What is Prevailing Wage?
What is the Davis Bacon Act?
What is Contractors Trust?
How does the Contractors Trust work?
What is VEBA?
What is a Welfare Benefit?
What is ERISA?
What is a Fringe Benefit?
What is the Service Contract Act (SCA)?
Why should you outsource fringe benefits administration?
There are a few good reasons to outsource your fringe benefits administration:
1. Enables you to focus on what you do best…managing your company.
2. We provide an easy access online system “ARROW” for you and your employees.
3. We ensure that all employees that should be covered are and those who shouldn’t be are not. (time and cost savings)
4. Tax and payroll savings you receive by using fringe benefits, not to mention ability to lower your bids based on these savings.
5. Trust and Contractors Plan set up.. that is easy and cost effective.
How does using bona fide benefits plans reduce your company’s payroll burden?
A part of the prevailing wage, the fringe portion, is to provide benefits for hourly workers. This benefits portions is not subject to payroll costs (FUCA, FICA, state unemployment taxes, general liability, and in some states, workers comp insurance). There are variances in the rates, these taxes represent approximately a 17-25 cents addition for every dollar paid as cash wages.
What does Prevailing Wage mean?
In government contracting, Prevailing Wage is defined as the hourly wage, usual benefits and overtime, paid in the largest city in each county, to the majority of workers, laborers, and mechanics. Prevailing wages are established, by the Department of Labor & Industries, for each trade and occupation employed in the performance of public work. See Prevailing wages rates by state.
What is the Davis Bacon Act?
The Davis–Bacon Act of 1931 is a United States federal law that establishes the requirement for paying the local prevailing wages on public works projects for laborers and mechanics.
Overview (as seen on the United States Department of Labor site)
The Davis-Bacon and Related Acts, apply to contractors and subcontractors performing on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works. Davis-Bacon Act and Related Act contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the local prevailing wages and fringe benefits for corresponding work on similar projects in the area. The Davis-Bacon Act directs the Department of Labor to determine such locally prevailing wage rates. The Davis-Bacon Act applies to contractors and subcontractors performing work on federal or District of Columbia contracts. The Davis-Bacon Act prevailing wage provisions apply to the “Related Acts,” under which federal agencies assist construction projects through grants, loans, loan guarantees, and insurance.
Prime contracts in excess of $100,000, contractors and subcontractors must also, under the provisions of the Contract Work Hours and Safety Standards Act, as amended, pay laborers and mechanics, including guards and watchmen, at least one and one-half times their regular rate of pay for all hours worked over 40 in a workweek. The overtime provisions of the Fair Labor Standards Act may also apply to DBA-covered contracts.
What is ARROW Contractors Trust?
We specialize in working with government contractors. Importantly, we place our clients, their employees, and the safety and security of their company benefits plan first. Services include benefits and retirement plan consultants, health-insurance product development and brokerage, retirement plan investment advisory, health plan administration and record-keeping, retirement plan administration and record-keeping, ERISA 403 (a) discretionary trustee services, and technology management and implementation to government contractors.
How does the ARROW Contractors Trust work?
Fringe benefits contributions are made to ARROW Contractors Trust monthly and credited to the account of each of your employees, both to your Welfare trust or VEBA, Voluntary Employee Benefits Association, and to your Retirement Trust. Regular statements, as well as an online portal, are available to you and your employees so you can both see when contributions and benefits payments are made, as well as each individuals account balance. Our online portal "ARROW" also provides online access to your personnel for employee data entry (new employees), updating (change of address, etc.) and reports (contact info, coverage info, payments, etc.) quickly and efficiently.
We custom design each client’s plan to maximize savings, ensure compliance and provide flexible benefit solutions tailored to your employees. Benefit offerings can include medical (fully insured or self-insured) dental, vision, life and disability insurance, vacation and holiday pay, apprentice training, supplemental unemployment and retirement plan benefits. Funds can be held in reserve to pay for benefits during periods of layoff. Click here to see our products
What is "VEBA"?
VEBA is an acronym for "voluntary employees' beneficiary association." They are trusts that are exempt from tax under the provisions of IRC section 501(c)(9). A VEBA is a "welfare benefit fund" to which sections 419 and 419A will apply if it is part of a plan of an employer through which the employer provides welfare benefits to employees and their beneficiaries. While welfare benefit funds can also be taxable trusts, most welfare benefit funds apply for exempt status as VEBAs in order to reduce or eliminate income taxes at the trust level. VEBA’s file Form 990, whereas taxable trusts file Form 1041. Click here for more Internal Revenue Info
What is a Welfare Benefit?
A "welfare benefit" is an employee benefit other than those to which IRC sections 83(h), 404, and 404A apply. The most common types of welfare benefits are medical, dental, disability, severance and life insurance benefits. It is important to remember that an examination of an employer’s deduction for its contribution to a welfare benefit fund is not an examination of the trust itself. The actual examination of a VEBA trust itself must be handled by an agent from the Tax Exempt and Government Entities division. Click here for more Internal Revenue Info
What is the Employee Retirement Income Security Act of 1974 (ERISA)?
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals of those plans.
ERISA requires plans to provide participants with all plan information including information on plan funding and features. It also requires requires plans to establish a grievance and appeals process for participants to get benefits from their plans; and
ERISA does not cover group health plans established or maintained by governmental entities, plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws and churches for their employees. ERISA also does not cover plans maintained outside the United States primarily for the benefit of nonresident aliens or unfunded excess benefit plans. For more info visit the United States Department of Labor website.
What is a Fringe Benefit?
A fringe benefit is a form of pay for the performance of services. For example, you provide an employee with a fringe benefit when you allow the employee to use a business vehicle to commute to and from work. See below for definitions as seen on the IRS site Publication 15B
Performance of services. A person who performs services for you doesn't have to be your employee. A person may perform services for you as an independent contractor, partner, or director. Also, for fringe benefit purposes, treat a person who agrees not to perform services (such as under a covenant not to compete) as performing services.
Provider of benefit. You are the provider of a fringe benefit if it is provided for services performed for you. You are considered the provider of a fringe benefit even if a third party, such as your client or customer, provides the benefit to your employee for services the employee performs for you. For example, if, in exchange for goods or services, your customer provides day care services as a fringe benefit to your employees for services they provide for you as their employer, then you are the provider of this fringe benefit even though the customer is actually providing the day care.
Recipient of benefit. The person who performs services for you is considered the recipient of a fringe benefit provided for those services. That person may be considered the recipient even if the benefit is provided to someone who didn't perform services for you. For example, your employee may be the recipient of a fringe benefit you provide to a member of the employee's family.
What is the McNamara-O-Hara Service Contract Act (SCA)
The McNamara-O'Hara Service Contract Act (SCA) requires payment of prevailing wage rates and fringe benefits to service employees employed on contracts to provide services to the federal government. As seen on the United States Department of Labor site.
The McNamara-O’Hara Service Contract Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement. The Department of Labor issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies. These determinations are incorporated into the contract.