What is the Walsh-Healey Act and How does it Affect Employers

What is the Walsh-Healy Act and How does it Affect Employers

The Walsh-Healey Public Contracts Act requires contractors engaged in the manufacturing or furnishing of materials, supplies, articles, or equipment government of America or the District of Columbia to pay employees who produce, assemble, handle or ship goods under contracts that exceed $10,000 the federal minimum wage for all the hours worked and time and a half their regular rate of pay for all over time past the 40 hour work week.  This act is enforced by Employment Standards Administration’s Wage and Hour Division within the U.S. Department of Labor.

What is the Walsh-Healy Act and How does it Affect EmployersThis contract applies to all contractors or employers who enter into contracts with the government for the manufacturing or furnishing of materials etc. in excess of $10,000. The act makes prime contractors liable if subcontractors violate the Act.

Although the Act does not apply to employees who are exempt from the minimum wage and overtime requirements under the Fair Labor Standards due to their employment in a bona fide executive, administrative, professional or outside salespersons capacity, a contractor must still pay these employees an overtime rate for all time worked over a 12 hour work day and/or 56 hour work week. If and when an employer fails to do so, they must pay the exempt employee an overtime rate for ALL hours over 40 in a given work week.

When employers/contractors violate the Act, they’re subject to such severe penalties as being debarred from future government contracts for at least three years (worst case scenario).

Contractors subject to the Act must keep the following records for three years:

1) Name, sex, address and occupation of each employee under the Act

2) Birthdates of all employees under 19 years old

3) Wage and hour records of every employee

These records must be kept for two years:

1) Basic employment and earnings records

2)Wage and rate tables

3)Work time schedules



Prevailing Wage Contract Thresholds Per State

Prevailing wage  laws are laws that require state contracted workers to be paid the same wages customarily paid to those in the private sector. 32 states have prevailing wage laws currently intact and four states have increased their contract values since 2006. One state, Wisconsin, has actually lowered its contract value since 2006. Every state has different thresholds that determine when their laws go into effect. There are 18 states, mostly in the South or Midwest, that don’t have prevailing wage laws. Nine of them because they’ve repealed their laws and eight of them that simply never had any such law. However, remember that the Davis Bacon Act applies to ALL states.

Check out the states Wage and Hour Division Here

States with prevailing wage contract thresholds generally apply their laws when the project’s contract value meets or exceeds a pre determined threshold amount. When projects fall below the threshold, they’re not required to pay the prevailing wage. Connecticut’s threshold for new construction is high at $400,000 and only Maryland’s is higher. Connecticut’s threshold for remodeling is $100,000. Indiana, Kentucky, Maryland and Vermont’s remodeling thresholds are higher but identical to their new construction thresholds. There are nine states that generally apply prevailing wage laws to all their public projects. They are: Illinois, Massachusetts, Michigan, Missouri, Nebraska, New York, Texas, Washington and West Virginia.

of the 18 non prevailing wage states, eight of them have never enacted any such law and nine of them have repealed their laws during the majority of the 1980s (1979-1988). New Hampshire is the only Northeastern state without a prevailing wage law. They repealed theirs in 1985. This was due to the prevailing rates skyrocketing the price of a school’s project and causing contractors to not bid on another project. Florida was the first state ever to repeal its prevailing wage law in 1979.

Do Your Employee’s Wages Violate the Law? (More on the SCA)

Do Your Employee’s Wages Violate the Law? (More on the SCA)

The Service Contract Act is a legal mandate for specific wage and benefit rates that workers MUST be paid by their employers. Huge fines can result for the employer who doesn’t follow this mandate.

Any employers in the management, building, property or equipment service, or food service industries who contract with the government must comply with the SCA. Recently, the SCA has included security services, though health care services are still exempt.

Based on an employee’s job classification, the SCA requires them to be paid certain wages. Additionally, businesses covered by the SCA need to provide their employees with certain benefits that are also based on their classification. These benefits include: medical, surgical or hospital care, training, death, disability, pension, unemployment, as well as vacation and holiday and personal leave.Do Your Employee's Wages Violate the Law? (More on the SCA)

Say an employee protected by the SCA goes from a minimum wage of $8.25 to $10.14 due to the SCA; he or she also must be paid benefits at a rate of $3.05 per hour. If the law does not specify an exact benefit amount, the employee is entitled to a default rate of 30% of that wage. There are three different ways this benefit can be paid. It can be paid as direct payment to the employee, payment to buy insurance in the equivalent amount or by implementing an employee benefit fund. Benefits already required under state law such as worker’s compensation, unemployment or social security do not fall under the 30% surcharge according to the DOL( Department of Labor).

Employers can be fined thousands of dollars for each violation. In addition to penalties, employers may also be responsible for back wages and interest payments to workers who have been underpaid.

