Save Money with Fringe Management

by Alex Gray
May 15, 2013
Read Time: Less than 3 Mins
Last Modified: April 27, 2024

Construction Payroll: make fringes easier to track

Processing construction payroll is complicated to begin with. Non-union contractors working on prevailing wage jobs have an added complexity to deal with: fringes. Fringes are meant to level the playing field for non-union contractors bidding on prevailing wage jobs. Unions offer benefit packages including health and welfare, vacation, pension, and more.

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Fringes are difficult to track…and expensive.

When the government puts together rates for a prevailing wage job, they list a pay rate and a fringe rate. The fringe rate is meant to be additional dollars for benefits. So on these prevailing wage jobs, contractors are required to pay their employees fringes, either in the form of cash or benefits. This can become difficult to manage. Each employee may have a different pay rate and may work on different tasks throughout the lifecycle of a job. Adding fringes into the mix can be overwhelming, difficult to track…and expensive.

Saving Money with Better Fringe Management

There are ways to save money when it comes to managing fringe benefits. Non-union companies that already offer vacation and health insurance on regular work have the opportunity to break down what they contribute on a yearly basis for both of these items and come up with an hourly figure. These hourly figures are usually anywhere from $1.00-$3.00 per employee per hour. This hourly figure can then be credited to the benefits required by prevailing wage jobs, saving employers a lot of money.

There are two reasons that contractors may not be doing this:  1)  They may not know that reciprocity of fringes is an option, and 2) Even if they know it is, they realize that it can be a lot of work for the office staff and could potentially be more trouble than good.

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Managing Fringes with a Construction Payroll Service

A good construction-specific payroll service will make managing fringes much easier by automating pay rates, as well as fringe reciprocity. The money saved by using a construction payroll service that can automate fringe management easily pays for the service. It also saves the employer a lot of extra money, giving them the opportunity to be more competitive when it comes to bidding.

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