What your Workers Need to Know About Prevailing Wage Benefit Plans

February 18th, 2015|By Jeff Bennett

One of the biggest objections we face from merit shop contractors when introducing the idea of a bona fide prevailing wage benefit plan is that workers will quit or try to unionize once they no longer receive their fringe supplements in their paychecks.

Although we certainly understand the basis for this fear, the reality is far different. The key is taking the time to educate your workforce and to show them that a prevailing wage benefit plan is a win for everyone.

How do we do this? We typically start with a discussion of competitive bidding and the impact of labor cost (wages, taxes, fringes, etc.) on a bid. Most workers don’t realize how many bids have just a few thousand dollars separating the winner from second place. This difference can be overcome easily by the savings realized by having a bona fide benefit plan, which removes the payroll burden from the fringe portion of the prevailing wage.

Employees soon realize that when you win more work (especially public work) they spend more time at the higher public work wage rate and they have money put aside for the future. Also, if you include supplemental unemployment benefits in your plan, workers will have money when they need it most: during the seasonal layoff.

We also spend time discussing the major differences between union and non-union bona fide benefit programs. With non-union retirement plans funded with prevailing wage fringes, workers are immediately vested in their retirement plan account and have access to all of their funds should they quit or change jobs. They also have the ability to work with us to help them pick from a wide array of investment options and to structure their savings plan to their liking. Union retirement plans are much more restrictive. You must wait until you reach retirement age (typically 65) before you can access your money. Workers also have no say in how their money is invested. In fact, many union pension plans are severely underfunded and risk not being able to pay the promised benefits to their workers.

Insured benefits, such as medical and dental coverage, vary greatly between union and non-union plans. Union plans have strict requirements on the number of hours members must work to qualify for benefits. With seasonality and layoffs, it’s not uncommon for workers to not qualify for coverage, or have breaks in coverage that require expensive COBRA payments. Non-union plans are much less restrictive and by utilizing The DirectAdvisors Trust, a reserve of fringe supplements can be set aside for periods of layoff or private work so that benefits can be continued uninterrupted and without the workers needing to make COBRA payments.

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.


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