Understanding The Prevailing Wage
The federal law in 1931 established the Davis Bacon Act that established the prevailing wage. According to the act, contractors working on federal funded projects must pay their workers on a set hourly prevailing wage. The main reason behind the act was to ensure that contractors do not reduce the wage of the workers with intent to reduce the cost of the project. The department of labor in consideration of an individual project sets the hourly wage for the workers.
The prevailing wage is set in two parts. One involves the amount paid to the worker and the other amount pays the fridge benefits. According to the settings in place, the amount paid to the worker needs to be three quarters of the set prevailing wage. The benefits plan then takes the remaining amount. Contractors however have the option to make the payments in full to pay for the fridge benefits. Fridge benefits considered in this respect include contributions such as insurance and vacation savings among others.
Majority of contractors opt to pay the full amount to the workers as they deem this as the simple option. Paying fridge benefits is however much better if the contractors make the consideration. Basically, there are taxes applied on the payroll and this means the contractor has to pay more taxes to the government. Amounts pad for fridge benefits in this respect do not attract taxes and this means the cost for the contractor reduces significantly.
Consideration therefore arises as to which of the two programs offers more benefits. Contractors who opt to pay for the fridge contributions enjoy more benefits. They make savings on the tax contributions that comes based on the payroll. This means they realize more funds to use in bidding for future projects. It also works to help create more fridge benefit plans for the employees. The employees on the other hand stand a chance to enjoy more with the plans in place. Also, the employees also get a relieve of taxes on the amounts paid to fridge benefit plans.
Basically, the prevailing wage act is always observed to the letter. The main question however comes on the payment plan used by the contractor. The plan that offers with payment for the fridge benefit plans brings along more benefits. According to factual results, the plan benefits both the contractor and the workers. In such way, this is the best and convenient approach to use for the contractors.
As a contractor, to be able to stand out from the pack, you should find more efficient ways of doing everything. This is not only going to benefit your workers but it will be of benefit to you. It might not look like it in the beginning but in the longrun, you will realize the benefits that come with the prevailing wage. There are so many contractors but not all of them have included this and the difference will be visible to both your customers and workers too. If you are not yet sure about this, do more research to determine if this is the way to go.