Cash is Not King with Benefits
My entire 27-year career has been centered on helping merit shop construction companies design and administer employee benefit plans compliant with prevailing wage regulations and I am still astounded when I hear that a contactor chooses to pay required fringe benefit contributions as cash wages rather than benefits because “that is what employees want”.
Don’t get me wrong, I am a business owner and I understand the importance of being mindful of employees needs and creating a workplace of harmony. I am fully aware that no business can reach its potential without a healthy and well-motivated team. However, true leaders make business decisions that are in the best interest of the company in its entirety. Fortunately, in the case of prevailing wage fringe benefits, what is in the best interest of the company and the best interest of the employees is aligned!
Strong employee benefit programs offering benefits such as health, dental, paid-time off, supplemental unemployment and retirement benefits create tremendous advantages for employees and business owners. Put simply, using fringe dollars to fund benefit programs is a way for you to take care of your employees.
Many of our clients at DirectAdvisors, are multi-generational construction companies who have funded prevailing wage benefit programs for decades. Not only do the owners of the companies span multiple generations, so do their employees. This does not happen by accident. By caring for their employees, they have sent the message that they are a valued part of the team that is integral to the overall success of the company.
When a company instead chooses to pay fringe benefits as cash wages, they are sending the message to their team that their employment is transactional in nature and makes it much easier for employees to walk away. It is also an expensive way of handling this obligation because wages are subject to a full array of payroll related taxes and expenses. This becomes a competitive disadvantage when others bidding on the project have greater efficiency in handling fringe benefits. This can easily be the difference between a winning bid and a second-place bid.
How we can help
DirectAdvisors, established in 2001 and located in Albany, New York provides bona fide benefit plan consulting and third party administrative services to merit shop (non-union) construction companies that are subject to the Davis-Bacon Act, Service Contract Act and state prevailing wage regulations. Our clients are located throughout the United States and range in size from 10 to 3,000 employees.
In 2018, our construction company clients will contribute tens of millions of dollars of prevailing wage fringe benefit contributions to The DirectAdvisors Trust (health & welfare benefits) and retirement plans managed by our team.
Our solutions are free from any conflict of interest as we do not sell any financial or insurance products. We work with existing agents, brokers and insurance companies.
If you have additional questions please do not hesitate to contact us or download our whitepapers – “Harnessing the Power of Supplemental Unemployment Benefit Plans” and “Working the Fringe.”
Please also view our short animated video, to see how constructing a bona fide fringe benefit plan, can move prevailing wage dollars out of payroll and reduce associated costs. Increase profits. Submit more competitive bids. Build employee loyalty.