The Fair Labor Standards Act (FLSA) does permit a wage plan that provides for a constant wage, even though overtime is worked. It is know as the "Belo Plan," named after the company that successfully argued its merits to the U.S. Supreme Court.
The Belo Plan is designed for salaried employees who work irregular hours, but there are a number of restrictions. Under this Plan, the employer and the employee agree on an hourly rate of pay which is substantially less than the employee's average hourly earnings in an ordinary week. The employee is promised this hourly rate for the first 40 yours each week, not less than time and one-half this rate for overtime hours, with a guarantee of a certain weekly salary regardless of the number of hours the employee works.
The Belo Plan is appropriate when the employee's job demands irregular hours of work. However, the following six requirements must be adhered to:
- There must be a written agreement between the employer and the employee.
- The employee's regular hourly rate must be specified.
- The employer must guarantee time and one-half the regular rate for hours worked over 40.
- The employer must guarantee a weekly salary, regardless of the number of hours actually worked.
- The guaranteed weekly salary may not cover more than 60 hours per week.
- When the employee's earnings at the regular rate for 40 hours and time and on-half for additional hours exceed the amount of the guarantee, the employee must be paid the excess over the guarantee.
For more information about Belo Plans, and a detailed explanation of compensation considerations, you might like to read an article written by Robert Ditmer.