Contractors have increasingly come to realize the significant savings opportunities of leveraging the fringe benefit requirements of Davis-Bacon Act contracts with their existing employee benefits program.

The January/February 2017 issue of CFMA Building Profits covered the basic concepts of maximizing prevailing wage fringe benefits, but there are many nuances of which contractors should be aware surrounding exclusions, costs, enforcement, and more.

 Navigating the contract requirements alongside employee benefits laws can be difficult, and mistakes can cause significant time and monetary costs, or worse. Contractors leveraging the fringe benefit requirements with their employee benefit plans must give special consideration in the design, implementation, and administration to ensure a compliant plan.

Improper Worker Exclusions

Properly identifying covered workers under the contract and guaranteeing they are being paid the proper wage and fringe rates is one of the most challenging parts of Davis-Bacon contracting.

Failure to properly identify covered workers can result in enforcement penalties, and failure to properly exclude workers can result in unnecessary administrative and financial costs.

Site Exclusions¹

Site of the work refers to the physical location where the work called for in the contract will remain, and any other site where a significant portion of the work is constructed if it is established specifically for the project. Therefore, batch plants, borrow pits, job headquarters, tool yards, and other locations are included as part of the site if they are primarily dedicated to the project and are adjacent or virtually adjacent to the site.

However, permanent home offices, branch plant establishments, fabrication plants, tool yards, and others whose location and operation are determined without regard to the project are not included as part of the site.

Davis-Bacon also provides that a contract’s commercial or material supplier’s own fabrication plants, batch plants, borrow pits, job headquarters, and tool yards that were established before opening of bids and not on the work site are not included in the contract. The commercial or material supplier exception applies even in situations where they are dedicated exclusively to the contract.