Fringe benefits are additional compensation provided to employees above and beyond an agreed-upon wage or salary. A fringe rate, or benefit rate, is the cost of an employee's benefits divided by the wages paid to an employee for the hours working on the job. The fringe rate is designed to allow employees to be able to purchase benefits when not offered by their employer.
If you’re in the construction business and you work on a government project, then you are subject to paying employees the prevailing wage for that job. The prevailing wage is established by regulatory agencies, including State Departments of Labor, for each trade and occupation working on a public job in a particular area and represents the required compensation, including hourly wages, fringe benefits, and overtime.
There are several variables which influence the government wage determination pay rate: specific job (Job ABC), work class (carpenter, plumber, etc.) , state in which work is being performed, prevailing hourly rate (may be higher than base rate), and fringe rate (hourly amount applied to benefits). Similar to the prevailing hourly rate, the fringe rate varies for each government project based on the employee’s work class, or role, and location of the project.
Most Time and Attendance systems are not designed for these complexities, such as fringe rates not paid at the premium amount of 1.5x and 2.0x.
Adding further complexity, the prevailing wage rates and corresponding fringe rates for a multi-year contract typically specify the future rate increases for the life of the contract (e.g. Prevailing hourly rates and fringe rates increase 12/31 of each year).
Example of a government-project fringe rate scenario:
For a government funded highway project that spans different cities in New York, the fringe rate will vary based on the job and location. E.g. a supervisor on the project may earn $12.50/hour of fringe benefits when working on the project while in Manhattan and $8.33/hour when working in Queens.
How can IDI help?
IDI can automate your time-consuming processes! Our Time Bank™ Prevailing Wage Rates solution is designed for companies working on government projects that require paying a job and location-specific wage for worked performed, including the corresponding fringe rate, and who have been relying on spreadsheets and manual calculations.
When Time Bank is run at the end of the pay period, it retrieves the time and labor information from the time system and associates the specific rates of pay and fringe earnings with the certified job and worker classification. After determining rates, Time Bank calculates the weekly average rate of pay, or FLSA rate, used for all overtime hours in accordance with FLSA guidelines.
With the click of a button, Time Bank reads the rates from a stored user-maintained table or from a client-provided comma-delimited file, the calculation is made, and the results are passed to payroll.