The cost of a law clerk: wages and benefits

Issue March/April 2016 March 2016 By Nicole Melman

As business picks up or as a way to access future associates, law firms often hire law clerks to fulfill their short- and long-term needs. Law clerks can be a way to bring on help instead of hiring a full-time associate, paralegal or legal assistant. Or, it could be a way to test-run a future associate. When deciding to hire a law clerk or summer associate, it is important for law firms to consider federal and state laws, two of which are the Massachusetts Minimum Wage Act and the Affordable Care Act (ACA), when determining whether the time is right to add someone to the firm.

Unlike Massachusetts, there is no requirement under federal law for interns to be paid minimum wage while interning for a for-profit employer so long as the employer meets specific requirements. The law in Massachusetts is much more stringent. Pursuant to the Massachusetts Wage Act, it is against public policy for an employer to employ anyone in an occupation below minimum wage. The minimum wage was raised to $10 per hour on Jan. 1, 2016 M.G.L. ch. 151, § 1. An occupation is defined as "an industry, trade or business … whether operated for profit or otherwise, and any other class of work in which persons are gainfully employed, but shall not include professional service … or training programs in charitable, educational or religious institutions, or work by members of religious orders." M.G.L. ch. 151, § 2. The statute does not define professional service or training program.

Professional service is defined in the Massachusetts Code of Regulations as having "the same meaning as set forth in 29 CFR Part 451."454 Mass. Code Regs. 27.03. An employee employed in a professional capacity includes someone who holds a valid license entitling him or her to practice law and "employees engaged in internship or resident programs, whether or not licensed to practice prior to commencement of the program … if they enter such internship or resident programs after the earning of the appropriate degree required for the general practice of their profession." 29 CFR V(A)(541)(D) § 304.

Training program is not defined in any statute or regulation. Instead, in an opinion letter, the Massachusetts Department of Labor Standards adopted the six-factor federal test to determine whether a training program is not required to compensate interns or trainees. A program must meet the following six factors to be considered a "training program:" 1) the training program must be similar to an educational environment; 2) the training program benefits the intern; 3) the intern will not be displacing regular employees, but rather must work under staff supervision; 4) the intern does not provide an immediate advantage to the employer, and the intern may hinder the employer's operations; 5) the intern is not entitled to a job at the conclusion of the program; and 6) both the employer and intern understand the intern will not be compensated for his or her time. Department of Labor Standards, Op. MW-2011-02-05.09.11.

Therefore, a law firm must pay a law clerk or summer associate minimum wage unless his or her employment fits within an exception.

A relatively new consideration for law firms is whether they must now offer law clerks and summer associates health benefits. The ACA requires employers with 50 or more full-time, or full-time equivalent, employees to offer affordable health insurance. A full-time employee is any employee that works, on average, 30 or more hours per week. A seasonal worker who works fewer than 120 days and independent contractors are not considered full-time employees.

The ACA relies on the U.S. Department of Labor definition of a seasonal employee -- a seasonal employee is an employee whose work is seasonal in nature and whose work generally begins at the same time each year (i.e., summer associates). The 120-day requirement is calculated yearly; the 120 days do not have to be consecutive.

In Massachusetts, a person qualifies as an independent contractor if he or she meets the following three-part test:

  1. The individual is free from control and direction in connection with the performance of the service, both under his contract for the performance of service and in fact; and
  2. The service is performed outside the usual course of the business of the employer; and
  3. The individual is customarily engaged in an independently established trade, occupation, profession or business of the same nature as that involved in the service performed.

The penalties for violating the Minimum Wage Act or the ACA can be significant. An employee who successfully brings a claim against his or her employer for violations of the Minimum Wage Act "shall be awarded treble damages … and shall also be awarded the costs of the litigation and reasonable attorneys' fees." M.G.L. ch. 149, § 150. For violating the ACA, an employer that employs 50 or more full-time employees, or full-time equivalent, could be responsible for $2,000 per person that it employs, excluding the first 30 employees