In 1938, Franklin D. Roosevelt signed into law the Fair Labor Standards Act (FLSA). The FLS set the minimum wage, introduced the forty-hour work week, restricted child labor, and set overtime pay regulation.

But, as employers soon realized, the overtime provision requiring time-and-a-half to be paid often creates complicated bookkeeping. To remedy this, employers were permitted to institute a Belo plan. This plan allows employers to pay employees who work unpredictable schedules a fixed salary. Employers like the simplicity, and employees enjoy the steady paycheck.

To qualify as a Belo plan under the FLSA, though, four requirements must be met:

• The employee must work pursuant to an individual contract or collective bargaining agreement,
• The employee’s job duties must necessitate irregular work hours,
• The employee’s contract must specify a regular rate of pay for hours up to forty per week and a rate equal to one and one-half times that rate for hours over forty, and
• The employee’s contract must provide a weekly pay guarantee for no more than sixty hours, based on specified rates.

In Jones v. Producers Service Corporation, oilfield technicians argued that the Belo plan run by their employer served to deflate their wages and not pay them the lawful overtime premium for hours worked. The technicians looked to the second of the four factors above, arguing that their job duties did not necessitate irregular work hours.

The parties agreed that oilfield technicians work irregular hours but did not agree on whether such hours were necessary. Oilfield drilling requires that the technicians work in alternating 12-hour shifts. And, because the drill sites are often far from civilization, technicians stay in camps on site for one or two weeks at a time.

The technicians argued that most of the irregularity in their schedule was artificially created by the employer or from their prescheduled vacation time, and that the job did not actually require an irregular schedule. However, the employer disagreed and argued that the energy industry constantly fluctuates, causing inconsistency in drilling; the technicians’ vacation time did not explain all the empty time in their schedule (as evidence of industry fluctuations), and pointed to some technicians’ own testimony that lack of work caused some of these gaps.

On procedural grounds, the Court remanded to a lower court for additional proceedings. However, practically, it’s a good reminder to make sure that you don’t run a Belo plan that is susceptible to similar arguments.

Photo: Franklin D. Roosevelt signing the Fair Labor Standards Act in 1938.