5 Employee Related Things Prevailing Wage Contractors Should Keep in Mind
Management Tips for Prevailing Wage Contractors
Contractors who work for government projects need to follow the guidelines set by the SCA and the DBA for prevailing wage workers. The contractor needs to comply these 5 guidelines and they will receive the maximum allowable credit for the fringe benefits paid on any government project.
Only Bona Fide Fringe Benefits must be offered.
Bona fide fringe benefits are the only benefits defined by the Prevailing Wage regulation as the only type of fringe that may be counted as part of the prevailing wage rate. These can include:
Insurance: This can include medical and hospital care, life insurance, disability and sickness insurance, and accident insurance. Insurance required by law, such as workman’s compensation or unemployment insurance, is not counted asprevailing wage required fringe. Bona Fide insurance must be for the benefit only of the employee andhis dependents.
Holiday and Vacation Pay (Paid Time Off): This is allowed by law if calculated and funded in a way that complies with the prevailing wage requirements.
Retirement Pensions: Contributions made to a 401k Pension Plan can be used to deposit all of the required fringes on a prevailing wage project. It can be used to offset other Retirement Plan contributions.
Apprenticeship Program: The program must be properly registered and approved by the government to be considered a bona fide fringe benefit. There are rules and guidelines that the contractor must follow in determining the amount of fringe that can be credited.
Cash: Prevailing wage fringe benefit paid in cash is paid as a regular wage, and thus subject to payroll tax.
The Benefit Program must be communicated to your prevailing wage employees in writing.
A well made benefit program is created in such a way where benefits are awarded and paid in a manner that allows the company to take credit on prevailing wage projects. The plan must define the fringe benefit being furnished, who is the beneficiary of the fringe, when can they get it, the calculations done and how the required Prevailing Wage fringes are paid.
Fringe Benefits must be paid as a cash value per hour.
Fringe benefits are expressed as a dollar per hour value, and must be paid as such. A contractor who does not follow this scheme must accept an hourly rate determined by an auditor.
In fixed rate fringe benefits, you will pay fix amounts, regardless of the number of hours worked by your employee. A calculated benefit on the other hand is paid as a dollar per hour value for the actual hours worked by the employee. It is often expressed as a percentage of the employee’s wage.
Benefit contributions must be made to benefit the employee.
This statement simply means that any payment or contributions that you have made for the employee’s fringe benefit is irrevocable, and cannot be reverted back to you.
The Benefit Program must be administered by a third party.
Regulations require that bona fide fringe benefits contributions must be administered by a third party, and must not be under your company’s sole control.
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