Many government contractors probably feel that whenever they turn around the Executive Order or Office of Federal Contract Compliance Programs (OFCCP) is handing them another regulation that affects their business. This comes on top of looming deadlines for Affordable Care Act (ACA) compliance and other factors that can affect a construction-related business, such as weather, job delays, employee turnover, and equipment glitches. Government contractors can take some solace in knowing there’s at least one aspect of their business they can control and, in doing so, hand over some of their worries to a qualified partner. This area is providing bona fide benefits for workers on prevailing wage jobs.
ACA COMPLICATIONS
Every individual in the United States is now required to have health insurance (or be subject to a penalty, which greatly increases over the next 3 years). After several delays, the deadline for “applicable large employers” with 100 or more full-time employees and FTE (Full Time Equivalent Employees) to comply with ACA’s employer mandate is just months away. Complying with the employer mandate means employers have to anticipate which employees will work enough hours in the coming months to qualify for coverage. In areas of the country where the weather can stop work quickly, that’s a tall order. On the other hand, when the weather is good, workers likely put in far more than the required 30 hours per week, which would require their employer to cover them.
Let’s throw a few more wrinkles into the employer mandate situation. Everything about construction pay and benefits runs on an hourly basis, while most everything in the world of employee benefits runs on a monthly one. Again, given the ebb and flow of seasonal work, employers in the construction world probably deal with layoffs and rehires more than employers in other industries.
While it’s true that smaller employers are not legally required to provide health insurance under the ACA, every individual in the U.S. is now required to have it. For employees who are unfamiliar with health insurance, the terminology used and the process of comparing various plans can easily be overwhelming. There’s no longer a shortage of work in the construction industry, and the most skilled laborers won’t have difficulty finding an employer or union that will offer health insurance for both the worker and his or her family.
The solution for government contractors is surprisingly simple. Some bona fide benefits providers offer a tool called hour banking, which alleviates and streamlines the tracking, accounting, and reporting required of the contractor.
HOUR BANKING 101
In very simple terms, hour banking is a way for employees to put extra hours worked (or the equivalent hourly premium) during peak construction periods into a “bank.” If there’s a slowdown in work due to weather or a lag between contracts, the employees can then draw from these banked hours and premium to extend coverage for themselves and their families.
Some benefit providers that specialize in benefits for contractors working on Davis-Bacon Act projects offer hour banking and handle the administration of the program for their contractor clients. This is especially beneficial for contractors who work on projects in several states and across multiple jobsites, as well as for those with employees who perform work in different job classifications. Hour banking breaks the monthly premium into an hourly rate, which makes tracking and accounting much easier for the employer.
ADVANTAGES FOR THE BUSINESS OWNER
With employer provisions of the ACA set to take effect January 1, 2015, hour banking is a simple tool for tracking hours worked. From the standpoint of tracking premiums, hour banking helps contractors who work on both public and private jobs by distilling rates paid on both types of contracts into one hourly rate.
Hour banking also offers many advantages for small employers. Breaking the monthly premium into an hourly rate makes tracking and accounting much easier. This significantly simplifies the accounting process and reduces the chance of overpayment of benefits. Having a per-hour cost makes the process of preparing bids simpler and more precise because the contractor knows exactly how much to factor into each hour they project they’ll spend on the job.
SUMMARY
Using prevailing wage fringe benefit dollars as intended—to provide benefits for workers—just makes sense from a bottom-line perspective. Even without ACA, passing up significant savings on payroll burden by continuing to pay the fringe as additional cash wages just doesn’t add up. You can realize the savings in the form of leaner bids or increased profits (which in turn helps the contractor be bonded) or both. Hour banking takes those advantages a step further, giving you another tool to assist with recruiting and retention of the best workers.
Visit the interactive calculator at www.thecontractorsplan.com to input your company’s data and estimate your potential savings. ■
About The Author
Adam Bonsky is EVP of government markets for Fringe Benefit Group, which has been helping the construction industry design and administer fringe benefit programs since 1983. For more information on its prevailing wage benefit plan, The Contractors Plan, and bidding on government jobs, visit www.thecontractorsplan.com. Adam may be reached at 800.662.6177 or abonsky@fbg.com.
Modern Contractor Solutions, December 2014
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