It is important to understand that the payment of benefits from Davis-Bacon wages may not pay for benefits covering non Davis-Bacon hours. One cannot use Davis Bacon the “fringe benefit” amount set forth in the Davis Bacon wage determination to pay for an employee’s entire month of healthcare, when the employee also works on many non-prevailing wage projects. The contractor must instead “amortize” the cost of the health care payment into a per hour calculation. There are several formulas which are acceptable to the DOL. The simplest is to amortize the premium over a year: Monthly premium paid on behalf of the employee X 12(months) divided by 2080 (typical number of working hours per year). = XXX per hour
credited toward fringes. Or, the DOL will generally accept a monthly amortization rate: Monthly premium paid on behalf of the employee divided by 160 hours (or another number which a contractor can validate as an average number of hours worked in a month or a prior year) = XXX per hour credited toward fringes. Remember, if a worker is not eligible to receive health benefits (because of a 30 or 90 day qualification or wait period) then the contractor cannot claim the amount of the anticipated premium. For those months where the employee is not qualified to receive benefits, the contractor must pay the employee the full amount or the cash equivalent of such benefits on the worker’s paycheck. If a contractor only pays for the individual employee’s health care coverage and the employee pays the additional coverage for family, etc. then the contractor may only amortize the amount the employer is actually paying (not the portion the employee is contributing).
The information above is brought to you by: Deborah Wilder’s “What Every Contractor Should Know About Prevailing Wages”