ParalegalGateway's Weblog: Compensation

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AUSTIN – Critics say the Texas Workforce Commission has overstated the role that federal requirements played in delaying 13 more weeks of unemployment benefits for Texans who have been out of work more than a year.

Andrew Stettner of the National Employment Law Project, an advocacy group for low-wage workers, said a requirement that the jobless document their work searches is a quarter-century old and has been partially waived by the Obama administration.

"Some states have had problems for sure, but other states have done it faster and we've heard of no state that's doing it this slow," he said.

On Wednesday, Texas officials announced they had indefinitely postponed a 13-week extension of unemployment compensation approved by state lawmakers in late May.

"It seems like Texas is more worried about one worker getting a check in error than getting the benefits out quickly," Stettner said.

Workforce Commission Chairman Tom Pauken of Dallas called the criticism "incredibly unfair." Unlike with regular unemployment compensation, people who apply for extended benefits "have to be willing to take a job that is below what they normally would be willing to do," he said.

"We really don't want to break the rules," Pauken said. "The question is: How can we speed it up?"

U.S. Department of Labor spokesman Michael Trupo said many of the 36 states now eligible for the federally paid extended benefits have had difficulty implementing their programs. Rules were adopted in the early 1980s, when laid-off workers filed in person at state offices or by mail, he said.

"Now claims are filed mostly over the phone using interactive voice-response systems. It means the state has to get a new system in place," Trupo said. "Of course, this requirement has been well-known and part of Texas law for about 25 years, so Texas shouldn't have been surprised by it."

Ill-equipped for need

Federal rules are just one problem vexing Texas' unemployment insurance system as it struggles to pay out about $3 billion to the state's jobless this year, up from $1.3 billion last year.

While a commission spokeswoman blames "17 pages of federal regulations," experts cited creaky computers, a lack of experience with prolonged recessions and manpower shortages. The commission has added 350 temporary workers to its call centers.

To speed the start of extended benefits, Pauken said, the commission may recruit technicians versed in its old German-made data programs that run on mainframe computers.

By state law, the commission's unemployment insurance trust fund can never have more than $1.7 billion in employer tax money on hand, so it soon will borrow from the federal government and might issue bonds to keep benefits flowing into next year.

Pauken said that although news accounts about the fund's deficit have worried many claimants, "benefits will be paid." Borrowing is routine, he said.

Busy signals at commission call centers also are routine, as is uncertainty about program rules and how long benefits last.

Angela Dinwiddie of Dallas said her internal alarm bells went off this week when she read about delay of the 13-week extension of benefits.

Dinwiddie was laid off from her job as a paralegal at a golf course management company last November. Her regular 26 weeks of benefits expired in late May. She now draws "emergency unemployment compensation," which lasts 33 weeks.

But she recalled a call center representative's saying last spring that she had been approved for 13 weeks of the next round of benefits, so Dinwiddie feared she might soon be cut off.

Although that's not true, Dinwiddie, who said she's applied for about 150 jobs and gotten only two interviews, is anxious.

"I have $100 in the bank," she said. "And Sunday I'm supposed to file for my next payment, which I would receive on Tuesday. So if I'm not getting any more money, then that means that this is all I have for my food. My utilities are due. Are they going to cut off my utilities?"

Pauken, a former state Republican Party chairman appointed by Gov. Rick Perry to lead the workforce commission, said he understands "people are struggling out there."

That's why, he said, he's pushing commission executives to seek federal lenience on certain rules and possibly add staff to accelerate the extension. One midlevel agency official said this week in an e-mail that it would be November before the benefits flow. They would be retroactive.

"But it's not as simple" as critics say, Pauken argued. "The other states in question already had a system in place, already had a law, already had been through this process in many instances. And we haven't. And so it's a different situation."

Other states ramp up

Stettner, though, said Georgia and Florida passed laws in May to take advantage of the special 100 percent federal funding of the extra benefits, which will expire early next year. Extended benefits in both states began flowing this month, he said.

