FEDERAL WAGE LAW: EMPLOYER AGREEMENT FOR OVERTIME

Managing overtime is a constant struggle for many businesses especially when the employee’s duties necessitate irregular work hours or the typical work shift simply cannot be anticipated with reasonable certainty. Businesses that require on-call services can very easily find themselves paying an excessive amount of overtime to meet the demands of their clients with diminishing returns. Peter Mavrick is a Fort Lauderdale employment attorney who represents businesses in defense against lawsuits filed by employees.

Employers need to know that there is an exception to the federal overtime wage law. Section 7(f) of the federal overtime wage law, i.e., the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207(f), allows employers to negotiate a minimum weekly pay equivalent to 40 hours at a regular rate of pay, and up to but not more than 20 overtime hours for at least one and one-half times the regular rate of pay.

This type of compensation is known as a “Belo plan” based on the United States Supreme Court’s decision in Walling v. A.M. Belo Corp., 316 U.S. 624 (1942). Under the Belo plan, a fixed payment of this kind is permitted when the employee’s duties necessitate irregular work hours and the total wages would vary widely from week to week if computed on an hourly rate basis.

Businesses have successfully had the Belo contract upheld in Court, where all the requirements were met. In the case of Schweninger v. Advanced Vision Technology, Inc., 273 F. Supp. 3d 946 (N.D. Ill. March 31, 2017), the business had previously run into financial difficulties, so it changed its pay structure to adopt a Belo contract. Specifically, the company lowered the hourly wages, but also guaranteed a minimum weekly pay equivalent to 40 hours at a regular hourly wage and an additional 10 hours at an overtime wage equal to one and a half times the regular wage.

The former employee worked as a Field Service Engineer and his job duties involved a wide range of activities that required him to travel to customer locations for installations or repair work. The trips were planned ahead of time, but the duration of the trips could vary for a multitude of reasons. In addition, the former employee was also on call for troubleshooting issues. After the business successfully proved that the legal requirements were met, the Court upheld the Belo exception in favor of the business.

To meet the requirements of the Belo plan, (1) the employee must be employed pursuant to a bona fide individual agreement, meaning that it must be agreed to by the employee and entered in good faith. (2) “The nature of the employee’s duties must be such that neither he nor his employer can either control or anticipate with any degree of certainty the number of hours he must work from week to week.” 29 C.F.R. 778.405; and the “duties must necessitate significant variations in weekly hours of work both below and above the statutory weekly limit on nonovertime hours.” Id. Irregularities do not include personal absences, illness, vacations or any other reason unrelated to the nature of the duties being performed. (3) The agreed upon pay must be a regular rate of pay for the weekly hours worked up to 40 hours and the weekly hours worked in excess of 40 but no more than 60 must be a minimum of one and half times the regular rate of pay. (4) Lastly, the agreement contains a guaranteed weekly pay, based on the rates specified rates, but for not more than 60 hours of work.

The employment agreement does not have to be written in order to meet the Belo exception. It is important to remember, however, that it is the employer’s burden to affirmatively show that each of the conditions have been met. Therefore, it is often in the employer’s interest to have a written agreement to prove the employer’s compliance with Belo. Peter Mavrick is a Fort Lauderdale employment lawyer who represents businesses and their owners.

The Fort Lauderdale employment litigation attorneys at the Mavrick Law Firm have successfully represented many businesses in employment law claims in the Miami-Dade, Broward, and Palm Beach County areas encompassed by the Third and Fourth District Courts of Appeal, as well as Hillsborough, Sarasota, and other counties encompassed by the Second Circuit Court of Appeal. This article is not a substitute for legal advice tailored to a particular situation. Peter T. Mavrick can be reached at: Website: www.mavricklaw.com; Telephone: 954-564-2246; Address: 1620 West Oakland Park Boulevard, Suite 300, Fort Lauderdale, Florida 33311.