Employees who keep accurate records of SCA compliance lower the risk of fines and penalties greatly. SCA covered employers have to submit annual certified payrolls to the DOL. An employer who can’t produce these records can be fined up to $200 a day.

When entering into a contract, see if it contains language submitting it to the SCA. These are known as Successor contracts and place the same requirements on the business. The concern for employers entering into successor contracts are that the wage rate schedule can change as it’s project specific. Be sure to obtain all wage rate information and review it before contracting with someone/place that is already contracted with the state.

The burdens of the SCA can be alleviated for employers or their successors who are already covered by a collective bargaining agreement. If you are covered by a CBA, you are excused from prevailing wage and benefit rates.

It can be hard to determine if a contract is covered by the SCA. To navigate the waters of the DOL, Fringe Consulting can help.




Contribution Amounts Annualized for Prevailing Wage Purposes

Contribution Amounts Annualized for Prevailing Wage Purposes

There are public works contractors that are fully aware and familiar with the need to annualize their portion of the medical premium that they provide. There are also public works contractors who are not and need further guidance from the folks at Fringe. For those who may be the latter, please take note of these two base principals or guidelines regarding annualization of contributions as pertains to our prevailing wage consulting clients.Contribution Amounts Annualized for Prevailing Wage Purposes

1) Annual Payments. For annualization purposes, contractors who make their yearly payments to cover the entire year’s medical premiums prior to the upcoming year, the total amount of hours worked by the employees the preceding year will be considered as representing a normal work year. Even if the employee is expected to work less, this next coming year, the previous year’s hours are still considered to be the norm. Therefore, to determine the hourly cash equivalent that the employer is entitled to take credit for, the total hours worked should be divided into the contribution made by the employer.

For instance, if an employee works 2,000 hours the previous year and the employer makes an yearly contribution of $7,500, then 7,000/2,000 comes out to $3.50 per hour credit.

2) Monthly Payments. For employers who pay monthly rather than annually, there are a couple of ways to decipher the hourly cash equivalent.

a) You can take the hours worked in the previous month( or same month in the previous yr) and divide it into the contribution made by the employer. For instance, if an employee worked 120 the previous month and the employer’s contribution is $200, then 200/120 comes out to $1.61 per hour credit. This method is Health Insurance Premiums Paid on a Lump Sum Basis.

b) If the employer wants to pay monthly but doesn’t want to make the calculations for the credit monthly, they instead may want to estimate the annualized amount and take the same credit for each employee throughout the year. This is the most popular and easiest choice. To decipher the annualized amount, a contractor may use the full year equivalent of 2,080 hours in determining the applicable credit.  Therefore, if the employer’s contribution to the medical premium is $300, then, 300×12/2,080 comes out to $1.73.

Remember, when doing a premium annualization estimate, you need to review the total amount of hours worked by each employee quarterly. If an employee is fore seen to work more than 2,080 hours, a refund needs to be issued to the employee for the overaged amounts and no more credit can be taken for him/her during that year.

Should you find any of this confusing, please contact us today.

6 Ways the Affordable Care Act Could Cost Federal Contractors More

Six Ways the Affordable Care Act Could Cost Federal Contractors More

The impending health insurance reform leaves federal contractors facing major cost increases. President Obama signed the Patient Protection and Affordable Care Act (PPACA or Act) into law on March 23, 2010. Besides the politics surrounding the law, the Act raises cost and compliance implications for federal contractors significantly. Many federal contractors are unaware of theSix Ways the Affordable Care Act Could Cost Federal Contractor's More  impending changes and costs that are about to happen due to the Act. Enrollment in exchanges are set to begin October 2013 and key provisions of the Act become effective in January 2014 all following affirmation of the Supreme Court. It is certainly time for federal contractors to set their minds on how all this change could affect their bottom line. Following, are six ways the Act could increase costs for federal contractors and ways they can prepare for the impact said expenses will have.

1) The Act’s health care obligations include new requirements on individuals, employers and health plans, and restructures the private health insurance market, setting minimum standards for health insurance. It also provides financial assistance to some individuals. Before the October 2013 date and exchange enrollment, employers are required to provide formal notice to employees that the exchanges are available. Following this time, cost implications will be close behind and it’s important for federal contractors with slim margins and tight budget constraints to assess what it will take for them to comply.

2) Potential Cost impacts include play or pay penalties for employers. Employers need to either provide affordable health insurance that is valuable or pay a penalty. Therefore, they either “play” along with the set Act OR “pay” a penalty. Employers must be aware of their employees eligibility for tax credits and must carefully assess whether their firm is considered large. Because if their firm is considered large, they can be subject to monthly fees or penalties.

