Should Arizona Paralegals & Legal Assistants Be Paid Overtime Wages?

Recent surveys reveal that many law firms, including law firms employing paralegals and legal assistants throughout the State of Arizona, do not pay such employees overtime wages, choosing instead to classify them as “exempt” employees. Although an employer law firm may tell such employees that they are not entitled to overtime pay because the position is “exempt” from the overtime requirements of the Fair Labor Standards Act, neither the job description nor the work performed usually supports the claimed exemption.

Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees.
Section 13(a)(1) and Section 13(a)(17) also exempt certain computer employees. Job titles do not determine exempt status. Instead, in order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department of Labor’s regulations.

When it comes to the legal assistant or paralegal position, it is fairly well-established that such positions may not properly be classified as exempt. From its first private letter ruling on the issue in 1977, the Department of Labor has consistently maintained that legal assistants and paralegals are not exempt unless they qualify under the administrative exemption. The department has repeated the same language in letter after letter.

Specifically, the Department of Labor has taken the position that “legal assistants and paralegals generally are not involved in the performance of duties requiring the exercise of discretion and independent judgment of the type required by section 541.2; they are, instead, involved in the use of skills rather than discretion and independent judgment.”

Based on that determination, the Department concludes that “such employees generally are found to be highly trained and highly skilled specialists who, as such, would not qualify for the exemption as defined . . . in Regulations, Part 541.” The DOL has recently readdressed the issue and reiterated that traditional legal assistant/paralegal duties such as preparing oral presentations or meeting and interviewing clients do not involve the exercise of discretion and independent judgment required to properly classify an employee as exempt.

These determinations rest upon the DOL interpretation that “discretion and independent judgment” mean “the authority or power to make an independent choice, free from immediate direction or supervision with respect to matters of significance.” Although it is unquestioned that certain tasks performed by paralegals involve some level of independent judgment, such work does not involve the exercise of discretion and independent judgment at a level contemplated by 29 C.F.R. Part 541.

Significantly, the DOL has also noted that the implications of the strict ethical prohibitions against the unauthorized practice of law by lay persons means that a legal assistant would not have the amount of authority to exercise independent judgments with regard to legal matters necessary to bring them within the administrative exemption.

Similarly, the DOL has stated its position that the professional exemption is also inapplicable because, although legal assistants may have special training in their field, their duties do not require knowledge of an advanced type in a field of science or learning within the meaning of section 541.301 of the regulations.

It is well-established that determination of an employee’s exemption under the Fair Labor Standards Act is purely a question of fact to be determined on a case-by-case basis. However, the employer always carries the burden of proving the exemption and an employer’s claim of exemption must be narrowly construed in favor of the employee. Indeed, some courts have held that an employer’s burden in proving an FLSA exemption is “heightened beyond the usual preponderance standard, such that the employer must show that the employee fits plainly and unmistakably within the exemption’s terms.” This is particularly true where the employer is a law firm.

The result of all of this is the potential for sizable liability for law firms that improperly classify their employees. A paralegal or legal assistant who can show that he or she worked an average of 10 hours of overtime per week over the course of three years, would have a claim for 1,560 hours of unpaid overtime. Assuming an average pay rate of $23.53 per hour ($48,000 per year), the overtime rate would be $35.29 per hour, leaving $55,059.74 in unpaid overtime wages alone. Additionally, the FLSA provides for an additional amount of liquidated damages in an amount equal to the amount of overtime wages, bringing the total claim, not including attorneys’ fees and interest, which can also be recovered, to over $110,000. A further concern is A.R.S. § 23-353, an Arizona statute requiring an employer to pay employees who have been discharged “wages due him within three working days or the end of the next regular pay period, whichever is sooner,” potentially tripling the employee’s claim.

The above demonstrates the clear risk to an employer who does not pay paralegals and legal assistants overtime wages. Legal assistants and paralegals in Arizona who believe they may have claims for unpaid overtime wages should contact an experienced Arizona employment attorney as soon as possible to determine whether they have valid claims. Because the time limits for bringing such claims are relatively short, failing to advance them in a timely manner may result in a significant reduction to any unpaid wage claim.