Service Contract

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Contractors and subs performing services on prime contracts over $2,500 are required to pay service employees wages and fringe benefits which are no less than local “prevailing wages” as determined by the Department of Labor. If the previous contractor had a collective bargaining agreement, the subsequent contractor must pay wages and fringe benefits at the rate in the agreement, including prospective increases. The DOL issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies.

Many contractors pay the fringe benefit portion of the prevailing wage as additional cash wages, believing it’s the easiest way to comply with the law.

The Problem: Paying the fringe as additional cash wages costs you money!
The Solution: Allocating this amount to a bona fide benefit plans results in significant cost savings. When the fringe portion of the prevailing wage is used to provide benefits for hourly workers, this amount is not subject to payroll costs such as:  FICA, FUTA, State unemployment taxes, Workers compensation premiums, Public liability premiums.

We can show you how to provide valuable benefits such as retirement, medical, dental, vision and life insurance plans for your employees; and at the same time reap these benefits for your company:

  • Reduce payroll burden
  • Narrow the gap between wages paid on private work and government contracts
  • Shave dollars off your bids, making them more profitable and increasing your odds of winning
  • Increase profits
  • Increase your ability as a company owner to contribute to your own retirement accounts using our expert plan design
  • Get support from our in-house team of compliance experts