Fringe benefits on certified payroll: cash, plans, and the credit you can take

The prevailing wage is basic rate plus fringe

If a determination lists a laborer at $24.00 basic and $8.50 fringe, the worker must receive $32.50 per hour in some combination of cash wages and bona fide fringe benefits. Paying $32.50 in cash satisfies the requirement; so does $24.00 in cash plus $8.50 per hour contributed to qualifying plans; so does $28.00 cash plus $4.50 in plan contributions. What does not work is paying $24.00 and treating benefits that are not bona fide, or that the worker would receive anyway under law, as the difference.

What counts as a bona fide plan

Contributions count when they are made irrevocably to a trustee or third party under a fund, plan or program for the worker's benefit — health insurance, pension or 401(k) contributions, life insurance, vacation and holiday pay funds, apprenticeship training funds. Benefits required by law (Social Security, unemployment insurance, workers' compensation) never count. Unfunded plans, where the employer promises a benefit but keeps the money, count only with prior Department of Labor approval, and self-administered vacation or bonus arrangements are scrutinised closely.

Working out the hourly credit

The credit is the contribution converted to an hourly figure. For benefits that are paid per hour worked, that is direct. For monthly premiums or annual contributions, the rule is annualisation: divide the total contribution by all hours the worker works in the year — on public and private jobs alike — not just the hours on the covered project. A $600 monthly health premium for a worker who works 173 hours a month is about $3.47 per hour of credit, whether or not all of those hours were on Davis-Bacon work. Contractors who divide by covered hours only overstate the credit and understate cash owed.

Keep the arithmetic on file: plan documents, contribution records and the hours base. Reviewers ask for it, and a credit that cannot be reconstructed is treated as if it were never earned.

Overtime and fringe

Overtime premium under the Contract Work Hours and Safety Standards Act is calculated on the basic hourly rate (or the worker's regular rate if higher), not on the fringe amount. Fringe continues to be owed for every hour, including overtime hours, but it is not multiplied by 1.5. Payroll systems that compute overtime on the full loaded rate overpay; systems that drop fringe on overtime hours underpay.

Reporting fringe on the WH-347

Column 6 of the revised form separates the actual cash rate (6A), the fringe credit per hour (6B) and cash paid in lieu of fringe (6C). On the Statement of Compliance the signer declares whether fringe was paid to approved plans, paid in cash, or both, with exceptions listed by classification. The declaration must match the columns; a payroll that shows a plan credit while certifying cash payment will be returned.