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Law Firms: Overtime Rules and Payroll Compliance (2026)
Overtime in law firms is time and one half after 40 hours on the regular rate, and the regular rate has to absorb billable hours tracking and partner draw vs. salary before the premium is applied. BEG runs law firm payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
The overtime rules that apply to law firms
Paralegals and legal assistants generally do not qualify for the learned professional exemption because an advanced specialized degree is not a standard prerequisite for the field, so they are owed overtime after 40 hours unless another exemption applies. The exemption is available to a paralegal with an advanced degree in another field who applies it, such as an engineer hired for patent work.
Employees holding a valid license to practice law who actually practice are exempt professionals, and the salary level and salary basis tests do not apply to them. Job titles alone do not determine exemption status; duties and pay must meet the regulations.
The administrative exemption requires a salary at the standard level, office or non-manual work directly related to management or general business operations, and the exercise of discretion and independent judgment on matters of significance. Applying well-established techniques, procedures or standards from manuals does not meet the test.
A worked example at law firm wages
Paralegals and legal assistants at the May 2025 national median of $62,890 earn about $30 an hour on a 2,080-hour year. Ten overtime hours in a week cost $454 at time and one half. If that week also carried billable hours tracking, the amount folds into the regular rate first and the premium rises with it; leaving it out is the most common overtime error in this industry.
How the payroll is set up to get it right
Each pay component is flagged at setup as included in or excluded from the regular rate, hours are captured by workweek rather than pay period, and any industry exemption is applied per employee with the supporting record kept. Overtime is then arithmetic, not judgment, on every run.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Paralegals and legal assistants generally do not qualify for the learned professional exemption because an advanced specialized degree is not a standard prerequisite for the field, so they are owed overtime after 40 hours unless another exemption applies. The exemption is available to a paralegal with an advanced degree in another field who applies it, such as an engineer hired for patent work. [29 CFR 541.301(e)(7)]
- Employees holding a valid license to practice law who actually practice are exempt professionals, and the salary level and salary basis tests do not apply to them. Job titles alone do not determine exemption status; duties and pay must meet the regulations. [DOL Fact Sheet #17D]
- The administrative exemption requires a salary at the standard level, office or non-manual work directly related to management or general business operations, and the exercise of discretion and independent judgment on matters of significance. Applying well-established techniques, procedures or standards from manuals does not meet the test. [DOL Fact Sheet #17C]
Read the full guide to how to calculate overtime pay, and the rest of the law firm payroll library.
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Frequently Asked Questions
Which law firm employees are exempt from overtime?
Paralegals and legal assistants generally do not qualify for the learned professional exemption because an advanced specialized degree is not a standard prerequisite for the field, so they are owed overtime after 40 hours unless another exemption applies. The exemption is available to a paralegal with an advanced degree in another field who applies it, such as an engineer hired for patent work.
How is overtime calculated on billable hours tracking?
billable hours tracking is added to the week's straight-time pay, the total is divided by hours worked to get the regular rate, and the half-time premium is paid on that rate for every hour over 40. Employees holding a valid license to practice law who actually practice are exempt professionals, and the salary level and salary basis tests do not apply to them.
What does an overtime hour cost at law firm wages?
At the BLS May 2025 national median for paralegals and legal assistants, $62,890 a year or about $30 an hour, an overtime hour is $45 before any bonus or differential is added to the rate.
What does managed payroll cost for a law firm?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Billable hours tracking, partner draw vs. salary and attorney bonus structures are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Law Firms. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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