Six Ways the Affordable Care Act Could Cost Federal Contractor's More3)Traditionally full time employees are considered those who work 40 hours a week. The Act describes them as working 30 plus hours a week. The new definition of part time workers is a major change in the breakpoint for employee benefits coverage. This change could significantly alter federal contractors’ insurance costs and in turn generate increased overhead costs, ultimately affecting the employer’s competitive pricing strategies.

4) Another impact will be excess health benefits or “Cadillac” tax. The Act will also penalize high cost benefit plans. Many within the insurance industry refer to this as the Cadillac tax.

5) Contractors with Service Contract Act (SCA) employees face even more dramatic consequences under the Act than those above. Prevailing wage determinations dictate that SCA employers can offer SCA employees benefits as fringe dollars. Starting in January 2014, the Act eliminates this simple way for employers to comply with the SCA and establishes the more complicated regime under which large employers have to provide an “affordable plan meeting minimum value” for their employees or face big penalties.

6) Employers face potential costs under the exchange system. The exchanges are partly intended to keep health care costs down but they may also subject employers to additional business and administrative costs.

Prevailing Wage Employee Benefit Administration

Prevailing Wage Employee Benefit Administration for Davis Bacon and Service Act Contractors

The U.S. Department of Labor or DOL has responsibilities to oversee that coordination, administration and consistency of the of the labor standards provisions of the Davis Bacon and Related Acts is being followed. The DOL has issued regulations under this authority to establish standards and procedures for the administration and enforcement of the Davis-Bacon labor standards provisions in covered contracts they’re responsible for or to which they provide federal assistance under laws they administer.

Compliance Assistance Materials include:Prevailing Wage Employee Benefit Administration

Davis-Bacon and Related Acts web page – Information on prevailing wage and benefits.

Employment Law Guide – Prevailing Wages in Construction Contracts – Description of the coverage and basic requirements of prevailing wages in construction contracts.

Compliance Assistance – Davis Bacon and Related Acts web page – Information on the acts that require prevailing wages and fringe benefits on federal construction contracts.

Wage Survey Form  – Optional form to ensure consistency in submission of wage data.

Wage Determinations on line – A single location providing federal contract officers and the public to use in obtaining SCA and DBA wage determinations for each official contract action.

Davis Bacon poster – Covered contractors must post this poster.

Form WH-347 – Optional form that satisfies requirements of Regulations parts 3 and 5. See 29 CFR 5.5 (a)(3)  for more information.

Davis Bacon Act – Requires payment of prevailing wages to laborers on a federal construction contract.

Reorganization Plan of 1950

29 CFR Part 1, 29 CFR Part 3, 29 CFR Part 5, 29 CFR Part 6, 29 CFR Part 7 – Regulation descriptions.

This is all the compliance materials, record keeping materials and applicable laws and regulations.  Contact Fringe Consulting for more information.


Service Contract Act – Fringe Consulting

Service Contract Act

The Service Contract Act, hereto referred to as SCA was enacted to prevent wage busting and displacement of workers. In the act, wages, benefits, vacation and holiday policies are specified as well as other working conditions for employees who fall under certain SCA classifications.Service Contract Act – Fringe Consulting

Anyone wishing to bid for a federal service contract in Massachusetts, New England, Boston or elsewhere, must meet the requirements of the act and develop strategies to make sure they also stay in compliance.

Before bidding on a project or negotiating the project price, it’s important to have a sound and thorough understanding of the financial and operation implications of the SCA.

The SCA enforces compensation requirements on the general contractors as well as their subcontractors providing services to the federal government. Make sure to note that the SCA applies to service contracts performed within the U.S. when the contract value exceeds $2500. If a portion of the contract is performed outside of the U.S., it does not apply as well as if a certain federal contract is exempt.

So, how does one make sure all their ducks are in a row as far as the SCA is concerned? Here is a helpful checklist to use as your measuring stick:

-Employee duties they actually perform dictate the classification of that job under the act and the rate of pay they’re entitled to under the applicable wage determination.

-When starting a new federal contract, previous or incumbent employees should be offered first right of refusal by the contractor within ten days. This can be done by acquiring copies of the predecessor’s service employment contract.

-Payable wages must meet prevailing wage rates and fringe benefits.

-The regular pay rate of such an employee shall not include any fringe benefit payments which are excluded from the regular rate under the FLSA.

-An employer may be able to apply a Special Minimum Wage when employing workers with disabilities. This exception applies only to prevailing wage and not fringe benefits. The employer must obtain the appropriate certification from the Department of Labor.

-The SCA specifies a distinction between temporary, part-time, and full-time employees and entitles them to an amount of the fringe benefits that is proportionate to the amount of time spent in work subject to the SCA.

-The SCA requires extensive record keeping. You must keep available such things as the employee’s basic information, correct work classification, wage rates and fringe benefits provided; hours worked, pay rates applied, paid vacation and holidays for three years from the completion of a given work assignment.

