Recently we've been hearing from contractors bidding on ARRA-funded weatherization work that job classifications and wage determinations for these projects are confusing. 

Prior to the passage of the ARRA, which included grant monies which were provided to states for use in weatherization of residential structures, projects performed as part of the Weatherization Assistance Program were not subject to provisions of the Davis Bacon Act.  However, all work done on projects funded in part or in whole with ARRA funds are covered by the Davis Bacon Act,  including residential weatherization.  

As a result, the Department of Energy requested that the DOL provide job classifications and wage determinations for workers who commonly perform weatherization work.  A spreadsheet listing these job classifications and the correlating wage determinations for each state can be found here.  

The Department of Energy has published an extensive FAQ to address questions arising from the application of the Davis-Bacon and Related Acts to ARRA-funded weatherization projects.  It can be found by clicking here and then selecting Davis Bacon Act from the drop-down menu.

Contractors are all too familiar with deadlines.  But an important deadline is fast approaching that many contractors may not be aware of.  To discontinue using a SIMPLE plan in 2011, contractors must notify both the financial institution handling the plan and their employees of their intent to discontinue making contributions to SIMPLE plan by November 1, 2010.
 
Many contractors start out using SIMPLE plans because they're relatively easy to set up.  But they usually discover fairly quickly that SIMPLE plans lack the flexibility prevailing wage contractors need to effectively accommodate their retirement plan needs.
 
We have a summary of the reasons SIMPLE plans don't work for prevailing wage contractors on our website. If you intend to switch from a SIMPLE plan to a different type of retirement plan more appropriate for contractors doing prevailing wage work in 2011, it's important to provide written notification to your employees and the financial institution handling your plan by November 1, 2010.  It is not required that you notify the IRS.

When it comes to understanding what does and does not fall under the auspices of the Davis Bacon Act, the devil is often in the details.  Recently we heard from a contractor who mentioned that while the publicly-funded project he was working on was not covered, the roofing and site work was.

Recently we've met some contractors who believe that the fringe portion of the wage on Davis Bacon projects must be allocated in a specific way.  In other words, there are some misconceptions among government contractors that a certain amount must go to provide health insurance, a specific amount invested in a retirement plan, and so on. 

While the state of California does break out the fringe amount by line item on the wage determination, even there employers can contribute the fringe however they see fit, provided the benefits meet the Davis Bacon Act criteria for being "bona fide". 

Employers who are interested in maximizing tax savings, both for the company as a whole and for themselves as individuals, may want to look at increasing the amounts contributed for their hourly wo rk ers into company retirement plans.  Of course annual retirement plan limits apply to the total amount that can be contributed each year for retirement.  But increasing contributions made on behalf of hourly workers can result in huge tax benefits for company owners and key employees.