Are Contract Attorneys Required To Be Paid Overtime?

As I mentioned previously, the current market rate for non-foreign language contract attorney work in the Washington D.C. area is $35 an hour with time and a half for overtime. However, I’ve noticed a few projects out there trying to convince contract attorneys to accept a less attractive flat rate with no overtime. While the flat wage rate is slightly higher at around $38 to $42 an hour, you are deprived the overtime benefit of time and a half, which is how contract attorneys usually make the bulk of their money.

An interesting issue that I’ve been wondering about is whether some of these flat rate agencies and law firms are violating the Fair Labor Standards Act (FLSA) by not providing its employees time and a half compensation for time worked beyond 40 hours.

Does FLSA Require Contract Attorneys To Be Paid Overtime?

I’m not attempting a complete legal analysis but my understanding of FLSA in the matter boils down to the following. Under the FLSA ,workers who are not otherwise exempt from the statute are guaranteed the right to overtime pay, or time and a half for every hour worked beyond the normal 40 hour work week. For white collar workers such as attorneys, three basic tests determine whether they are exempt from FLSA overtime requirements. If they fulfill the three basic tests, they are exempt and thus not required to receive overtime pay. If they are not exempt, they are eligible for overtime.

To be exempt from overtime, contract attorneys must satisfy the following tests:

  1. Salary Level Test – Firstly, employees earning less than $23,600 per year ($455 per week) cannot be exempt. Average contract attorneys are almost certainly exempt since they are likely to earn more than the threshold.
  2. Salary Basis Test - Secondly, employees must be paid a set salary and not an hourly wage in order to be exempt. However, the FLSA actually excludes lawyers from this requirement, and thus lawyers may be considered exempt even if they are paid hourly.
  3. Duties Test- Thirdly, a worker cannot be denied overtime pay unless his or her duties are primarily administrative, professional, or executive in nature.

My Opinion

I think as an initial matter, contract attorneys are not independent contractors, since we are at-will employees of the agency or law firm that employs us.

Under the tests outlined above, I believe contract attorneys are exempt from the overtime requirements of the FLSA. The only question regarding overtime exemption is the third duties test of whether contract attorney work is considered professional in nature. Can we really consider document review work to be professional in nature and not merely clerical? I submit that it is. While document review does not entail mind blowing legal skills to say the least, it does require understanding of legal procedure and terminology. The legal skills and analyses required are dependent on the type of project and on the level of expected interaction between contract attorneys and managing associates. As contract attorneys, we support the project and oftentimes may be called upon to provide our legal opinion to the team and draw upon our prior experience, e.g. discussing privilege claims issues.

Additionally, as licensed professionals, we are also subject to all applicable standards of practice and conduct while on the job. Therefore, even if it is document review, it constitutes the practice of law and ethical violations such as over-billing could lead to bar sanctions.

Thus, while I don’t believe contract attorneys are statutorily required to receive overtime compensation, I do note that it has become common expected practice for document reviewers to be paid in such fashion. Currently, I don’t think there is industry consensus about whether contract attorneys are exempt from overtime requirements under FLSA. How the overtime compensation trend got started I’m not sure, but most contract attorneys today request overtime compensation and agencies predominantly oblige. I think law firms and agencies agree to pay the extra overtime now for competitive reasons rather than legal obligation. Like some commentators have pointed out, we are a finite resource.

9 Responses to “Are Contract Attorneys Required To Be Paid Overtime?”

  1. Joe Miller Says:

    I know that there was some litigation in Seattle on this topic. The court held that contract attorneys performing document review are not practicing law and are, therefore, entitled to overtime pay.

    Contract attorneys should still receive overtime pay, especially in D.C., a jurisdiction in which contract lawyers are required to pass the D.C. bar exam, or waive into D.C., in order to be entitled to the $35/hr. rate, regardless of whether they are barred in other jurisdictions, such as New York, with higher bar passage standards (more subjects to study for) than D.C.

    Additionally, D.C. lawyers, at many large firms, received raises to $160,000, not including bonuses, which are around $30,000+/yr.–the New York salary–even though the D.C. cost of living is below that of New York.

    Therefore, the time and a half in overtime that contract attorneys receive is a mere pittance, compared to what clients would otherwise have to pay a team of full-time associates, to do the same work.

  2. Jeff Manners Says:

    I think we are missing the issue here. If the contract attorney has steady work from the employer whereby he earns over the statutory amount, then he may be an exempt professional. If the contract attorney is not paid the requisit amount by the law firm or agency, then the attorney should be paid time and a half for each hour worked over 40 in each work week.

  3. Jen Says:

    Does anyone know the name or any other details of the case in Washington that Joe refers to above? The overtime issue is still a live topic. I’ve done document review for years and have noticed that certain employers do not comply with overtime requirements.

  4. Charles Scalise Says:

    I am an attorney in Austin, Texas and I presently represent a plaintiff in a collective action under the FLSA who is a lawyer and who was hired to review documents. We do not believe that the work performed by our client rose to the level of the professional exemption under the FLSA and therefore he was non-exempt. If anyone would like to speak with me privately about this case, I can be reached at 512-474-7677.

