Last week, the Second Circuit revived an attorney's claim that he was owed overtime compensation under the Fair Labor Standards Act (FLSA) and muddied the waters as to when a professional is exempt from the FLSA's overtime provision.
David Lola appealed a New York District Court's dismissal of his putative collective action seeking damages for violations of the FLSA overtime provisions. Lola worked as a contract attorney for Skadden, Arps, Slate, Meagher & Flom LLP and Tower Legal Staffing, Inc. in North Carolina. He alleges that during the 15 months he worked conducting document review in multi-district litigation pending in Ohio his "entire responsibility . . . consisted of looking at documents to see what search terms, if any, appeared in the documents, marking those documents into the categories predetermined by Defendants, and at times drawing black boxes to redact portions of certain documents based on specific protocols that Defendants provided." Lola was paid $25 per hour for this work, and he worked about 45 to 55 hours each week.
The FLSA requires employers to pay employees one and one-half times the regular hourly rate of pay for any hours worked in excess of forty in a workweek. However, employees "employed in a . . . professional capacity" are exempt from the overtime requirement. Attorneys are exempt from the FLSA if they hold a valid license permitting the practice of law and are actually engaged in the practice of law.
The Second Circuit looked to North Carolina, where Lola lived and worked, to define the "practice of law." At a minimum, North Carolina law requires at least a modicum of independent legal judgment be applied to constitute the "practice of law." Defendants maintain that Lola was overtime exempt because he was a licensed attorney engaged in the practice of law. Lola countered that, although he is an attorney, he was not exempt because he exercised no legal judgment whatsoever while reviewing documents for Defendants.
The district court granted Defendants' motion to dismiss finding that Lola was engaged in the practice of law as defined by North Carolina, and was therefore an exempt employee under the FLSA. The Second Circuit remanded the case, because it disagreed with the district court's conclusion that by undertaking the document review Lola was allegedly hired to conduct, Lola was necessarily "practicing law" within the meaning of North Carolina law.
In light of this decision, businesses that hire professionals as contract employees to perform routine tasks may want to assess their overtime policy. Specifically, employers should examine the actual duties being undertaken by the alleged exempt individuals. There are no blanket exemptions simply by job title.
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