You know how important it is to be cost competitive. More importantly, in these tough economic times, you know that just a few thousand or even a few hundred dollars in your bid can be the difference between a large government contract and laying-off employees. Lower your job costs and save money by taking the fringe off of your prevailing wage payroll.
Contractors performing work (services) subject to the Davis-Bacon Act, State or Municipal Prevailing Wage law or the Service Contract Act - who are not subject to a collective bargaining agreement - can save substantial bottom line dollars by redirecting fringe dollars into bona fide benefit plans.
The contractor controls the allocation of fringe dollars. The contractor, however, is required to pay out those dollars on a per-hour / per-employee basis for every hour worked – but they may do so in any combination of cash and/or bona-fide benefit plan(s).
Paying fringes as cash in lieu of benefits creates a liability equivalent to your payroll tax burden in the following areas*:
By placing the fringe portion of the prevailing wage on your employees’ paychecks, your mandatory fringe payments are being treated as wages and unnecessary payroll taxes are incurred.
On average, this amounts to 25% or $.25 on every dollar. That may not sound like much. But, for a large government contract, you might be paying thousands of dollars in taxes that you don’t need to be spending.
Outstanding Advantages to the Employer.
Let’s say you have 10 employees working 40 hours / week on a year-long job and your mandatory fringe contributions are $10/hour. Your workers comp per hundred is $13.50 (per $100 of payroll) and your G/L premium is $5.49 (per $1,000 in payroll) - a nice conservative amount. Based on these numbers, you are wasting $36,107 dollars per year. Look at these job cost reduction calculations. What does this mean for your firm, you ask?
At T&M Group, we are here to help you put a cost-saving strategy into action. You’ll be glad you did.
*Varies by state
Hard to believe that big cost savings can be as easy as eliminating the Fringe off of your payroll, but it’s true. While both Davis-Bacon and State prevailing wage laws mandate the amount of fringe you pay to your employees, they offer options for how you pay it. And that’s why T&M is here.
T&M Group specializes in helping you direct fringe benefit dollars into bona fide employee benefit plans, thus avoiding unnecessary payroll burden. Your employees get the benefit of great benefits.