Overview
Prevailing Wage Plans
Prevailing wage was established under federal law by the Davis-Bacon Act of 1931. Under the act, contractors and subcontractors are required to pay their workers an hourly prevailing wage when working on the site of a federally funded construction project valued over $2,000.
Prevailing wage consists of two parts: a base hourly rate paid to each worker and a separate per-hour dollar amount called the “fringe.” While contractors often pay out the fringe as part of a worker's wages, there is the option to fund qualified employee benefits with fringe dollars. Qualified benefits include; retirement plans, medical benefits including ancillary products, HRAs, training and vacation pay. The fringe dollars are always employer directed.
Example:
The federal government stipulates $20.00 an hour prevailing wage, allowing $3.00 of the $20.00 wage to be used for “qualified fringe benefits.” If the $3.00 is diverted to a qualified benefit, the employer can avoid paying all labor burden on the fringe amount which averages 25%.
Why Choose FuturePlan for Prevailing Wage?
Advanced Compliance Expertise
We can help you navigate the regulatory and compliance complexities with over 30 years of experience giving our clients peace-of-mind. FuturePlan is your single point of contact, managing all the relationships that determine whether you’re compliant with prevailing wage based on Department of Labor, ERISA and Davis-Bacon prevailing wage requirements.
We specialize in custom plan design and maximizing prevailing wage dollars and employee participation in the plan.
Consultative and Accessible
Expect the highest level of individualized service and advantages, like a participant resource center dedicated to answering employee questions—complete with bilingual support. We offer continuing education through in-person meetings and annual reviews, and with the bundled solutions that FuturePlan offers, contractors will save time and money, while minimizing aggravations.
Ideal Candidates
Mid to large-sized companies working in the prevailing wage and/or service contract space.
Plan Advantages
A Prevailing Wage Retirement Plan is a specialized plan that addresses the requirements of the Davis-Bacon Act, by using the fringe benefit component of prevailing wage to fund a qualified retirement plan.
Reduce Payroll Costs
Implementing a prevailing wage plan lets employers avoid labor burden on fringe benefits by diverting the funds toward a benefits plan. While paying out the mandatory fringe benefit as wages is the easiest way to comply with the law, it’s much more costly. All wages paid to employees are subject to payroll taxes, which can add up to as much as 25 cents on every dollar paid in wages.
Bid More Competitively
Use the money you save in taxes to invest in your business and win more bids by lowering cost estimates and timelines.
Attract and Reward Employees
Construction workers are 9x more likely to stay with their employer if they’re also satisfied with the benefits. Using fringe dollars to implement or improve an employee benefit program can also increase job satisfaction and retention and help employees prepare for a secure financial future.
Learn More About Prevailing Wage
Interested in learning more about prevailing wage plans? Fill out this quick form to receive a prevailing wage overview, along with answers to any additional questions you may have.
