Fluctuating Workweek, Belo and Other Guaranteed Pay Plans for Nonexempt Employees

Why Should You Attend:

Changes to the white-collar exemptions from the minimum wage and overtime requirements of the Fair Labor Standards Act have many employers faced with reclassification of some currently exempt employees paid on a fixed salary basis to nonexempt status.

Paying a fixed salary, regardless of hours worked, is generally limited to exempt employees. The amount paid to a non-exempt employee, even if salaried, is usually subject to adjustment with variations in hours worked. Where the requirements are met, however, a non-exempt employee can be paid a fixed salary each workweek even though the hours vary from week to week.

Understanding the rules for such plans is critical. It is important for employers to be aware that such plans do not reduce the need to keep accurate records of hours worked. Such plans have strict requirements for compliance.

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, the Department of Labor has identified a number of plans that employers have attempted to use that do not meet the statutory requirements of the FLSA. Such plans include such things as artificial wage rates, split day plans, pseudo bonuses or a low “regular” rate supplemented by employer provided “facilities”. Use of such plans can be costly to employers in terms of payment of back wages and penalties.

Learning Objectives:

• 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

Areas Covered in the Webinar:

• 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 Will Benefit:

• Payroll Supervisors and Personnel
• Payroll Consultants
• Payroll Service Providers
• Public Accountants
• Internal Auditors
• Tax Compliance Officers
• Enrolled Agents
• Employee Benefits Administrators
• Officers and Managers with Payroll or Tax Compliance Oversight
• Company / Business Owners
• Managers/ Supervisors
• Public Agency Managers
• Audit and Compliance Personnel / Risk Managers

Patrick A Haggerty
Owner, Patrick A. Haggerty, Tax and Accounting Services

Patrick A. 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 represent tax payers at all administrative levels of the IRS and is a Certified Management Accountant. He has written numerous articles and a monthly question and answer column for payroll publications. In addition, he regularly develops and presents webinars and presentations on a variety of topics including payroll tax issues, FLSA compliance, and information return reporting.

Topic Background:

The Fair Labor Standards Act 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 no overtime premium payments, such as night shift differentials. Because of these requirements, nonexempt employee pay is often variable.

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. Such plans include fluctuating-workweek plans, Belo plans and certain other guaranteed pay plans. However, such plans are subject to strict requirements in order to be compliant.

In establishing a guaranteed pay plan, it is important for the employer to make sure that the employees understand how they are being compensated and where required, agree to the payment plan. Employers must also avoid practices that are considered by the DOL to circumvent the minimum wage and overtime requirements of the FLSA.

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