  5. Exploited DC Lawyer Says:

    Section 7(a)(1) of FLSA requires overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. However, §13(a)(1) carves out exception for “any employee employed in a bona fide executive, administrative, or professional capacity.” FLSA’s implementing regulations are found in chapter V of Title 29 of the Code of Federal Regulations . Part 541 of the regulations define and delimit the statutory term “any employee employed in a bona fide executive, administrative, or professional capacity” while Subpart D of this part specifically addresses professional employees.

    Section 541.300(a)(1) provides, in part: “The term `employee employed in a bona fide professional capacity’ in section 13(a)(1) of the Act shall mean any employee: (1) Compensated on a salary or fee basis at a rate of not less than $455 per week….” Section 541.304 addresses the specific practice of law and medicine. Section 541.304(a)(1) provides, in part: “The term `employee employed in a bona fide professional capacity’ in section 13(a)(1) of the Act shall also mean [a]ny employee who is the holder of a valid license or certificate permitting the practice of law or medicine or any of their branches and is ACTUALLY ENGAGED IN THE PRACTICE THEREOF….” [Emphasis added].

    Although initially appearing redundant to §541.300, the apparent purpose of §541.304 is to distinguish the practice of law and medicine from other professions, and to specifically exempt those two professions from the salary requirement of §541.300(a)(1). This is done through §541.304(d), which specifically provides: “The requirements of Sec. 541.300 and subpart G (salary requirements) of this part do not apply to the employees described in this section.”

    Section 541.304(a)(1) provides a two-part test for an attorney’s inclusion into §13(a)(1) exception: 1) the attorney must be a holder of a valid license or certificate permitting the practice of law, and 2) the attorney must be actually engaged in the practice of law.

    If you’re in DC, see D.C. Court of Appeals Committee on the Unauthorized Practice of Law Opinion 16-05 entitled: “Compliance with Rule 49 by ‘Contract’ Lawyers in the District of Columbia.” Basically the opinion says whether you’re practicing law depends on how you’re held out and billed to the clients. For the most part, DC agencies bill contract attorneys as paralegals or some other sort of professional, but not as attorneys.

    Thus, contract attorneys should be either excluded from §13(a)(1) as paralegals under 29 CFR §541.301(e)(7) or excluded from §13(a)(1) because they do not meet the salary basis required by 29 CFR §541.300(a)(1). In sum, “straight time” is illegal. The agencies simply count on our fear of black listing to keep this illegal secret. I hope this useful to someone who is the position to fight this fight. For the Dept. of Labor summary see:

    http://www.dol.gov/whd/regs/compliance/fairpay/fs17d_professional.htm

  6. mostdumking Says:

    “The court held that contract attorneys performing document review are not practicing law and are, therefore, entitled to overtime pay.”
    Are you sure that this is true?

  7. Exploited in DC Says:

    I’m in DC on a project that does not pay overtime. How do I report this problem, and to whom? Being blacklisted by the responsible agency does not bother me.

  8. Exploited DC Lawyer Says:

    You have 3 options:

    1) Contact D.C. Dept. of Employment Services (DOES) Office of Wage Hour- Not Recommended. Be forewarned, they are in the pocket of the agencies and don’t want to help you. They’ll try to brush you off upfront. The only way to get them to even look at your issue is by contacting DOES’s public information office after they brush you off.

    Here’s the shakeout: They use a duties test. They’ll do an “investigation” where they’ll send a survey to everyone on the project, hoping at least one person will say a J.D. is required to do doc review. It really isn’t; a JD is just an employer’s preference. Paralegals do this work all the time. However, if anyone says a JD is required, then it’s over with them. They absolutely are not going to look at the second part of the two part test under 29 CFR §541.304(a)(1). Remember, they want to rule against you so that it’s not more work for themselves.

    2) You can file a complaint with the U.S. Department of Labor. Your district office would be Baltimore:

    Baltimore District Office
    US Dept. of Labor
    Wage & Hour Division
    Room 207 Appraisers Stores Building
    103 South Gay Street, Room 207
    Baltimore, MD 21202-4061
    Phone: (410) 962-6211

    3) You can file suit in D.C. Superior Court. If you go this route, study FLSA carefully before filing, making sure to study the hell out of my previous comment.

    Do not go to small claims! The law is too complicated for judges who are too busy to take the time necessary to study the law. The agencies will point to 541.304(a)(1), say you’re an attorney, and the judge will be too busy to go beyond that.

    And stick to FLSA claims. The agencies have managed to get entire cases thrown out by focusing on the presence of non-FLSA claims, which people are usually so off base about, it causes the validity of their entire complaint to be questioned.

  9. Seattle lawyer Says:

    Under 29 C.F.R. 541.304 lawyers do not have to meet the salary basis test to be eligible for the professional exemption under the FMLA.

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