The new overtime regs: A wake-up call for lawyer employers

The new overtime regulations issued by the U.S. Department of Labor, which take effect December 1, will impact many law-firm employers to the extent they have traditionally been paying, or not paying, employees with certain job responsibilities for hours worked in excess of 40 per week.

In general,  executive, administrative, and professional ("EAP") employees are exempt from the Fair Labor Standards Act's overtime provisions. According to the DOL's fact sheet, the Department has historically required three tests to be met before the FLSA's EAP exemption applies. See https://www.dol.gov/whd/overtime/final2016/overtime-factsheet.htm.

To qualify for the exemption, employees must (1) be paid a fixed, predetermined salary; (2) the amount paid must meet a specific minimum salary level; and (3) the employee's job duties must primarily involve executive, administrative, or professional duties.

The new rule raises the minimum salary from a weekly amount of $455 ($23,660 annually) to $913 per week ($47,476 annually), doing away with the requirement that the rate be an annual salary as opposed to a fixed hourly rate. Teachers, lawyers, and doctors are considered bona fide professionals under the rule; whether they make $913 per week is irrelevant. Law firms need to audit positions within their ranks to determine both whether the weekly amount and the duties tests are met.

According to Chicago employment attorney Alisa Arnoff, many law firms have traditionally misclassified clerks, paralegals, and secretaries as exempt from the overtime laws. She says it is also possible, based on the specific duties of an individual, that employees in the same job classification - such as legal secretaries - might be paid differently. Legal secretaries for managing partners or department group leaders may have responsibilities that render them exempt administrative employees. However, legal secretaries that work for lower level lawyers might be entitled to overtime because their duties are different.

"Now is the perfect time to do an internal audit and see who is truly executive, administrative, or professional. See actually how many hours employees whose positions are impacted by the new law are working," Arnoff says. Find out more in the August Illinois Bar Journal.