To Be or Not To Be... Exempt

I cannot wrap my head around the Department of Labor's classification of paralegals as generally all non-exempt employees under the Fair Labor Standards Act.

First, I understand that the purpose of the FLSA is to protect workers and to keep employers from taking advantage of employees. I understand that it is generally a good thing to receive overtime compensation for long hours. I also don't dispute that many paralegal positions are hourly wage positions, and there is nothing wrong with it.

My problem lies in the way the DOL dances around the controversial issue of whether or not it is appropriate to classify paralegals as exempt employees. If the purpose of the FLSA is to protect the worker, the DOL comes off sounding more condenscending than protective.

In a formal 2005 opinion (which can be found here: http://tinyurl.com/n6tt3j), the DOL attacks the situation from several different angles. For the opinion, they were given hypothetical paralegal work situations, and were to decide in each situation whether the paralegal would be considered an exempt or non-exempt employee. In every situation, they found the paralegal to be a non-exempt employee who must be paid accordingly.

There are two main categories paralegals could possible fit into when decided upon exemptions. The first, and the most difficult to establish, is the "learned professional" category. It is usually pretty easy to explain away the idea of a paralegal being a "learned professional." Generally speaking, we do not fit the bill. In order to fall under this category, an employee must perform work that requires a specialized and advanced knowledge in a field of science or learning, and such knowledge must be acquired through prolonged, intellectual, specialized instruction. 29 C.F.R. Sec. 541.301(a). This category is fairly narrow, usually encompassing lawyers, doctors, engineers, and the like. Most paralegals do not have law, medical, or engineering degrees. Now, if you do, and you use that degree in your paralegal job, then you may qualify as an exempt employee based on your learned profession and the fact that you utilize it.

There is another category, though, that paralegals could fit into: the administrative exemption. To fit into this category, an employee's primary duty must be work directly related to the management or business operations of the employer or its customers, and that duty must include using discretion and independent judgment in significant matters to the business. C.F.R. 541.200(a).

This is where the DOL loses me. Many paralegals also come with the title of law office manager, or office manager, or just manage the office without a formal title. According to the DOL opinion I cited above, work that is "directly related to the management or general business operations" of a business is work that directly assists with the running or servicing of a business. Since everything I do on a daily basis directly assists with the running or servicing of my employer's business, I feel that many other paralegals like me would meet this specific criterion. Perhaps the DOL would agree with me here. Perhaps not. They move on into even murkier territority, though, to discuss the meanings of "discretion" and "independent judgment."

29 C.F.R. Sec. 541.202(a) states that "In general, the exercise of discretion and independent judgment involves the comparison and the evaluation of possible courses of conduct, and acting or making a decision after the various possibilities have been considered. The term ‘matters of significance’ refers to the level of importance or consequence of the work performed.” Perhaps I think too highly of my position, but my Boss asks for my opinion regularly when he gives me a research assignment or asks me how to build a case. Granted, he has the final say. As the attorney, he will take whatever I do and make it his own once he puts his John Hancock on it. Still, before the last step of final approval ever happens, I am comparing and evaluating possible courses of conduct and making decisions based upon my analysis. The Boss then consults with me or my report and makes a decision based off of my analysis and suggestions. Forgive me if I have a hard time not seeing this as a significant contribution to the business or its customers. Further, my job in research and analysis fits perfectly into the following description:

"Thus, the term "discretion and independent judgment" does not require that the decisions made by an employee have a finality that goes with unlimited authority and a complete absence of review. The decisions made as a result of the exercise of discretion and independent judgment may consist of recommendations for action rather than the actual taking of action." [Emphasis added] 29 C.F.R. §541.202(c).


Factors considered when determining what kind of discretion and independent judgment an employee has include: whether she is given the authority to affect or implement management procedures, carry out major assignments, does work that affects the business in a substantial way, can commit the employer financially, can decide to deviate from standard and/or set policies, whether she is involved in business planning, whether she consults or advises, and more. 29 C.F.R. § 541.202(b) While I cannot do everything described above, like commit the business financially, I find that my job regularly includes about half of these characteristics. According to the DOL opinion and 69 Fed. Reg. at 22, 143 - individuals who meet at least two or three of these factors qualify as exempt employees. Yet the DOL finds that paralegals do not qualify.


The letter also states that

"the paralegal employees appear to fit more appropriately into that category of employees who apply particular skills and knowledge in preparing assignments. Employees who apply such skills and knowledge generally are not exercising independent judgment, even if they have some leeway in reaching a conclusion. In addition, most jurisdictions have strict prohibitions against the unauthorized practice of law by laypersons." FLSA 2005-54

I find it strange that the DOL here compares independent judgment in a law office to UPL, whether or not, it seems, the judgment is directly related to a matter of law. After all, as any solo practice or small firm lawyer can tell you, much more goes into a law office than the simple (or rather complex) practice of law. Like any business, a law firm requires management of employees, equipment, and supplies. How many paralegals out there fit also into these roles?

After reminding the reader of the ABA ethics guidelines, the DOL states, "The implication of such strictures is that the paralegal employees you describe would not have the amount of authority to exercise independent judgments with regard to legal matters necessary to bring them within the administrative exemption."

I find this to be a strange statement, too. Practicing law and working in an administrative capacity are two entirely different things. If the employee were practicing law legally, he or she wouldn't have to worry about the administrative exemption at all... he or she would be exempt under the learned professional category. Obviously, the administrative exemption is there for individuals who do not fit the learned professionals category. Yet it would seem that the DOL is disqualifying paralegals from the administrative category based on the fact that we do not fit into the learned professionals category.

While I don't mind overtime pay, I am annoyed at the reasoning behind the DOL's consistent assertions that paralegals do not qualify as exempt employees. I am particularly baffled by their seeming willingness to ignore 29 C.F.R. §541.202(c) as quoted above, regarding making recommendations rather than taking action. If the DOL would simply look at reason, they would find that many paralegals do, in fact, qualify as exempt employees under statute.