Davis Bacon question

[AKconsult]

Would it be permissible for an employer to add a Prevailing Wage (davis bacon) source to a plan but only use that source for some of the davis bacon employees? For example, if the employer has several offices in different states, could they only put the davis bacon fringe for the workers of 1 state in the plan and simply pay the fringe in cash to the davis bacon workers in the other states. I don't see a reason why they could not do this but not sure.

[Below Ground]

Davis Bacon Allocations would almost always pass Coverage Testing given the composition of benefitting employees, so without even touching on "concepts" of Davis Bacon Allocations, I think it is safe to say you will be fine. Just look at standard coverage testing to see if there could be a problem.

[GBurns]

Since the vesting and eligibility is different for the DBRA employees, I usually see companies advised to have a separate plan rather than do as you propose.

[Below Ground]

I must respectfully disagree with Mr. Burns on the need to use separate plans. Most good documents allow for different vesting and eligiblity. In fact, using separate plans would typically increase operating costs for little, if any, value. Of course, there are times when use of separate plans makes sense, but I did not get that sense from the OP. If I read that right the question was can Prevailing Wage Provisons be applied differently to different units of the firm. That "problem" is simply addressed by how the document defines application of related provisions. That would NOT require use of a separate document, just care when writing the document.

Mr. Burns would be correct, however, if the added cost is justified by a benefit that may be obtain from separate plans. Those reasons could include a unit being a separate line of business (regardless of being an actual QSLOB) that would benefit from such separation. Note that if not a QSLOB, Coverage Testing could still be an important consideration.

[GBurns]

Why those companies were usually advised to have separate plans was something I never bothered to question so I do not know the facts etc nor the rationale. Also since that was a few years ago, it could be that changes in law have made that advice moot. I do not know, I can only report what happpened.

It might be good to do a Google search on something like "separate plan Davis Bacon" and see what comes up. A search of BenefitsLink should bring up some past discussions of this issue.

By the way, we do not know the "quality" of the documents of the plan used by the OP. And I do wonder what % of documents would qualify, under whatever standard, as being "good" ?

[AKconsult]

Actually, just as an FYI, we use the ASCi prototype plan and it seems to have very comprehensive provisions for PW contributions.

[Below Ground]

Years ago, finding a plan document that addressed PW was somewhat hard. I find that the documents from the nearly all reputable vendors seem to cover this fairly well now. With respect to your OP, look at the "addendum" or the ability to add one, allowing for the flexibility you want. Good luck!