Type of Contractor: Electrical Construction
# of Employees: Approximately 30

Our featured company is an electrical contractor who works predominately on projects covered by the Davis-Bacon Act. No employee benefits have been offered to the employees and the typical prevailing wage fringe benefit rate is $29 per hour. The contractor has provides it as additional cash wages.

The company hired DirectAdvisors to design a comprehensive bona fide benefit program that could be funded fully with the fringe benefit portion of the prevailing wage rate.


DirectAdvisors met with company leaders as well as their employee benefit insurance broker to determine the mix of benefits that would be most needed and valued by the field staff.

The employer initially felt that medical and dental insurance would not be widely embraced because many of the field staff had coverage through a spouse. However, after meeting with the field staff, we were approached with a high level of interest. Many of the employees were unhappy with high deductibles and co-pays they had to pay.

To address this need, with the help of our clients’ insurance broker, we put in place a high deductible medical plan in conjunction with a Health Savings Account. The Health Savings Account, like all the other benefits, is funded with prevailing wage fringe dollars. Now employees can pay all deductibles and co-pays from the Health Savings Account and have no out of pocket expense.

In addition to the insured benefits, employees also expressed a need for paid-time-off (PTO) benefits such as vacation, sick pay, and holiday pay. This has been put in place so that employees can have up to 80 hours per year of PTO.

The company has expressed a desire to make sure that funding was also set aside to provide on-going job training, supplemental unemployment benefits (income replacement during lay-offs) and retirement savings.

Following is an example of the breakdown of how the employer has provided the required fringe benefit rate of $29 per hour:

Family medical insurance $24,000
Health Savings Account $5,000
Dental insurance $1,500
Paid Time Off $2,800
Supplemental Unemployment $4,000
Job Training $1,500
Retirement Savings $19,200

Total cost of benefits $58,000

Total Hours Worked 2,000

Benefit cost per hour $29

The Results:

The financial savings to the company by moving approximately $1.75 million of prevailing wage fringe benefit payments out of payroll and into a bona fide plan is substantial. The companies labor burden rate (payroll related taxes and coverages) is approximately 22%. $1.75 mm x 22% = $385,000 in savings.

The employees now have a full array of benefits which are flexible enough to meet their individual needs. Those that continue to secure medical coverage through a spouse receive a higher level of retirement savings.

How DirectAdvisors can help

DirectAdvisors, located in Albany, New York, provides bona fide benefit plan consulting and third party administrative services to merit shop (non-union) construction companies subject to the Davis-Bacon Act, Service Contract Act and state prevailing wage regulations. Our clients are located throughout the United States and range in size from 10 to 3,000 employees.

In 2018, our construction company clients will contribute tens of millions of dollars of prevailing wage fringe benefit contributions to The DirectAdvisors Trust (health & welfare benefits) and retirement plans managed by our team.

Our solutions are free from any conflict of interest as we do not sell any financial or insurance products. We work with existing agents, brokers and insurance companies.

If you have additional questions please do not hesitate to contact us or download our whitepapers – “Harnessing the Power of Supplemental Unemployment Benefit Plans” and “Working the Fringe.”

Please also view our short animated video, to see how constructing a bona fide fringe benefit plan can:

  • move prevailing wage dollars out of payroll
  • reduce associated costs
  • Increase profits
  • Submit more competitive bids
  • Build employee loyalty