Belo Plans are another wage option under the FLSA that can benefit some employers. A Belo Plan is a form of guaranteed compensation that includes a pre-determined amount of overtime. It offers the employee the security of a set weekly income, with the employer able to anticipate and control labor costs and bookkeeping calculations. 29 C.F.R. § 778.404
There are a number of requirements for an enforceable Belo Plan:
- There must be a specific agreement/contract (Section 7(f) Contract) between the employer and the employee, although such an agreement need not be in writing. 29 C.F.R. § 778.407.
- The employee’s duties must necessitate irregular hours of work. 29 C.F.R. § 778.405. This has been interpreted to mean that the employee’s work must fluctuate such that the employee sometimes works more than 40 hours a week and other times fewer than 40 hours during the week.
- The weekly overtime payment must be guaranteed. 29 C.F.R. § 778.413. In other words, if the Belo Plan calls for 60 hours of work and the employee works 40 hours, the employee still gets full payment;
- The guaranteed number of weekly hours worked cannot exceed 60. 29 C.F.R § 778.412. All hours worked beyond 60 per week must be compensated at an additional time and a half. The type of employees who might qualify for a Belo Plan include “outside buyers, on-call servicemen, insurance adjustor, newspaper reporters and photographers, firefighters, trouble-shooters and the like. 29 C.F.R. § 778.405.
If the parties agree upon a regular rate of $8 an hour and enter into a contract that provides a weekly guarantee of pay for 60 hours per week, every week the employee would be paid the regular rate of $320 ($8 x 40 hours) plus an overtime rate of $240 ($12.00 x 20 hours). Thus, every week, for all work performed up to and including 60 hours a week, the employee would be paid $560. In the event the employee worked more than 60 hours per week, an additional overtime premium would be payable at the $12.00 per hour rate.