Should an employer not comply with the requirements of SCA, the Department of Labor has the authority to withhold the violator’s contract funds in order to reimburse the employees, as well as terminate the contract, holding the contractor liable for associated costs. Lastly, the violator can be prevented from participating in future federal contracts for three years.

Real Pros Know the Value of Hiring Expertise!

Real Pros Know the Value of Hiring Expertise!

When it comes to landing government contracts for the first time, many small business owners feel a bit like Captain Kirk when he left earth for outer space, “going where no man has gone before.” The truth is, there are people who know the ins and outs of government contract compliance and smart people consult them before their names and reputation go on the dotted line.

Why? All government contractors must prove that their contract workers receive comparable wages to salaried workers before the contracts can be validated. The rules are dictated by Davis-Bacon laws that attempt to safe guard prevailing wages for workers.  It is a bit complicated, but with some solid coaching, you will be landing those lucrative government contracts in no time!Fringe Benefits for companies

Fringe Consulting doesn’t deal with Area 51 and space aliens, they deal with employee fringe benefit programs that not only keep you compliant with federal regulations, it can actually provide your contract laborers with a better return on their retirement using programs are tax-deferred or sheltered.

What does that mean to you? As a small business owner you already know how expensive it is to hold on to quality workers when the jobs thin out. With a contract labor force, “you can make hay while the sun shines” then rest easy during those inconvenient lulls that even the best businesses must endure.

Fringe Consulting specializes in helping businesses create competitive and attractive benefits packages that can help your best laborers stay loyal to you! That gives your work force a competitive edge over fly by night firms that have to rebuild a labor force every time they land a new contract. The stronger your team, the safer your bottom line.

Businesses that use Fringe Consulting see their services as an insurance policy against costly litigation that arises from ignorance of the law on an ever changing landscape. The pros at Fringe Consulting stay up to date on the law and that means you can stay up to date on the things that keep your business making money when others lose their shirts.

Think of it this way, some people content themselves to save a few bucks on the tools they depend on most only to spend more time and money fixing problems later. When you work with Fringe Consulting, you get a proven product and the peace of mind that comes from knowing that you won’t have to deal with red tape when you should be getting your job done!

No matter how you look at it, using a team like Fringe Consulting keeps you doing what you do best because they always do their best to keep you compliant with government regulations. That means you have more time to spend building successful bids that keep your teams moving when others are sending their workers home.

Sound good? Give these guys a call. They know their business and that means you can spend more time doing what you know, working hard and earning a good living! Call Fringe Consulting today!

These topics might also interest you:

Get that Competitive Edge when Bidding Contractor Jobs

Hour Banking for Prevailing Wage Contractors

Employing Fringe Benefits

Get that Competitive Edge when Bidding Contractor Jobs

Get that Competitive Edge when Bidding Contractor Jobs

Build Your Business by Landing Government Contracts

As a contractor, you need to “make hay while the sun shines!”  In this market, that means being more competitive when bidding public construction projects. Every year, Davis Bacon and Service Contract Act projects are put out to public bid, but for you to win and turn a profit, you need to know the ins and outs of the rules and regulations that apply to these “one of a kind” projects. Sound complicated?Get that Competitive Edge when Bidding Contractor Jobs

It doesn’t have to be!

Fringe Consulting specializes in helping businesses like yours land profitable contracts while safely navigating the obstacles along the way. How? Our experience in creating Davis-Bacon Act compliant benefits packages ensures that you meet government regulations, provide your workers with competitive benefits packages and ensure that you are not overpaying!

Many contractors pay their workers additional cash wages and still pay a portion of their health insurance premiums. A better approach is to pay insurance premiums using fringe funds. This provides your workers with the same benefits but lets you keep more of your hard earned money! It is a no-brainer because it eliminates your payroll burden on funds you pay out for healthcare.

You could try to get this right yourself, but why? Fringe Consulting can lower your payroll taxes, workers comp and general liability insurance and improve your compliance to all prevailing wage laws those government contracts require. That means you stay compliant and still have a chance turn a profit when the job is done!

Fringe Consulting provides you with quality pension plans, fringe benefit options, prevailing wage consulting and employee benefits for either short-term or long-term contracts. When you offer fringe benefits in lieu of cash wages, you save money for both employer and workers by reducing tax exposure to all. We offer a complete range of fringe benefits, pension plans and trust programs.

What are you waiting for? Call Fringe Consulting today and lets discuss a better fringe benefits strategy to help you win more bids!


Seasonal Workforce Solutions for Prevailing Wage Contractors

 Schedules can Interrupt the Workforce

Prevailing wage contractors often are challenged with managing a workforce that experiences interrupted work schedules.  Some trades experience this more often including heavy highway, roofing, utility, masonry, excavators, boring and many more contractor specialties.

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