1000 hour rule

[Gary]

a plan credits hrs of svc based on actual hrs an ee is paid or entitled to payment. If a salaried ee works overtime, say over 40 hrs in a week, is he credited (for benefit accrual and vesting purposes) with all the hrs worked? That is, is he credited with the hrs above 40 also?

[Dave Baker]

Sure (I think). Seems like the hours in excess of 40 would be hours for which the individual is paid or entitled to payment.

Even though the payment would be 150% of the hourly rate for the first 40 hours, only the actual number of hours (not 150% of that number) in excess of 40 would be added to the first 40, though.

Every now and then a plan will use "equivalencies," which would say (for example) that a person who works just 1 hour, or any number of hours more than that (e.g. 55) would be credited with exactly 45 hours of service for that week. In that situation I guess overtime work doesn't make a difference.

[Gary]

To be more specific. Say a salaried ee makes $5,000/wk. He makes this if he works 40 or 50 or 60 hrs that week. However, in counting hours worked. Is it 40, since salaried or is he credited with the 50 ro 60 hrs for purposes of crediting for vesting?

[david rigby]

I'm not sure I agree with Dave.

Since the hours worked are irrelevant to the comp he receives, then the regs say you credit 40 hours per week (I think). But, can the plan define the service to credit more, using actual hours if more than 40? Not sure. Certainly would be an opportunity for abuse. The usefulness of such a provision may be doubtful.

[Gary]

where exactly in the regs is this subject addressed? In the meantime I will start looking.

[david rigby]

Sorry that I do not have regs. handy.

"Hour of Service" is defined in ERISA sections 202 and 203, and in IRC section 410(a)(3)©. Probably good to start with DOL and IRS regs on those cites.

[Guest FredReilly]

The hour of service definition is contained in Labor Reg. 2530.200b-2. It includes each hour for which an employee is paid or entitled to payment for performance of service. I am sure that includes overtime hours.

[Guest FredReilly]

The hour of service definition is contained in Labor Reg. 2530.200b-2. It includes each hour for which an employee is paid or entitled to payment for performance of service. I am sure that includes overtime hours.