United States: FLSA: New Overtime Regulations Affect "Utah" Paralegals

[2004] All rights reserved including the right of reproduction in whole or in part in any form.

On Monday, August 23, 2004 the New Overtime Regulations became effective.

For most paralegals this historic day passed with no noticeable changes in how paralegal hours are managed by their employers for the purposes of paying overtime.

However for others the new overtime regulations have shattered their worlds, as their employers frantically implement changes in an attempt to comply with the new regulations. For some paralegals this meant "goodbye" to the previously enjoyed ability for them to flex their schedules and pretty much come and go as they pleased.

Much like the former regulations, paralegals and non-supervisory employees classified as exempt in the administrative and professional categories are at highest risk of being misclassified under the new regulations. Employers who have not appropriately applied the new regulations or overlook their importance, do so at their own peril.

U.S. Secretary of Labor Elaine L. Chao on April 27, 2004, named a new enforcement task force within the Wage and Hour Division (WHD) of the Department of Labor (DOL) to, as she puts it, "maximize worker’s rights" under the new regulations. Non-exempt employees may file complaints concerning overtime pay with the DOL either by mail or in person at any WHD District Office. DOL indicates its investigators are discreet and will seek permission from the complainant to use their name if required, during an investigation. Additional information concerning complaints may be found at http://www.dol.gov/esa/regs/compliance/whd/fairpay/complaint.htm or by contacting the WHD toll-free between the hours of 8 a.m. to 5 p.m., in your local time zone at (866) 487-9243.

As discussed in "Paralegals are Non-Exempt Under New DOL Regulations," published in the Jun/Jul 2004 edition of the Paralegal Reporter, of the 75,280 comments received by the DOL concerning the proposed rule changes to the Fair Labor Standards Act of 1938 (FLSA), only a handful were received from individual paralegals, paralegal groups and associations.

Notably, The National Federation of Paralegal Associations, Inc. (NFPA) did submit comments, where the National Association of Legal Assistants (NALA) did not.

In Utah, the Paralegal Division of the Utah State Bar (PAD) and the Legal Assistants Association of Utah (LAAU) did not submit comments during the comment period; the Rocky Mountain Paralegal Association (RMPA) endorsed the comments of NFPA.

Unfortunately, most other statewide associations did not submit comments, either. This created a domino effect when other organizations located within the various states indicated they were going to follow their statewide associations, which only resulted in those organizations not submitting comments, either. Thus, final DOL regulations were released without input from the majority of paralegals.

Since publication of the Jun/Jul 2004 edition of the Paralegal Reporter I have received numerous e-mails from paralegals across the country concerning this issue. Some paralegals asking questions for clarification and several others in a frenzy because their employers were making changes to their conditions of employment in an attempt to comply with the new regulations, which those paralegals did not like. After first trying to assist each colleague, my question to each was: did you or your organization submit comments to the DOL? The resounding answer was NO!

Paralegals know the percentage of winning an appeal after a decision is made is drastically lower than winning the issue at trial. As in this case, relying on some other association or person to submit "your position" ended up with "your position" not being communicated at all. Arguably, comments timely submitted to the DOL may not have resolved all the issues, but at a minimum the DOL would have at least had an opportunity to consider those comments from the "majority of paralegals" before releasing the final regulations.

The new regulations may be located at the DOL website, titled "FairPay" (found at www.dol.gov/esa/regs/compliance/whd/fairpay/main.htm). This site also attempts to help explain the changes. Additionally, full text of the regulations as published in the Federal Register may be found at http://www.access.gpo.gov/su_docs/fedreg/a040423c.html under Wage and Hour Division. In this version the DOL specifically addresses sections of the regulations and the comment directed toward those sections, and at times provides some analogy.

Briefly, under the new regulations the FLSA’s "white collar" exemption rule increases the salary floor under which employees must be paid overtime. Under the final regulations those earning $455 per week (the equivalent of $23,660 per year) or less are non-exempt and automatically entitled to time-and-a-half pay for any hours worked over 40 hours per week. Highly compensated employees, who earn at least $100,000, may be exempt and not entitled to overtime pay. Exemption of employees who earn more than $23,660 but less than $100,000 per year exemption classification, is determined by the duties test on a case-by-case basis.

