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An excess in either component (wage or fringe) can offset a shortfall in the other component under the Davis-Bacon Act. |
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About prevailing feature and rate classes
If you also set up pay rates that are higher than DBA prevailing wage rates within a federal class code, but separated by position code, you can still use the rate class feature to set up rates by position, and the prevailing feature to set up the prevailing wage. The system simply takes the higher pay rate. Either way, rate classes are required to take advantage of the prevailing wage and fringe features, whether union or non-union.
Calculation flow: Pay rate with cash fringe
The following diagram shows how the system calculates the pay rate involving prevailing wage and fringe amounts. Pay rate includes any cash fringe that may be due to the employee.
Example scenarios - prevailing wage and benefits
This section contains example scenarios to illustrate how prevailing wage and fringe benefits are calculated, including cash fringe, if applicable.
The Employee Standard rate in the examples below is the highest rate, taken from one of the following:
- Employee (Employee Pay Code Maintenance window)
- Employee rate class (Employee Maintenance Codes window)
- Job rate class (Job Maintenance window)
EXAMPLE 1: Prevailing wage and fringe are greater than employee standard wage and fringe
In this example, the prevailing wage and fringe rates are higher than the bricklayer's standard wage and fringe. The bricklayer will get the prevailing wage of 32.71, plus the difference between the prevailing fringe and his/her standard fringe, making a cash fringe of 9.54.
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Cash fringe = (prevailing wage - employee fringe)
EXAMPLE 2: Prevailing wage is greater than employee standard wage; employee fringe is greater than prevailing fringe, by a greater difference than the wage difference
In this example, the prevailing wage for bricklayers is greater than the employee's standard rate for bricklayers. However, the employee's fringe benefits are higher than prevailing. Because the difference in fringe is greater than the difference in wage (in the example below, $5.21 - $4.21 = $1.00), the employee does not get the prevailing wage, there is no cash fringe, and the wage rate is reduced from $32.71 to $31.71. The total package for the employee is $38.25, which is equal to the prevailing total package.
| Wage | Fringe | Cash fringe | Total package | |
|---|---|---|---|---|
Prevailing | 32.71 | 4.54 |
| 37.25 |
Employee Standard | 28.50 | 9.75 |
| 38.25 |
Result: | 28.50 | 9.75 | none | 38.25 |
EXAMPLE 3: Employee wage is greater than prevailing wage; prevailing fringe is greater than employee standard fringe
In this example, the prevailing wage for bricklayers is $25.75 per hour but your company has Bricklayer 1 and Bricklayer 2, where Bricklayer 1 makes 25.50 per hour and Bricklayer 2 makes 28.00 per hour. (You can set up the different rates using a combination of the prevailing feature with the rate class feature to set up the three rates). In our example, Bricklayer 2 is used, and since the employee rate is higher than the rate class rate, $28.00 will be used. The prevailing fringe rate is greater than the employee fringe. In this example, the difference in the wages ($2.25) is subtracted from the greater difference in fringe ($3.00), giving us a cash fringe of $0.75.
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Cash fringe = (prevailing fringe - employee fringe)- (employee wage - prevailing wage)
EXAMPLE 4: Employee standard wage and fringe are higher than prevailing wage and fringe, respectively
In this example, the bricklayer's standard wage and fringe are higher than the prevailing wage and fringe, respectively. Therefore, the total package for the employee is higher than the prevailing package, and no adjustments are necessary.
| Wage | Fringe | Cash fringe | Total package | |
|---|---|---|---|---|
Prevailing | 25.75 | 5.00 |
| 30.75 |
Employee Standard | 28.75 | 8.00 |
| 36.75 |
Result: | 28.75 | 8.00 | none | 36.75 |
EXAMPLE 5: Employee standard wage is lower than prevailing wage, but the employee fringe is higher than the prevailing fringe
In this example, the prevailing wage is $1.00 higher than the employee standard wage, and the employee fringe is $1.00 higher than the prevailing fringe. Therefore, the employee will not get the prevailing wage of $34.00 but instead, the standard rate of $33.00 (34-1). There is no cash fringe and the total package is $39.00.
| Wage | Fringe | Cash fringe | Total package | |
|---|---|---|---|---|
Prevailing | 34.00 | 5.00 |
| 39.00 |
Employee Standard | 33.00 | 6.00 |
| 39.00 |
Result: | 33.00 | 6.00 | (none) | 39.00 |
Setup
Setting up the prevailing wage and benefits feature involves the following windows: Employee Fringe Maintenance, Prevailing Wage and Fringe Rate, Rate Class Codes, and Rate Class Detail. Information on the rate class windows appears in the Job Cost User Manual. Make sure to set up rate class codes and detail prior to setting up prevailing wage and fringe rates.
Prevailing Wage and Fringe Rate Maintenance window
This window is used to enter wage rate and fringe rate information from the government-supplied wage determination sheet. Information is based on the union, county and Standard Occupational Code (Fed Class Code). Fringe rate is an hourly accumulation of all the fringe benefits paid to a typical employee in a classification (union or non-union). Microsoft Dynamics GP > Tools > Setup > Job Cost > Payroll Setup > Prevailing Wage and Fringe Rate.
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Entries are saved as soon as you enter data into a field. To delete a row of data, right-click and choose Delete Row. Also, if the Filter Date does not fall completely within the start and end date of the new entry, the entry will disappear from view as soon as you tab to the next line. The line is saved, but won't appear until you change the Filter Date. |
Employee Fringe Maintenance window
This window is used to enter and manage fringe benefits paid to each employee, including a start (effective) date. The standard benefits entered in this window are compared to prevailing fringe benefits, based on the information from the government-supplied Davis-Bacon Act (DBA) wage determination sheet. Microsoft Dynamics GP > Tools > Setup > Job Cost > Payroll Setup> Employee Fringe
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