| What is a bona fide benefit plan? |
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To qualify as a bona fide benefit plan under the Davis-Bacon and Service Contract Acts, contributions made on an employee's behalf must be irrevocable, made to a trustee or third party pursuant to a fund, plan or program; and the provision of benefits must be communicated to employees in writing. Fringe benefits must be provided to all employees who are eligible under the Acts. The following are considered fringe benefits for purposes of the Davis-Bacon and Service Contract Acts:
Benefits which are required by federal, state or local law can not be counted toward the fringe benefit allocation. Examples include:
Partnering with a firm like Fringe Benefit Group relieves contractors of the burden of ensuring their plans are compliant. Violations can result in fines and, in some cases, debarment. Some contractors worry that their employees will quit or protest the offering of a bona fide benefit plan when they see the reduction in their paychecks. However, many workers have friends who are out of work, and have been out of work for some time. Once they understand that providing these benefits makes it more likely that the company will win jobs, thereby making it more likely they'll continue to have work, employees usually accept the changes. We have more information on how to educate your workers about the importance of the benefits provided in a bona fide plan here. More information on fringe benefits under the Davis-Bacon Act can be found here.
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Get more information on The Contractors Plan.
