Prevailing wage laws often require employers to provide not only a base hourly wage, but also additional compensation in the form of fringe benefits. These benefits can include various non-wage compensations such as health insurance, retirement plan contributions, paid time off, and training. Calculating these benefits accurately is crucial for compliance. Typically, the total cost of these benefits is determined, and then divided by the total number of hours worked by employees subject to prevailing wage requirements. This results in an hourly fringe benefit rate that is added to the base hourly wage to determine the total compensation package.
Accurate calculation ensures compliance with legal obligations and helps avoid penalties. Moreover, it contributes to a level playing field for contractors bidding on public works projects. Historically, prevailing wage laws were enacted to protect construction workers from wage exploitation and ensure fair competition among contractors. Properly accounting for all compensation, including fringe benefits, is fundamental to upholding these principles.
