Davis-Bacon Compliance Principles.ppt

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Examples of Fringe Benefits Life Insurance Health Insurance Pension Vacation Holiday Sick Leave Funded Fringe Benefit Plans Contractors may take credit (without prior approval from DOL) for bona fide FB fund contributions made to third-party trustees or insurers that: Are irrevocably paid; and, Are made regularly, not less often than quarterly Credit is for payments made for individual workers eligible to participate in the plan, program, or fund Unfunded Fringe Benefit Plans Costs for an “unfunded” FB plan count towards WD obligation if specific following are met: Costs reasonably anticipated to provide bona fide FB Pursuant to an enforceable commitment Carried out under a financially responsible plan Has been communicated in writing to affected workers Annualization Principle Applies to benefits of a continuous nature (e.g., health insurance, pension plans) Determine hourly rate of contribution that is creditable towards contractor’s Davis-Bacon prevailing wage obligation by: Dividing the total annual contributions by the total annual hours worked (both Davis-Bacon and non-Davis-Bacon work); and Allocating fringe benefit credits so that Davis-Bacon work is not be used to fund benefits on private (non-Davis-Bacon) work AnnualizationDefined Contribution Pension Plans Davis-Bacon credit is based on the effective annual rate of contributions for all hours worked in a year (both Davis-Bacon and non-Davis-Bacon work) An exception to the annualization principle applies to plans that provide immediate participation and essentially immediate vesting (100% vesting after an employee works 500 or fewer hours). This exception allows full credit for the amount of contributions made on Davis-Bacon work Annualization Example Defined Contribution Pension Plan A firm’s contribution for an employee’s pension plan that does not provide for immediate vesting was computed at $2,000 a year. The employee worked 1,500