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SUPPLEMENTAL UNEMPLOYMENT BENEFITS (SUB) PLANS - DAVIS-BACON & CALIFORNIA PREVAILING WAGE COMPLIANT
For employers that are looking for a great way take the fringe off of their prevailing wage payroll AND offer employee benefit options that are really appreciated, the most popular plan we write is our Supplemental Unemployment Benefits (SUB) plan. Though less well known in the construction sector than vacation/holiday, SUB plans have been utilized for many years in various industries – most notably the automobile industry. SUB is popular with employers because it is an effective way of removing fringe money from the payroll. Employees like the SUB plan because it gets money into their hands relatively soon after it was earned. The CPWIS SUB plan is not only fully compliant with Davis-Bacon and California prevailing wage regulations, it has also secured sponsorship from the National Association of Prevailing Wage Contractors.
What is a Supplemental Unemployment Benefit (SUB) Plan?
Our Supplemental Unemployment Benefit plan enables employers to make their fringe payments directly into an employees’ SUB account while the employee is working on a prevailing wage project. Then, in the case of a seasonal-layoff, or layoff of any kind, the employees are able to receive their fringe money in the form of a benefit check issued by our third party administrator.
How SUB Contributions Are Made
Knowing when to put fringe money into a SUB plan is easy - if the participant is working on a prevailing wage job, then the employer makes a contribution to the participant's SUB plan. If the participant isn't working on a prevailing wage job, then you don't. Getting those Davis-Bacon fringe dollars off of your payroll really is that simple!
How SUB Benefits Get to Participants
The beauty of SUB is that, in addition to getting Davis-Bacon fringe money off of payroll, it's a great supplemental unemployment benefit for your employees. Consider this - a participant is eligible to receive SUB benefits whenever they are linked for eligibility to state unemployment. And while the specific, state by state requirements for linking may vary, most states do not even require unemployment filings to be completed on the participant's behalf. (To find out more about how your state handles linkage to unemployment, contact us so that we can help!) So you see, our prevailing wage clients benefit from lower job costs that result from reduced payroll taxes and workman’s compensation costs. Employees benefit by having their fringe monies available to them relatively soon after it was earned, which is why we call this our ‘Money Now’ plan.
Highlights of our 'Money Now' Supplemental Unemployment Benefit plan:
In addition to offering clear advantages to employees, our Supplemental Unemployment Benefit plan is popular with prevailing wage contractors because it is:
• Tax-exempt
Your fringe contributions are exempt from both worker’s compensation and statutory payroll taxes in California (other states must be reviewed on a state-by-state basis)
•Fully compliant for Davis-Bacon and California Prevailing Wage
CPWIS’ SUB plan has received favorable reviews from both DOL and IRS
• “Bona fide”
The SUB plan used by CPWIS has received IRS approval as a Supplemental Unemployment Benefit plan available for use in all states and has been reviewed and accepted by the DOL as exempt from prevailing wage annualization rules.
• No Administrative hassle
Employees receive their fringe money in the form of a benefit check from the SUB Trust’s third party administrator, not the employer. Federal tax withholdings (income tax) are done by the third-party administrator. Even W-2s are issued by a third party administrator, as well as, required IRS 5500 filings.
CPWIS is there every step of the way
Committing to a SUB plan can be a cornerstone of your cost-saving strategy, but the work doesn’t end there. That’s why CPWIS does more than just help you choose the right employee benefit plan(s). We also work closely with our clients as their prevailing wage consultants, offering advice and guidance as they navigate the complexities of Davis-Bacon and State Prevailing Wage regulations. We’re here to help lower your job costs and help you to be compliant with prevailing wage regulations.
Want to learn more about our SUB plan? Why don’t you contact us (or have us contact you!) and let us show you how you can provide “bona fide” employee benefits AND lower your job costs! You’ll be surprised at just how easy it can be!
