Prevailing Wage-Paying More Than the Wage Decision Requires
The Wage Decision provides you with the minimum amounts (base rate and fringe rate) that you must pay your employees when they work on a Prevailing Wage job – but confusion often happens when you actually pay your employees more than what the Wage Decision requires. See this question from a reader.
We pay up and above the wage decision that we have. I need to know how to account for fringe benefits in cash that are already included in the base pay for us. For example the wage decision for an operator is $12.98 base with $3.31 fringe. I pay my operator $22 an hour. So the pay is up and above the rate. So on the form how to I show that? Do I have to show the fringe on it’s own or can I leave the fringe column out because the base pay that I am paying is so much higher? Submitted by Michele
I run into this situation on occasion with our non-union customers – where they like you – pay there employees on a regular basis a much higher wage than the combined prevailing wage rate plus any applicable cash fringes. I’ve even had some of them ask if they can “legally” just pay them the total of the base plus fringe instead of their normal higher rate when they work on this job! That I do not recommend; because you’ll have a bunch of VERY angry employees!
From what I’ve found, each state has their own “unpublished” requirements for this type of situation – so the first thing that I highly recommend is that you contact the prevailing wage division of your State Department of Labor. If you don’t have any luck there, contact the General Contractor (or whoever you signed the contract with) and ask them for guidance.
The customers who have gotten back to me regarding this have indicated that because most Statements of Compliance (the 2nd page or the sign-off sheet) requires that you indicate HOW you pay fringes (Cash or Plan); that even if you normally pay a higher rate you must check the “fringes paid in cash” box and that on the actual certified payroll report you have to split out the higher base/required cash fringe – in your case for the operators you would show $18.69/$3.31.
Others have told me that they have been allowed to just display the $22.00 in the rate of pay/cash fringe column, check the “fringes paid in cash” on the statement of compliance, and are required to use the “Remarks” section and put in a single sentence stating that the employees normal rate of pay is higher than the combined base plus fringe and that no cash fringe is reported.
Still others have been required to use the Exceptions section on the Statement of Compliance for the Federal form, entering each classification in the Exception (Craft) column and in the Explanation column put in “regular rate higher than required rate”.
At this point, I’m afraid that I can’t provide you with any “written in stone” rule for reporting this, however, these examples should help you prepare for whatever comes your way.
Again, I highly recommend that you contact either the Prevailing Wage division of your State Department of Labor or the General Contractor/Awarding Agency for a clearer definition of how they want you to handle this. If you get no answer, I would highly recommend that you do the following:
- Report rate of pay/cash fringe as $18.69/$3.31
- Check the Fringes Paid in Cash option
- Use the remarks section to hold “employees normal rate of pay is higher than the combined base plus fringe
- AND use the Exceptions/Explanation to list each Craft (Work Classification) shown on the report with an explanation of “regular rate higher than required rate”
I know it sounds like overkill, but these are public documents and everyone who looks at these documents must be able to understand what is going on.
I hope you’ve found this post helpful, if so please take a moment to leave a comment or share it on your favorite social media platform.
Leave a Reply
- The Great Debate – QuickBooks Desktop vs. QuickBooks Online
- Using Account Numbers in Your QuickBooks Chart of Accounts
- QuickBooks Creating a More Meaningful Payroll Expenses Section
- Calculating & Displaying Fringe Benefits on a Certified Payroll Report
- QuickBooks Tip - Child Support Garnishments
- How To Turn On and Use Manual Payroll in QuickBooks
- Create a QuickBooks Job Cost Report With Hours & Payroll Costs
- QuickBooks Payroll Tip - Tracking Employee Advances or Loans
- QuickBooks Tip - Job Costing Starts With A Simple Item
- QuickBooks for Contractors Tip – Basics of Progress Invoicing
- QuickBooks Tip-Creating a Functional Payroll Liabilities Section
- Welcome to the QuickBooks for contractors blog
- QuickBooks Tip: Important Facts About Items Left as Billable
- QuickBooks Tip-Handling Employee Reimbursements for Expenses
- QuickBooks Tip - Determing Cost of Goods Sold
- Straight from the IRS - Social Security Tax Reduced to 4.2%
- QuickBooks 2015 Announced - Important System Requirements
- QuickBooks 2013 Upgrade Do's, Don'ts & Frequent Questions
- QuickBooks 2012 - Frequently Asked Questions About Upgrading
- QuickBooks 2015- The Good, Bad and Ugly, Part 1