Davis Bacon Plans

[Guest AHayhow]

We currently provide a variety of implementation and administration services for our clinets (i.e., section 125, COBRA, Benefit Statements, etc).

We have been asked by an existimg client to provide implementation and administration of a "Davis Bacon" like plan. The employees are non-union, but work on projects that require the employer to pay a prevailing wage. The employer currently pays this out in cash (taxable) and has been convinced that they will save big bucks if the money is used on fringe benefits (specifically medical coverage and pension plan) because of the employer's tax savings. I have lots of questions, but my first and most important is:

1. Does this employer have to implement a Davis Bacon/Prevailing Wage plan if they want to contribute this money to fringe benefits or can it be handled through a Flex Plan in which the employer provides employees with credits to pay for these benefits?

Thanks for your help!