From small to large, there are tens of thousands of government contractors in America. If your company has a government contract you no doubt are familiar with the Service Contract Act and Davis Bacon Act. From food service, construction, engineering, to grounds maintenance, thousands of businesses across the country work for the tax-payer.
Government contractors must pay a prevailing wage, certain employee benefits paid by the employer and employee, and fringe benefits paid by the employer. The employer can pay the employee the cash equivalent of required fringe benefits, approximately $4.50 per hour, instead of bona fide fringe benefits. Types of fringe benefits include dental, vision, disability, tele-medicine, and life insurance.
Whether a small or large business, those with a government contract will be better served (as will the employees) if they purchase fringe benefits as opposed to offering the cash equivalent. The employer will lower their payroll taxes by approximately 20% by purchasing bona fide fringe benefits. Lower payroll expense means lower bids, which means winning more contracts.
Employees want fringe benefits, and offering these health benefits help retain employees. Fringe benefits can also be offered to seasonal and part-time employees and their dependents. Fringe benefits make the employee feel valued, and will make a meaningful difference in their lives.