Federal Davis-Bacon Rates typically set forth a Wage Rate and a fringe Benefit Rate for each classification. The contractor MUST pay NOT LESS than the total of the wage and fringe benefit amount either to the employee or “for the benefit of the employee” Fringe benefits must be made irrevocably for the benefit of the employee and in most cases to an ERISA approved plan
(ERISA is the Employee Retirement Income and Security Act and governs the handling of various health and welfare plans, pension plans, etc.).
For a union contractor, usually, fringe benefit payments are part of the contractor’s collective bargaining obligation, are calculated at a “per hour rate” and will equal or exceed the total fringe benefits amount listed in the Davis-Bacon wage determination. If a contractor pays only some fringe benefits, but not the full amount of the fringe amount, then the contractor may take “credit” for the appropriate amount of the fringe benefit contribution and must pay the difference to the employee in cash (on the employee’s paycheck).
Types of Fringe benefits include: Health insurance, dental coverage, vision coverage, disability plans, pension contributions, life insurance, annuities, etc. These benefits can be calculated and paid based on a specific amount per hour or a percentage of salary.
The information above is brought to you by: Deborah Wilder’s “What Every Contractor Should Know About Prevailing Wages”