Win More Davis Bacon, State Prevailing Wage and Service Contract Act Projects
If you are a public works contractor on Federal and/or State funded projects, then you are familiar with Prevailing Wage Determinations, Labor Compliance and Certified Payroll. As you know, misunderstanding these important regulations can result in penalties and fines. But what you may not be as clear on are the financial benefits and your rights regarding the payment of the fringe benefit components of the Prevailing Wage to your field workers. Do you know that as an Open Shop Contractor, you have the sole discretion of how you pay the fringes? Do you know that paying the fringes as wages is increasing your labor costs and preventing you from being more competitive? The plans you you put in place, or don’t put in place, will have a lasting financial impact on your company. We are here to help you understand and implement plans that will help the financial well being of your company on your Prevailing Wage Projects.
Lower Payroll = Lower Bids = More Winning Projects
Many contractors combine the base rate and fringe benefit components of the prevailing wage and pay their field personnel this combined amount on their paychecks. They believe it is the simplest method or don’t know of a better way. The fact is, this method of paying field personnel is VERY expensive.
Let’s take a look at an example:
A contractor with a one year California State Prevailing Wage project using 15 Operating Engineers located in San Diego using the February 22, 2014 wage determination. This contractor has a workers compensation net rate premium of 7%.
This contractor would realize $112,320 in total tax and insurance premium savings by getting the fringe off payroll! This contractor could lower its bids by the $112,320 which does three things:
1. The contractor has a better chance of winning prevailing wage jobs!
2. The contractor earns the same profit even at a lower bid!
3. The contractor has more continuous work for his company and employees!
Getting these fringe dollars off payroll and into “Bona Fide” benefit plans is the best method. The benefit plans are: