Equivalent Benefits Temporary And Part-Time Employment
A contractor may discharge the obligation to provide specified fringe benefits (including vacation and holiday pay) by:
- Furnishing at least the benefit amount listed on the contract wage determination for each employee to a third party or trustee, such as for life or health insurance and/or a pension plan, or by
- Furnishing equivalent combinations of bona fide fringe benefits (the types of fringe benefits may be different for individual workers), or by
- Making equivalent payments in cash to the employee. "Equivalent" means equal in terms of monetary cost to the employer, or by
- Providing any combination of bona fide fringe benefits and cash payments needed to meet the fringe benefit requirements under the contract.
Cash equivalents for fringe benefits 29 C.F.R. § 4.177.
- Examples of cash equivalents:
- If a wage determination requires health and welfare benefits of $3.71 per hour, that fringe benefit obligation may be discharged by paying the employee $3.71 per hour in cash in addition to his/her monetary wage, if separately stated in the employer's records.
- If a wage determination requires a successor contractor to pay the fringe benefits set forth in a collective bargaining agreement which has a health and welfare benefit of $4.30 per hour, and a pension benefit of $1.50 per hour, the fringe benefit obligation may be discharged by paying the employee $5.80 per hour in cash in addition to his/her monetary wage, if separately stated in the employer's records.
- Cash equivalents for fringe benefits stated in terms other than a cash amount:
- Where fringe benefits are stated as a weekly or monthly amount, the hourly cash equivalent can be determined as shown in the following example.
- The fringe benefits for pension is $120 per week, the hourly cash equivalent is $120 divided by 40 hours or $3.00 per hour.
- If the fringe benefits do not specify the daily or weekly hours of work for which fringe benefits are to be measured, a standard 8-hour day, 40-hour workweek will be applicable.
- Where fringe benefits are specified in terms such as "ten (10) paid holidays per year" or "one week paid vacation after one year of service," the employee's hourly rate of pay is multiplied by the number of hours making up the paid vacation or holidays to determine annual cost. (A standard 8-hour day and 40-hour week will be applicable unless the wage determination specifies otherwise.) The total annual cost is divided by 2,080 hours (40 hours a week x 52 weeks) to arrive at an hourly cash equivalent.
- Example: The fringe benefit is 10 paid holidays per year.
- Example: The fringe benefit is one week paid vacation after one year of service.
- Where an employer decides to pay an hourly cash equivalent instead of the vacation fringe benefit, the cash payments need not commence until the employee has completed "one year of service." However, if the employee should terminate employment before receiving the full cash amount of the vested fringe benefit due, the employee must be paid the full amount of any difference remaining as a final cash payment.
- Example: An employee became eligible for one week paid vacation on May 1 and the employer elects to pay the hourly cash equivalent to the employee in lieu of the paid vacation beginning that date. The employee terminates his employment on July 1. If the employee has received only one-sixth (2 of 12 months) of the vacation to which he/she is entitled, the employee is still due the remaining five-sixths (10 of 12 months) of the vacation pay upon termination.
Employee's hourly rate is $9.00.
$9.00 x 80 hours (10 days of 8 hours each) = $720.
$720/2,080 hours = $0.346 per hour.
Employee's hourly rate is $10.00.
$10.00 x 40 hours = $400.
$400/2,080 hours = $0.19 per hour.
Consulting Services We Provide
- Review public works preconstruction contracts
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- Audit labor classification for each worker employed
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- Review DIR Fringe Benefits Statement PW-26
- Monitor DIR wage determinations
- Audit fringe benefits allowances
- Review DIR holiday payment requirements
- Audit DIR travel & subsistence requirements
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