UNION FRINGE CONTRIBUTIONS: AN HOURLY COST AND A MONTHLY CASH BILL.
The collective bargaining agreement sets each fringe as a dollar rate per hour worked. The contractor does not pick a plan or receive a premium bill from a carrier. It reports the hours by employee to each fund, usually every month, and sends the money with the report. Because the rate is per hour, fringe is a direct labor cost that goes into every bid and change order, and a late, short or wrong report adds interest, charges and an audit on top of the contributions themselves.
This page covers the cost and cash side: how the hourly rate becomes a labor burden, a remittance and a line in the cash forecast, and how it works on public jobs. It is not legal advice. Agreements, fund rules and state law differ, so the owner checks the agreement and the fund's own instructions.
WHAT IT MEANS.
Union fringe benefit contributions are the hourly amounts a signatory contractor pays to the union's benefit funds, such as health and welfare, pension, annuity and training, for each hour of covered work, at the rates set in the collective bargaining agreement.
A contractor-sponsored plan works differently. In that case the owner chooses the plan, the carrier sends a premium bill, and the cost follows enrollment and the plan year. With a union fund the contribution follows hours. An employee who works 40 hours generates 40 hours of contributions, and an employee who works none generates none. The fund, not the contractor, decides what benefits those hours buy.
Nothing here is about a particular union or fund. Rates, due dates and reporting forms come from the agreement and from each fund, and they differ by trade and by area.
HOW FRINGE BECOMES A COST AND A BILL.
The agreement sets the rate and the hours decide the cost
Each fringe in the agreement, such as health and welfare, pension, annuity or training, is listed as dollars per hour for each classification. The contractor owes that rate for every covered hour. Funds generally base the contribution on hours worked, and the agreement says which hours count and whether overtime hours are included. When the agreement changes the rates, the cost of every open job changes on the effective date.
The money goes to the funds, not to a carrier
The contractor sends a remittance report that lists each covered employee and the hours worked, along with a payment, to each fund or to the fund administrator. Monthly is the most common schedule, and a common due date is the 15th of the month after the work was done. Some funds ask for weekly or semi-monthly reports. The fund's own instructions control, so SPM reads them for each fund and does not assume a date.
Fringe is part of the labor burden on every bid
Fringe contributions belong in the burden rate with payroll taxes and workers comp, but they are far larger than most other burden items. They apply to every hour that is bid, so they belong in the estimate, in each unit price, and in the pricing of every change order. A change order priced at the base wage alone loses the fringe on those hours, and the contractor still owes it to the funds.
Late or wrong reports create extra charges
Federal benefits law requires an employer bound by an agreement to make the contributions the agreement calls for. When a fund has to collect, the remedies it can ask for include the unpaid contributions, interest, liquidated damages, audit costs and attorney fees. Trust agreements set their own rates for interest and liquidated damages, so they differ from fund to fund. A short report, a missed month or a wrong classification can start those charges.
Funds audit payroll records
Funds commonly review an employer's payroll records, and many do so routinely or at random. The auditor compares the hours on the payroll records to the hours on the remittance reports, for every employee and every classification. Hours that were paid but not reported become unpaid contributions. Where a contractor has not kept good records, courts have placed the burden on the employer to show what was owed, so clean time records by job and employee are the contractor's protection.
On public jobs, fringe and prevailing wage meet in the payroll
A prevailing wage determination lists a basic hourly rate and a fringe rate. Under federal rules a contractor can meet the fringe part by paying bona fide plans or funds, by paying cash in place of fringe, or by a mix. DOL guidance says a contractor can take credit for contributions that are irrevocably paid to a trustee or insurer on a regular basis, at least quarterly. Cash in place of fringe is wages. A union contractor's agreement rate may be higher or lower than the determination, and any difference is a cost or a cash payment that someone has to plan for.
WHAT IT LOOKS LIKE IN DOLLARS.
Take an invented agreement with health and welfare at $9.00 per hour, pension at $7.50, annuity at $3.00 and training at $0.80. That is $20.30 of fringe for every hour worked. A crew of 8 working 40 hours is 320 hours in a week, so the contributions are 320 times $20.30, or $6,496 a week. None of that is paid to the employees. It is owed to the funds in addition to the wages.
A four week reporting month is 1,280 hours and $25,984. A five week month is 1,600 hours and $32,480. The same crew creates a $6,496 difference between the two months, and the report for the month is due after the month closes. The contractor pays the wages every week and pays the funds after the month closes, so the cash forecast needs its own line for the remittance.
At an invented base wage of $38.00, fringe of $20.30 adds about 53 percent on top of the wage before payroll taxes and workers comp. A 2,000 hour scope includes $40,600 of fringe. If the bid used the wage plus the usual burden and left fringe out, the $40,600 comes out of the margin.
WHAT WE CHANGE.
SPM sets up the payroll cost report so each trade classification shows its wage and each fringe rate as its own line, multiplied by the hours worked. The owner sees the fringe cost by job and by classification, and the burden rate used in estimating comes from the same lines.
SPM builds a calendar with each fund, its due date and its expected amount, based on the hours in the payroll for the period. The remittances appear in the cash forecast in the month they are paid, which is after the month the wages are paid. The payroll timing page explains why the two dates differ.
Before each remittance, SPM compares the hours on the report to the hours on the payroll by employee and by classification, and flags differences for the payroll preparer. Fixing a short report before the due date costs nothing extra. Fixing it after a fund's audit costs the charges as well.
When a new rate takes effect, SPM updates the burden rate in the estimating template and lists the open jobs and pending change orders that are priced at the old rate. On public jobs SPM also compares the agreement's fringe to the determination, so the owner knows early where cash in place of fringe will be needed.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing. No payroll. The one-time onboarding fee is right here in the table.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
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