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Why Classifying Workers Correctly is Critical on Davis Bacon Projects

Why Classifying Workers Correctly is Critical on Davis Bacon Projects

If you secure a federally-funded construction contract, you’ll need to pay your workers the prevailing wage. The exact prevailing wage varies depending on skill level, role, and a host of other factors. It’s critical to classify your workers correctly if you want to avoid severe financial implications.

Many business owners ignore the severity of incorrect classifications. One of the most common examples of this is an employer labeling a skilled worker as an unskilled laborer. In doing so, they can often pay their employees a lower rate.

In some cases, this may be a mistake. If you have a skilled laborer working as both an unskilled laborer and tradesperson, you need to pay them according to the hours worked in each role. You must allocate the correct number of hours to each job type – you cannot simply pay them the lower wage because they fill multiple roles within your company.

You must also realize that misclassification does much more than violating the Davis-Bacon Act. It may also violate the False Claims Act.

Not abiding by correct classifications can have dire consequences. In fact, some business owners have been sued because of the misclassification of staff. The financial repercussions resulting from a lawsuit are much more significant than the savings from paying staff a lower wage.

While paying the prevailing wage can be difficult for businesses with small margins, there are avenues you can take to reduce your financial exposure. By using a Davis Bacon Pension Plan, you can offset some costs associated with higher wages.

At Davis-Bacon, we help our clients access industry-leading Davis Bacon Pension Plans. If you’re hoping to improve your business’s cash flow when you’re working on government contracts, our arrangements will help you reduce your payroll tax liabilities. Contact our team at (425) 889-8855 if you have any questions about this unique pension plan.

Three Davis Bacon Pension Plan Facts to Keep in Mind

Three Davis Bacon Pension Plan Facts to Keep in Mind

If you’re a construction business owner, you’re already aware that you must pay the prevailing wage to laborers involved in federal contracts. This hurdle often proves to be a significant stumbling block for businesses that are not equipped to pay higher wages.

Fortunately, using a Davis Bacon Pension Plan can help you offset some of this cost. In this article, we’ll take a look at three facts regarding Davis Bacon Pension Plans – keep these in mind if you’re planning on incorporating this type of pension plan into your business.

1. It Can Save Your Business Serious Money

 

First things first – a Davis Bacon Pension Plan can help your business save serious money. By offsetting your payroll tax liabilities, you’ll be able to reduce the financial burden of complying with prevailing wage regulations. It’s one of the best ways to reduce your exposure to the Davis Bacon Act.

2. Misclassification Can Result in Punitive Damage

 

If you’re working on a Davis Bacon project and you misclassify a worker, it can result in severe issues for your business.

While some business owners cut corners on purpose, others make the mistake of not appropriating hours correctly.

For example, if you have an electrician that also works as a laborer, you must pay them the correct prevailing wage for hours that they work in each role. You cannot merely pay them the lower laborer wage for all working hours.

3. Software Can Help

 

If you’re struggling to manage a Davis Bacon project, using software to help you track staff hours and prevailing wages is critical. By accessing specialized software, you can ensure that you’re following the Davis Bacon Act. In essence, this is essential for business owners that want to take advantage of a Davis Bacon Pension Plan.

Fortunately, there are plenty of excellent software programs available that can help you remain compliant. This is the best way to take the stress out of your next federal contract.

Contact Us to Discuss Your Options

 

If you’re working on federal contracts that require you to pay the prevailing wage, it’s essential to reduce your costs as much as possible. If you can’t lower your labor costs, you won’t be able to offer competitive bids on contracts. Fortunately, a Davis Bacon Pension Plan can help you avoid the financial repercussions of the Davis Bacon Act.

At Davis-Bacon, we help our clients use pension plans to increase their profitability. If you’d like to discuss our services, contact us at (425) 889-8855.