Tag: Prevailing Wage

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Fringe Benefits Overview

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Fringe Benefits are an important factor of prevailing wage and can include a variety of benefits in addition to normal wages. According to the IRS, they are considered a form of compensation for services rendered. These benefits can include health or pension plans, among others. In the context of prevailing wage, fringe benefits are significant for two reasons:

  1. What counts as a Fringe Benefit: It is essential to determine what can be categorized as a fringe benefit. The amount must be paid to a 3rd party on behalf of and to benefit the employee. Examples of bona fide fringe benefit plans include health or pension plans.
  2. Factoring into Prevailing Wage: Fringe benefit payments may be taken into account when calculating prevailing wage rates for employees. Employers need to calculate the hourly cost of providing these benefits to the employees. This amount can be added to regular wages when determining the total compensation offered to employees to meet the prevailing wage requirements.

On August 23, 2023, the Department published in the Federal Register the final rule, “Updating the Davis-Bacon and Related Acts Regulations.”  The final rule updates regulations issued under the Davis-Bacon and Related Acts. The final rule is effective on October 23, 2023.

The final rule adds new paragraph (c) to § 5.25 to codify the principle of annualization that is used to calculate the amount of Davis-Bacon credit that a contractor may receive for contributions to a bona fide fringe benefit plan (or the reasonably anticipated costs of an unfunded benefit plan) when the contractor’s workers work on both DBRA-covered and private (non-DBRA) work. Contractors, plans, and other interested parties may request an exception from the annualization requirement by submitting a request to WHD, but such exceptions may be granted only if the benefit provided by the plan is not continuous in nature and does not compensate both DBRA-covered and non-DBRA work.

Generally, Fringe Benefits encompass employer contributions relayed to employees, firmly entrusted to a trustee or an external party as part of a genuine fringe benefit fund plan or program. This plan should be reasonably anticipated and represent a binding financial commitment for the employees’ benefit. It’s important to note that employer contributions mandated by federal, state, or local regulations do not fall under the category of fringe benefits.

Fringe benefits can be confusing, but taking these factors into account will help you remain compliant and avoid penalties! 

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Prevailing Wage in Hawaii

Prevailing Wage Hawaii

Surf, sand, and prevailing wage in the Land of Aloha!? Chapter 104 of the Hawaii Revised Statutes (HRS) established and details Prevailing Wage mandates in Hawaii. The code sets the minimum wage and hour requirements for laborers and mechanics working on public works projects in Hawaii. It requires contractors and subcontractors to pay their workers no less than the prevailing wage rate for similar work in the same locality. The law aims to ensure that workers are paid fairly for their work on public projects and to prevent contractors from underbidding one another by paying their workers less than the prevailing wage. It is important to note that Chapter 104 applies to all public works projects over $2,000 involving a Governmental Contracting Agency, regardless of funding source. By enforcing this law, Hawaii is committed to protecting the rights of workers and ensuring that they are compensated fairly for their work on public projects.

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Prevailing Wage for California Temporary Staffing Agencies

Awarding Agencies

Misclassifying employees from Temporary Staffing Agencies is a frequent mistake in prevailing wage. It’s important to know how contractors utilizing these employees are subject to the prevailing wage requirements on applicable projects. 

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What is a Temp Agency?

A temporary staffing agency, or most popularly known as a temp agency, is a recruiting firm that acts as an intermediary between candidates looking for work and companies needing short-term employees or indefinite temporary positions. Temp agency employees work for what is referred to as a “host employer” (or an employer who has general supervisory authority over the worksite) but are on the payroll of a “primary employer.” The primary employer can be either: A temp agency that hires workers and sends them to work for a host employer, or a professional employer organization (PEO) that puts a host employer’s employees on the PEO’s payroll as its own employees. 

What are the Prevailing Wage Requirements?

Prevailing wages are expected to be paid on certain project types. Public works projects most commonly enforce the payment of prevailing wages. Temp agencies may be called in by contractors to assist in performing work for these projects. The “primary employer” status designates which body, between the Temp agency and the hiring contractor, would be held under the prevailing wage requirements in this situation. 

When it comes to prevailing wage, temporary staffing agencies must register with the DIR if the temp agency submits their own payroll as the primary employer (See CCR Title 8, § 16410). However, if the hiring contractor includes the temp 

employee on their payroll and can submit payroll for them, the temp agency does not need to be registered with the DIR. 

Temp Employees, Apprenticeship, and Violation Penalties

As referenced on the DIR’s FAQ website, “Apprenticeship requirements are the responsibility of the contractor. If a Contractor relies on the temp agency and there are problems, it is the Contractor who will be responsible for any resulting penalties.” 

Apprenticeship standards are enforced on public works projects and published under Labor Code 1777.5. Meeting these standards are included within a contractor’s duties on public works projects. If a contractor chooses to utilize employees from a temp agency in place of a valid request for apprentices, the contractor may be in violation. 

Some of the requirements regarding apprenticeship standards can include but are not limited to not employing apprentices if utilizing an apprenticeable craft, late and/or DAS 140 forms not being sent for apprenticeable crafts, and/or failure to make training payments for all hours worked. 

1777.7(a)(1) notes that contractors who violate any of the apprenticeship standards found in §1777.5 “shall forfeit as a civil penalty” an amount not exceeding $100 “for each full calendar day of noncompliance.” 

Conclusion

Although temp agency employees can be beneficial when it comes to saving time on training and hiring, employers must be aware and do their due diligence to ensure they are meeting the prevailing wage requirements when they are choosing to work with temp agencies to avoid costly penalties on California State Funded Public Works projects.