Federal construction contracts in excess of $2,000 are subject to the Davis-Bacon Act, which requires payment of locally "prevailing wages" including the "anticipated cost of prevailing benefits." Generally this is expressed as a per-hour wage and per-hour cash equivalent value of benefits, and is often based on a union scale.
Prevailing wages are set by the U.S. Department of Labor and are included in the bid specifications of covered contracts. Many contractors pay the fringe benefit portion of the prevailing wage as additional cash wages, not realizing that it's inflating their bids and costing them more in payroll taxes.
At The Contractors Plan, we're familiar with the intricacies of the Davis-Bacon Act. We can help you establish a bona fide benefits program that complies with the law and results in significant cost savings.