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Law Firms: Payroll Compliance Guide (2026)
Payroll compliance for law firms rests on the federal rules that reach this industry specifically, 4 of which are cited on this page, plus the deposit and filing duties every employer carries. 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 rules that reach law firms specifically
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.
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.
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.
The standard salary level for the executive, administrative and professional exemptions is $684 per week, equal to $35,568 a year, and the highly compensated employee total is $107,432 including at least $684 per week on a salary or fee basis. These thresholds do not apply to lawyers.
The duties every employer carries
Federal income tax withholding, Social Security and Medicare, FUTA, deposits on the monthly or semiweekly schedule the lookback period sets, quarterly Form 941, annual W-2s and, for law firms paying contractors, 1099-NEC at the $2,000 threshold in force for tax years after 2025. A late deposit starts at a 2 percent failure-to-deposit penalty and climbs to 15 percent.
Legal Services (NAICS 5411) is on OSHA's partially exempt industry list, so law firms do not have to keep OSHA 300 injury and illness logs unless OSHA or BLS asks in writing. They must still report any work-related fatality, in-patient hospitalization, amputation or loss of an eye.
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.
- 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]
- 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)]
- 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]
- The standard salary level for the executive, administrative and professional exemptions is $684 per week, equal to $35,568 a year, and the highly compensated employee total is $107,432 including at least $684 per week on a salary or fee basis. These thresholds do not apply to lawyers. [DOL WHD salary levels page]
- Legal Services (NAICS 5411) is on OSHA's partially exempt industry list, so law firms do not have to keep OSHA 300 injury and illness logs unless OSHA or BLS asks in writing. They must still report any work-related fatality, in-patient hospitalization, amputation or loss of an eye. [OSHA 29 CFR 1904 Subpart B, Appendix A]
Read the full guide to the payroll compliance library, and the rest of the law firm payroll library.
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Frequently Asked Questions
Law firm compliance: DOL Fact Sheet #17D
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.
Law firm compliance: 29 CFR 541.301(e)(7)
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.
Law firm compliance: DOL Fact Sheet #17C
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.
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: Wage and Hour Division
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