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Educating Your Employees About the Advantages of a Prevailing Wage Plan

February 21, 2010 Written by: Karen deMontigny, NE Regional Vice President

One of the most common misconceptions about implementing a prevailing wage benefit plan is that workers will quit or try to unionize once they see the reduced amounts in their paychecks.

While this may once have been more of a concern, the fact is that in today’s challenging economic times, most construction workers have either been unemployed themselves, or have friends who have been unemployed for long periods of time. Most appreciate having work and being able to provide for their families, knowing that more than a million jobs have been lost in the past year alone in the construction sector.

Educating employees about the bidding process can go a long way toward overcoming any objections. Most have never seen a bid, and don’t know what goes into submitting a successful bid. One tactic is to show your workers bid results on an actual project. The margin between the winning contractor and the one who came in second is often just a few hundred dollars – a difference that can be compensated for many times over with the savings realized by having a bona fide benefit plan and removing payroll burden from the fringe portion of the prevailing wage. When your workers realize that having a plan can mean the difference between having work or being unemployed – or working on private jobs which often pay at a much lower rate – they usually see these benefits in a much different light.

Teaching your workers about the differences between union benefit plans and non-union benefit plans is also helpful. With a prevailing wage benefit plan, workers are immediately vested in the retirement plan and have access to all their funds should they quit, be laid off, or change jobs. With a union retirement plan, workers cannot receive any of their funds until they retire, and there are no options as to how the money is paid out. With a union plan, workers also have no say as to how their retirement savings are invested. With the Contractors Plan, for example, workers can choose the investment mix that best suits their goals and/or their anticipated retirement date

Health insurance coverage is another issue that varies greatly between union and non-union plans. Unions have stringent guidelines workers must meet to qualify for coverage, usually requiring that they work a certain number of hours in a specified time period. With seasonality of work and layoffs, it’s not uncommon for workers to be with the union for years and never qualify for health insurance. While there are eligibility requirements attached to a non-union health insurance plan, they are much less restrictive. The Contractors Plan also offers hour banking, which gives employees the opportunity to “bank” extra hours worked during busy times, then use them to continue health insurance coverage during layoffs or slow times. Hour banking also helps employers avoid overpaying premium, and eliminates the problem of trying to get refunds from health insurance providers.

If you’d like more information on how to “sell” your employees on the advantages of having prevailing wage benefit plans, give us a call. If you partner with the Contractors Plan, a representative is available to assist you with your enrollment meetings, and can answer questions your employees may have.