Benefits are essential to any business’s recruitment and retention strategy, and federal contractors are no different. While designing an attractive benefits plan that aligns with the needs of their workforce can be complicated in all industries, it is particularly challenging for businesses that work on federal contracts because of the complex compliance requirements that apply to federal contractor benefits.
Here is a look at what federal contractors need to know about benefits compliance.
Healthcare
Healthcare plans play a central role in nearly every business’s benefits offering as employees seek affordable healthcare coverage and employers invest in ensuring the health of their workforce.
Similar to traditional businesses, federal contractors can give their employees various options for healthcare according to their preferences, from traditional health insurance to flexible spending accounts and HSAs.
The Patient Protection and Affordable Care Act (PPACA)
Employers with 50 employees or more must offer their full-time workers health coverage; those who fail to comply will face penalties. Federal contractors must also comply with this regulation.
They may be required to prove their PPACA compliance before bidding on federal contracts. Under the Affordable Care Act, the health insurance coverage that businesses offer their employees must meet specific standards of affordability and value.
It is important to note that employees must be offered health insurance coverage within their first 90 days of employment. However, it is recommended that the coverage begins a month after their work begins.
Retirement Savings
Businesses that work on federal contracts should offer employees a comprehensive savings plan for retirement, including options such as pension and 401k plans. This can provide employees with financial security for their future and boost employee retention.
The Employee Retirement Income Security Act (ERISA)
The Employee Retirement Income Security Act applies to federal contractors who sponsor retirement plans for their workforce. In addition to protecting the rights of those participating in these plans, ERISA contains standards governing the administration and reporting of these plans.
The Davis-Bacon Act (DBA)
Another concern for businesses that work on federal contracts involving the construction or repair of public buildings is the Davis-Bacon Act (DBA).
This requires businesses to pay their employees and mechanics a wage and fringe benefits that are comparable with the prevailing wages in the area where the work is carried out. Federal contractors must also provide certified payroll records to demonstrate their DBA compliance.
The Service Contract Act (SCA)
Under the Service Contract Act, contracts that provide services to the federal government, such as maintenance or security, must provide their employee’s wages and fringe benefits comparable to the prevailing wages and benefits in the area where the work is being conducted. In addition, contractors must offer their service employees health and welfare benefits, sick leave, and vacation and holiday pay.
Maintaining Compliance
In addition to understanding the regulations governing federal contractor benefits, such as the Affordable Care Act, businesses working on federal contracts should review the terms and conditions of each contract carefully, as some may specify specific benefits requirements that go beyond the baseline requirements.
Businesses should also implement policies that ensure their employees receive the required benefits. For example, it is essential to implement procedures for enrolling employees in health plans, tracking and reporting the hours they have worked, and setting up employer-sponsored retirement accounts.
Businesses should keep accurate documentation related to all of their benefits and policies. Benefits compliance must be audited regularly. These audits should include verifying eligibility and enrollment status and reviewing employee payroll records.
If any problems are identified, businesses should notify the federal government immediately and take steps to correct the situation, such as paying any benefits owed.
Why Is Federal Contractor Benefits Compliance So Important?
There are several reasons that businesses that work on federal contracts must ensure compliance. First, compliance allows businesses to enjoy good standing with the federal government, customers, unions, and competition.
It also enables them to protect the health and well-being of their employees, fostering a positive working environment and boosting productivity. In addition, it allows them to avoid penalties that can negatively impact the business’s finances and reputation.
Reach Out to the Experienced Benefits Consultants
Working on federal contracts requires careful attention to all applicable regulations, from accounting and reporting requirements to benefits compliance. Because federal contracts are funded by taxpayer money, businesses that work on these contracts can expect additional scrutiny.
Therefore, working with experienced benefits consultants is essential to ensure your company meets the requirements to avoid fines, damaged reputation, and lost opportunities. To learn more about benefits compliance for federal contractors or to talk to knowledgeable benefits consultants, reach out to the professionals at Business Benefits Group today.