"UTAH" Paralegals Are Non-Exempt And Should Be Paid Overtime

An opinion letter dated February 19, 1998, issued by the DOL, used the former regulations to determine that paralegals should be considered non-exempt. Interestingly, the DOL did not alter its position concerning paralegals in the new regulations, which position is quite clear. Paralegals are non-exempt employees who should be paid overtime.

In the new regulations the "duties test" was simplified and some aspects deleted, leaving one standard test for each category of exemption. The DOL in Section 541.301(d) added the phrase "and performs substantially the same work" to the final regulation. Therefore, degrees alone do not earn a paralegal employee an automatic exemption classification.

Employees today obtain advanced knowledge through a combination of work experience and intellectual instruction. When this occurs, focusing on the actual work performed by the non-degreed employee should be the determining factor if the employee qualifies as exempt.

In today’s 21^st Century workplace, paralegal professionals who attain their advanced knowledge through a non-traditional path, possess the same knowledge level and perform the same work as the traditionally degreed paralegal professionals, and should be classified and paid in the same manner as those degreed paralegal professionals. Equal treatment for degreed and non-degreed employees who perform the same work is common in employment law today. Thus, under the new regulations, regardless of a degree, paralegals are non-exempt and should be paid overtime.

The new regulations establish minimum standards that may be exceeded, but cannot be waived or reduced. Employers, on their own or through a collective bargaining agreement, are not precluded by the FLSA from providing higher wages, shorter workweeks or higher overtime premium (double time, for example). Nothing in the FLSA relieves an employer from its contractual obligation under a collective bargaining agreement.

Those paralegals whose conditions of employment where drastically affected by the new regulations may obtain some relief by their employer's "voluntary" participation in Comp Time - Flex Time.

On July 31, 2004, during a speech at the David L. Lawrence Convention Center in Pittsburgh, Pennsylvania, President Bush urged Congress to pass legislation that would allow private-sector employers to offer employees compensatory time in lieu of overtime pay.

President Bush told the audience in Pittsburgh, "Congress needs to enact what we call comp-time and flex-time to help American families better juggle work and home duties."

Republicans in Congress have a proposal which would amend the Fair Labor Standards Act to allow employers to offer employees paid time off as compensation for overtime hours worked. Through a voluntary agreement with their employers, employees would be able to choose overtime pay or paid time off. For each hour worked over 40, employees would receive one and a half hours of compensatory time.

Sen. Judd Gregg (R-N.H.) introduced the Family Time and Workplace Flexibility Act (S. 317) in the Senate and Rep. Judy Biggert (R-Ill.) introduced the Family Time Flexibility Act (H.R. 1119) in the House. Currently both bills are pending consideration by Congress.

The Comp Time – Flex Time issue is one that could possibly affect paralegals' take home pay and should be closely monitored. In other words, if the opportunity to voice your position or submit comments presents itself, YOU may not wish to let the opportunity pass by without taking action.

Buzz from various groups seems to indicate that a Congressional Challenge may be forthcoming. Efforts were started back on May 4^th, 2004, when Sen. Judd Gregg (R-N.H.) introduced an amendment that passed on a 99-0 vote, which would preserve the current regulatory overtime status for 55 occupations or job classifications. Then, Sen. Tom Harkin (D-Iowa) introduced an amendment that passed on a 52-47 vote, which would allow only the increased salary requirements from the new final regulations to be enforced, while preserving the previous overtime regulations. Both amendments were offered to an unrelated tax bill (S. 1637). The issues remain pending further Congressional consideration.

A slight chance does exist that the new regulations could be derailed by Congress through lack of funding or some other means. However, what is more likely to happen is some political "horse-trading," especially since there is renewed political interest and support in the Comp Time – Flex Time bills.

Unanswered Questions

Will the majority of paralegals suffer as a result of the new regulations? What will the ultimate impact on the paralegal workforce be? These and many more questions will be answered only with the passage of time.

It should be noted that federal and state laws regarding overtime are very detailed, containing several exceptions and caveats that cannot be fully addressed in this article. Employers and employees are advised to seek guidance from legal counsel regarding the handling of overtime matters. Employers should also seek the advice of legal counsel before refusing to pay employees overtime. This article is not intended nor should it be considered legal advice. Each overtime employment issue is unique and specific. Every employer and employee is encouraged to seek guidance from legal counsel concerning specific overtime matters.

B[2004] All rights reserved including the right of reproduction in whole or in part in any form.