Wednesday, January 23, 2008

Its coming soon. A few minor issues and the FLSA.

First off, watch the unsolicited advertisements. I got a little concerned there when someone posted a job announcement with full contact information. I decided to leave it because if nothing else, I hope that someone finds a position in which they are Happy or Happier. I don't mind so much if other bloggers post links to their blogs, especially when they are related issues to my own, but watch the ads. See Rule 5.

Second, there have been many requests for me to publish a chart for contract jobs in Philadelphia. I may attempt to do this at some point in the near future. However, the limits of the blogspot being what they are, it will likely be published in JPEG format. For this chart I will have to also create a rating and annotation system. Further, not every contractor values the same thing in a job site. Some prefer the quiet of their own cube or office, while others (especially older contractors) seem to prefer a conference table type of job where they are free to talk. No rating system will satisfy everyone.

Third, the issue was raised briefly in the last string of what the markup for contractors was. This varies widely depending on the contract. Further, with some jobs there are 2 markups, with others there is only one. These markups are:

Contractor Pay---> Contract Firm charges for Contractors--->Law Firm charges for Contractors--->What the Law Firm Client actually pays for Contractors.

Contractor Pay---> Contract Firm charges for Contractors-->What the Law Firm Client actually pays for Contractors.

Notice in the second model the law firm (ie Dechert) is not paying for the contractors, rather their client is doing so directly. This model has become popular for companies on larger document reviews lately because it saves them money, and they have gotten smart about what they will and will not pay.

Someone did communicate to me what their markup actually was. The person found out through a slip up by an HR person at the contract firm. This was a couple of years ago, and this person was with a plaintiff's law firm known to negotiate really low rates, so the markup may not be representative of the industry. The employee was receiving $25/hour. The Contract firm was receiving $39/hour. The Law Firm was "billing" $225/hour against the settlement. The client did not end up paying $225 as the Law Firm might be faced with a client unwilling to pay that much, and would knock down the price when the client balked. Also, when there is a Class Settlement, the law firms use that figure to try to negotiate a larger share of the attorneys fees. Attorneys fees in class actions are often subject to the approval of the court, and so usually end up being more reasonable. However, courts used to frequently overlook the fact that contractors are being billed as associates even when doing Doc Review.

Fourth, some comments have been made about how much better being a 1099 employee is. It can be better and worse, it all depends on your business/tax savvy. Keep in mind that 1099 employees are essentially double taxed because they must pay self employment taxes. I believe that the person above told me that he would need to make more then $32/hour just to overcome the tax consequences of being a 1099 employee. Ironically the firm started its 1099 employees at $30/hour. Also, despite the meager benefits that a contract firm may provide, 1099 employees get nothing for benefits. If you are further interested in being a 1099, run the numbers against the income tax forms for 2008. There is also a hassle being 1099 in that you are required to pay taxes quarterly, and save up for them on your own. There are potential benefits, but like I said before, you need to be savvy about how you set yourself up. Okay, enough of that for now.

Finally, the double edged sword of the FLSA.

Most contract attorney jobs are considered exempt by the law firms and the contract firms under the professional employee exemption. This means that the protections of the FLSA does not extend to us contractors. The FLSA essentially says that any position which requires advanced education (like law school) as an essential part of the job duties and qualifications is exempt. The argument that is used to justify this position is that they require us to have a J.D. and sometimes to have to passed the Bar. They justify these requirements because we must code for Confidentiality, Relevancy (Legal) and Privilege. These terms have a legal meaning and non-legal meanings. Theoretically, we learned the legal meanings of these terms in law school, and the Bar was a test of our knowledge of these terms.

My argument is that the rules that are used for Confidentiality, Relevance and Privilege bear little resemblance to those that we learned in law school. They have already been hammered out through negotiation between the lead counsel on the case, and sometimes let through information that would normally be considered to fall under one of these titles. Further, I have heard many cases where the defendants took an overly broad view of Privilege and essentially required everything to be coded as privileged. This means that the actual knowledge that we gained in law school is not being used as a part of our duties. We are retaught what these words mean for each case we work. Also, coding is a repetitive task (necessarily so) that does not allow us to use any discretion under these rules. What this means is that we should not be exempted under the professional definition of the FLSA.

The double edged sword that some have pointed out to me in the past, is that if the education and license is not actually required to do the work, then college students could just as easily do the work. In fact anyone who is intelligent enough to follow the directions at the document review site and speaks English could do it. This opens the door to non-attorneys reviewing the documents and a drop in the salaries of document reviewers. It also opens the door to the off shoring of document reviews. If the license and education is required to do the work, then you lose the protections of the FLSA.

ALL of that being said, qualification under the FLSA has nothing to do with whether you can unionize, or for that matter with what the union can argue for on your behalf. That is for the next post.

The Black Sheep


JamesConnolly said...

I know it has been awhile, but it would have been nice if you had asked before using my information.

More important, what happened to the unionization thing?

Are we going to have a walk out or sick out here in Philly? The Temps at the McCarter Job in Newark are apparently looking to strike in some way.

Anonymous said...

The McCarter Philly thing is bad. If you replaced the computers with sewing machines it would be a true sweat shop right out of the 1920's. Let's Strike!!!

Anonymous said...

I'm fairly sure the FLSA exemption applies to salaried professionals, not wage slaves like us.

Also, doesn't 1099 independent contractor status require more than simply an agreement between employer and employee? How does a doc coder meet the definition of an independent contractor, when they're given no flexibility to do the job as they see fit? We are employees, not ICs.

The Black Sheep said...

James Connolly, good alias. If you readers are unfamiliar, then look it up on Wikipedia. I am sorry if you were the person whose information I used in my example. I have heard of a few different cases. If you are who I think that you are, I will apologize directly to you. I did not feel that this information clearly identified you.

As to your other questions I will address them in my next post.

8:51, I agree with you, the FLSA should, and probably does apply to us all; however, there is a question of what would happen if people started filing complaints. How would coverage change the industry? I also agree with the statements about independents, but it is all a question of negotiating status, and as individuals we have little if any power in negotiations.

saul tigh said...

Possible bad news for some of our friends at Pepper Hamilton?

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