring advance knowledge” means that the work has a predominantly intellectual character and requires the consistent exercise of discrimination and judgment; work that involves routine mental, manual, mechanical, or physical work does not qualify as “work requiring advanced knowledge.” The advanced knowledge used by an exempt employee at work must be in a field of science or learning. This typically includes such fields as aviation, biology, chemistry, education and actuarial computation. However, whether an employee’s job duties require the use of “advanced knowledge” is fact sensitive and is determined by courts on an ad hoc basis. Finally, the advanced knowledge used by the employee must be of the type that is customarily acquired by participating in a prolonged course of specialized intellectual instruction. To satisfy this prong, specialized academic training must be a prerequisite to entrance into the profession, as is the case for doctors, registered nurses, teachers, engineers and architects. In its Jan. 7, 2005, opinion letter, the Labor Department stated that, as a general rule, paralegals and legal assistants do not meet this test for learned professionals and, therefore, are ordinarily nonexempt. The agency reached this result because it concluded that an advanced, specialized degree is typically not required for paralegals and legal assistants to enter the field. 29 C.F.R. � 541.301(e)(7). While recognizing that many paralegals and legal assistants possess general four-year degrees from colleges, the Labor Department also noted that most specialized paralegal programs are merely two-year associate degree programs that are offered by community colleges or equivalent institutions. The Labor Department did recognize that it is possible that paralegals and legal assistants could qualify as learned professionals under Section 13(a)(1) of the FLSA if they possess advanced specialized degrees in other, nonlegal professional fields and apply that advanced knowledge towards performance of their work duties. For instance, the opinion letter provided an example of an engineer who is hired as a paralegal and applies her advanced knowledge to provide expert advice on product liability or patent cases for her law firm. In that case, the paralegal would be using her advanced knowledge from her engineering degree towards the performance of her paralegal duties and would be properly classified as an exempt professional under the FLSA. Significantly, the Labor Department pointed out that its position on the nonexempt status of paralegals and legal assistants was not altered by the issuance of new and controversial wage and hour regulations on Aug. 30, 2004. Despite receiving numerous comments during the rule making process urging that paralegals and legal assistants be classified as exempt learned professionals, the agency noted that no commentator provided any evidence to demonstrate that a paralegal or legal assistant is required to have an education greater than a two-year associate’s degree to enter the profession. Finally, New Jersey employers should remember that prior to classifying any employee as exempt or nonexempt, they must carefully consider not only the FLSA, but also the New Jersey Wage and Hour Law, N.J.S.A. 34:11-56a et seq., in any analysis. This is because even if the employee in question is considered exempt under the FLSA, he may still be nonexempt, and eligible for overtime pay, under the Wage and Hour Law and its accompanying regulations. Wage and hour laws have become of increasing interest and importance to employers, given a sharp rise in litigation under both the FLSA and the Wage and Hour Law. The intricate, confusing, and often counterintuitive nature of these laws, coupled with the prospect of mandatory awards of attorneys’ fees for successful suits, have contributed to heightened interest in this area within the plaintiffs’ bar. Law firm employers are not immune from these trends and should be conducting audits of all positions for compliance with the new USDOL regulations and reviewing payroll deductions to ensure compliance with state and federal wage and hour laws. Steven W. Suflas is a partner at Ballard Spahr Andrews & Ingersoll of Voorhees, where he represents management in all phases of labor and employment law. Jennifer L. Sova is an associate in the labor & employment group.

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