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by Karen deMontigny
14 Building Washington
T
he U.S. Department of Labor
(DOL) Wage and Hour Division
recently alerted Supplemental
Unemployment Benefit (SUB) plan
providers that credit for employer
contributions made on Davis-Bacon
Act (DBA) covered contracts must be
calculated on an annualized basis. If
your company is utilizing a SUB plan,
then you have an urgent need to
understand this change. Your SUB plan
may still be viable, but you may need
to alter the way it is funded. If that’s
not an option, then there are other
bona fide benefits that you can put in
place. But you need to act now—don’t
put your business at risk for fines by
delaying the conversation.
What changed?
Employers will no longer be able take
full credit for SUB plan contributions
for employees who also perform
non-prevailing wage work (for which
no SUB plan contributions are made).
This development specifically affects
SUB plans that previously had a
DOL exemption as well as SUB plans
without such an exemption that in-
appropriately claimed contributions
were exempt from annualization. It is
important to note that the exemption
from annualization for contributions
made
to
defined
contribution
retirement plans remains at the
federal level and in most states, if set
up properly.
What does this
mean for employers?
At the end of October 2015, the DOL
announced a 90-day phase-in period
in which plans must notify employers
to begin calculating credit based on
all hours worked. So based on the SUB
plan they are using, employers need
to make sure they are in compliance
beginning early in 2016.
Critical Points
This change affects federal DBA
contracts
and
federally-financed
Davis-Bacon Related Act (DBRA)
covered contracts. There are states
where there is either a general SUB or
plan specific exemption. This change
BIG CHANGES
f o r S U B P l an s :
No Longer Exempt from Annualization