Belo Plans, Fluctuating Workweeks, and Guaranteed Pay for Nonexempt Employees
The Fair Labor Standards Act (FLSA) governs the minimum wage and overtime pay requirements of the nation's workers. Under the FLSA, employers are required to pay employees, who are not otherwise exempt, the federal minimum wage and any overtime pay of one and one half times the employee's regular rate of pay. The regular rate of pay is calculated by adding together all wage payments; noncash wages in the form of goods, board, or lodging; and non-overtime premium payments, such as night shift differentials. Because of these requirements, nonexempt employee pay is often variable.
Paying a fixed salary, therefore, regardless of hours worked, is generally limited to employees who are exempt from the requirements of the FLSA. The amount paid to a nonexempt employee, even if salaried, is usually subject to adjustment with variations in hours worked. However, where the requirements are met, a nonexempt employee can be paid a fixed salary each workweek even though the hours vary from week to week. A Belo plan is the only guaranteed pay plan that allows for the inclusion of overtime compensation in the guaranteed salary. However, a Belo plan is subject to strict rules including the setting of the salary rate, the maximum number of hours allowed before an employee is entitled to additional overtime compensation, and the actual fluctuation of the hours worked from workweek to workweek.
A fluctuation workweek plan allows for a set salary, regardless of the number of hours worked, for regular pay purposes, but requires overtime compensation for hours worked in excess of the statutory maximum. Under this plan, pay in addition to the regular salary is restricted and an employee's hours must fluctuate from workweek to workweek. Employees may also be paid under other plans that smooth employee earnings such as day or job rates or for a "stint". However, it is important for employers to be aware that such plans do not reduce the need to keep accurate records of hours worked. In addition, there are several types of payment plans that do not meet the statutory requirements of the FLSA such as artificial wage rates, split day plans, pseudo bonuses, or a low "regular" rate supplemented by employer provided "facilities".
In this session with tax expert, Patrick Haggerty, you will get a better understanding of Belo plans, fluctuating workweeks, and guaranteed pay for nonexempt employees. You will also understand the risks involved in these plans, which may involve payment of back wages and penalties.
Learn when a guaranteed pay plan makes sense for the employer
Understand the recordkeeping requirements for fixed salary plans
Discover how a fluctuating workweek plan could be beneficial
Learn which deductions from salary are allowed, and which are prohibited
Learn which plans fail to meet FLSA standards and why they fail
Learn how to handle FMLA leave under guaranteed pay plans
Investigate how paid time off is applied to the fixed salary
Understand bonuses and fluctuating workweek plans
Appreciate how the half time pay method works
Learn the techniques used to control overtime costs
Discover how to assure fixed salary employees are properly compensated for overtime
Gain an appreciation for how Belo Plans differ from other guaranteed pay plans
Know whether workweek hours must fluctuate on both sides of forty hours per workweek
Detailed discussion of requirements for allowable methods
Discussion of potential use of Fluctuating work week as a remedy in employee misclassification cases
Examples of situations in which particular guaranteed pay plan might be beneficial
Examples of plans including numerical tables that show the effects on employee compensation
Examples of plans that do not meet the FLSA requirements
The importance of a clear and mutual understanding between employer and employee of the pay plan
Who Should Attend
Payroll Supervisors and Personnel
Payroll Service Providers
Tax Compliance Officers
Employee Benefits Administrators
Officers and Managers with Payroll or Tax Compliance Oversight
Pat Haggerty is a tax practitioner, author, and educator. His work experience includes non-profit organization management, banking, manufacturing accounting, and tax practice. He began teaching accounting at the college level in 1988. He is licensed as an Enrolled Agent by the U. S. Treasury to repr...