BUSINESS BANKING CORNER
Hour Banking Offers Many Advantages for Contractors Working on Government Jobs
By Bryce Curtis If you’re an open shop contractor work-
ing on government jobs, not providing ben- efits on prevailing wage work doesn’t make sense from a business standpoint. Forego- ing the savings on payroll burden can mean losing bids. And protecting your workers and their families from the financial rami- fications of costly healthcare expenses is the right thing to do, especially since health care reform (ACA) requires all individuals to have health insurance this year. Contractors who perform public works
jobs should consider evaluating a benefits program which offers them an hour bank- ing option. Your company will benefit from hour banking if the nature of your work is seasonal and if you have rapid in- creases or decreases in the number of em- ployees working a job. Hour banking allows employees to “bank” hours during peak work periods, then use their excess hours to maintain coverage during slow periods. Hour banking also makes it possible for employers to account for all hours worked, as well as their corresponding fringes. Many contractors work on both public
and private contracts – as do their employ- ees. It’s not uncommon for employees to switch back and forth between these two types of work in a single day. In addition to this complication, some employees per- form work in differing job classifications throughout the day. Tracking these hours and the corresponding benefits can create headaches for even the most experienced contractors.
Open Shop Contractors Benefit Hour banking offers several advantages
for open shop contractors. Employers always have a consistent and transparent method of reporting and taking credit for benefits provided to their workers.
Contractors know exactly how much, per man-hour, their benefits cost them, which means bids are more accurate.
Using an experienced prevailing wage benefits provider allows contractors to be confident that their bona fide ben-
22 November/December 2014
efits plans are in compliance with appli- cable prevailing wage laws.
Working with a benefits provider that offers hour banking simplifies ben- efits administration. Employers upload the number of hours their employees worked, and the provider takes care of the rest.
When employees reach the maximum number of hours allowed in their bank (generally between three to six months’ worth of coverage), excess fringe dol- lars are redirected into the employee’s retirement plan. This helps ensure compliance with Department of Labor (DOL) regulations. Prior to signing on with a provider, be
Your company will benefit
from hour banking if the nature of your work is seasonal and if you have rapid increases or decreases in the number of employees working a job.
sure to verify that the company is qualified to offer hour banking. Hour banking can- not be offered outside of an ERISA plan, and requires a special arrangement with the medical insurance carrier.
How Does Hour Banking Work? In busy times, hours over 40 that are
worked during a week, and the premium associated with them, are held in reserve. Then, in weeks when workers may not have enough hours to qualify for benefits, they can draw from these reserve hours and extend coverage. Employees can hold three to six months of medical coverage in reserve. With hour banking, employers have the advantage of paying for actual hours
worked, avoiding the possibility of taking too much credit against the fringe portion of the prevailing wage. Employees have an automatic “savings” program that allows them to continue medical coverage during work stoppages. While workers in the construction
trades know the possibility of periods of unemployment exists, most neglect to put money in savings to extend their health coverage
via COBRA. While monthly
costs vary depending on location and type of coverage, it’s not unusual for monthly COBRA costs to run between $300 and $500 for just the employee. The hour banking option, in essence, acts as a sav- ings program to extend health insurance coverage.
Confidence in Tracking of Hours, Premium Rather than guess how much credit to
take against the fringe benefit portion of the prevailing wage, contractors who use an hour banking option can be confident that hours and premium are tracked and reported correctly. This is advantageous on two fronts: Employers don’t risk taking too much credit for benefits provided, which puts them at risk for being found in violation of prevailing wage law; and
Employers can be assured that they are taking credit for the full amount to which they are entitled, which has a positive impact on profitability.
When searching for a benefits provider,
ask about their experience providing the hour banking option for contractors who offer health insurance for their employees. This can save you considerable time and money, and help ensure that you’re in compliance with applicable laws.
Bryce Curtis, a partner at Williams Lloyd
Employee Benefit Group, specializes in help- ing open shop contractors with prevailing wage benefit plans. He can be reached at (888) 353-2044 or b_curtis@williamslloyd. com.
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