Belo Plans, Fluctuating Workweeks, and Guaranteed Pay for Nonexempt Employees (MLC261K)

  Pre Recorded Webinar
  120 minutes

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.

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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... More info


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