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Washington State Issues Policy Memorandum on Fringe Benefit Contributions

March 15, 2013 Written by: Written by Mike Rogers, Chief Compliance Officer

The Washington State Department of Labor & Industries (L&I) recently issued a policy memorandum explaining how contractors should calculate credit for fringe benefit contributions made during periods of prevailing wage covered work.

This important memo reiterates Washington’s existing definitions of prevailing wage, usual benefits, and annualization.  L&I states that its long-time position is “consistent with the approach adopted by many other states and by the U.S. DOL with respect to most plans, that contributions made to a fringe benefit plan for public works should be based on the effective annual rate of contributions for all hours, public and private, worked during the year by the employee.”

Most importantly, L&I clarifies the State’s position on annualization in regards to contributions made to retirement plans.  L&I states, “For defined contribution pension plans that provide for a higher hourly rate of contributions to be made for prevailing wage covered work than for non-covered work, the higher rate paid for covered work will be fully credited toward satisfaction of the required prevailing wage rate only if the plan provides for immediate participation and an immediate or essentially immediate vesting schedule (e.g., 100% vesting after an employee works 500 or fewer hours).”

In terms of contributions to retirement plans, L&I’s enforcement position in the past has not been crystal clear to all contractors working in Washington so this clarification is critical from a compliance perspective as well as an important recognition of the importance of retirement savings.

During the development of this memo L&I reached out to stakeholders and sought to develop a position that is clear, consistent, and in the bast interest of employees.  A copy of the memorandum can be viewed at