Don Winstead, special adviser to Florida GOP Gov. Charlie Crist, agreed that to have claimants prove they've "met the suitable work requirement and still make timely payments does create a challenge."

He said Florida quickly ramped up extended benefits after it hired computer specialists.

"We were able to bring in some outside contractors who assisted our staff in the development, programming, testing and implementation," Winstead said in an e-mail.

He said Florida, like Texas, hadn't granted extended benefits since 1981.

Stettner said federal officials tried to ease the mid-1980s paperwork rules, telling states in May that they may take people at their word that they've looked for work and do audits later.

Former state District Judge Scott McCown of the Center for Public Policy Priorities in Austin, an advocacy group for low-income Texans, said as many as 70,000 of the more than 350,000 unemployed now drawing benefits will exhaust eligibility before November.

He said the state should "set up some special hotlines and staff them."

Texas pays benefits to a lower percentage of its jobless – 31 percent – than any other state except South Dakota, Labor Department statistics show. McCown said Texas has shown generosity when hurricanes devastate communities and should do the same for workers hurt by an awful recession.

Ann Hatchitt, the commission's spokeswoman, said it must act cautiously "so that once we start paying benefits, [the federal government] won't disqualify the claims and ask the state of Texas to pay the money back."

Source: DallasNews

by Peter G. Golden

Last month, we highlighted the federal overtime law as it applies to paralegals, concluding that in most cases, paralegals are not exempt from the Fair Labor Standards Act’s overtime laws and must be appropriately compensated for any hours work in excess of 40 in a given week (1). This month, we’ll tackle the ethical boundaries of creatively compensating paralegals for something other than the mere quality and quantity of the work performed.

Has your firm ever proposed to give you a cut of a contingency fee recovery on a case you’ve been assigned to? Ever been on a job interview where the lawyer promised you a referral fee for any case you brought to the firm as part of the overall compensation package? Well, these compensation arrangements can sure seem enticing, but do your state’s rules of professional responsibility allow for them? Probably not.

While the rules of professional conduct are not identical in every state, in virtually all states, general “fee splitting” or specific sharing of fees received from a particular matter is not allowed. Thus, lawyers may not, by advance agreement, make contingency payments to paralegals based on the outcome of a case. For example, your boss likely cannot, within the bounds of professional responsibility, promise to pay you a bonus equivalent to 5% of the amount of attorneys’ fees recovered in a particular matter. This, and similar fee splitting arrangements have been near universally rejected by state bar associations and boards of ethics. The rationale for prohibiting this conduct is to “protect the lawyer’s professional independence and judgment.” (2)

But to the contrary, attorneys may compensate paralegals based on the quantity and quality of their work and the value of that work to the law practice. (3) Thus, in addition to regular compensation, paralegals generally may also be paid discretionary merit based bonuses or bonuses based on the overall success of the firm or practice area. (4) Thus, a lawyer or law firm that has a profitable year may award a paralegal a bonus based on the overall success of the firm, or the paralegal’s contribution or extraordinary work on a particular case.

Separate from the fee splitting issue, is the issue of referral fee payments. In a nutshell, lawyers are prohibited from paying paralegals for referring legal work to the firm. The rationale for prohibiting an attorney from sharing a percentage of attorney’s fees with a paralegal is that it may lead to improper interference in a case by the paralegal. (5) In fact, it was referral fee payments to non-lawyers and charges of fee splitting that ultimately resulted in disciplinary action against attorneys in one highly successful New Jersey law firm. In 2000, Tomar Simonoff, a well known personal injury firm in New Jersey dissolved after allegations surfaced that it paid referral fees to paralegals, secretaries and other non-lawyers and that it conditioned the bonus of an office administrator on office revenue. During proceedings to determine whether the attorneys involved acted improperly, numerous firm employees came forward to claim that paralegals and secretary referral fees were a standard part of the compensation package. Ultimately, the New Jersey Disciplinary Review Board recommended that two attorneys in the firm have their license suspended for one year. Thus, for attorneys, the punishment for providing non-lawyers with improper forms of compensation can be significant. (more>>>)