While the guaranteed pay may not cover more than 60 hours, the
contract may guarantee pay for a lesser number of hours. In order for a
contract to qualify as a bona fide contract for an employee whose duties
necessitate irregular hours of work, the number of hours for which pay
is guaranteed must bear a reasonable relation to the number of hours the
employee may be expected to work. A guaranty of pay for 60 hours to an
employee whose duties necessitate irregular hours of work which can
reasonably be expected to range no higher than 50 hours would not
qualify as a bona fide contract under this section. The rate specified
in such a contract would be wholly fictitious and therefore would not be
a ``regular rate'' as discussed above. When the parties enter into a
guaranteed pay contract, therefore, they should determine, as far as
possible, the range of hours the employee is likely to work. In deciding
the amount of the guaranty they should not choose a guaranty of pay to
cover the maximum number of hours which the employee will be likely to
work at any time but should rather select a figure low enough so that it
may reasonably be expected that the rate will be operative in a
significant number of workweeks. In both Walling v. A. H. Belo Co., 316
U.S. 624 and Walling v. Halliburton Oil Well Cementing Co., 331 U.S. 17
the court found that the employees did actually exceed the number of
hours (60 and 84 respectively) for which pay was guaranteed on fairly
frequent occasions so that the hourly rate stipulated in the contract in
each case was often operative and did actually control the compensation
received by the employees. In cases where the guaranteed number of hours
has not been exceeded in a significant number of workweeks, this fact
will be weighed in the light of all the other facts and circumstances
pertinent to the agreement before reaching a conclusion as to its effect
on the validity of the pay arrangement. By a periodic review of the
actual operation of the contract the employer can determine whether a
stipulated contract rate reasonably expected by the parties to be
operative in a significant number of workweeks is actually so operative
or whether adjustments in the contract are necessary to ensure such an
operative rate.
