Allowable Fringe Benefits in the Prevailing Wage Law

Allowable fringe benefits must first be a benefit to employees.

Two questions were asked recently about whether credit could be taken for a fringe benefit under our prevailing wage law, Chapter 104, Hawaii Revised Statutes, for the supply and laundry of uniforms and for the general excise tax paid by contractors. The answer to both is no, these are not allowable fringe benefits that can be credited towards the prevailing wage on public works in Hawaii.

The supply and laundry of uniforms is at the direction of the employer and therefore a cost of doing business. Requiring an employee to wear a uniform is not a benefit to the employee. It is generally unlawful for employers to deduct for the cost and maintenance of a uniform required to be worn at work.

The payment of general excise tax is required by all businesses in Hawaii unless specifically exempt. There is no exemption for construction work. As a required amount to be paid by the employer to the State, the general excise tax is not a benefit to an employee.

Itemizing Fringe Benefits on Certified Payrolls

Act 10, First Special Session 2009, became effective October 1, 2009. This means that anyone submitting a certified payroll on a public works job subject to Chapter 104, Hawaii Revised Statutes, now has to provide an itemized list of the fringe benefits paid to laborers and mechanics along with their certified payroll. The Department of Labor and Industrial Relations (DLIR) worked with the Department of Accounting and General Services (DAGS) to adapt a form currently being used by DAGS on public works construction.

The Public Works Division of DAGS has numerous forms available on their website arranged according to the stage of construction. The adapted form for Act 10 is an xcel file found under "Ongoing Construction" on the Public Works Administration of Construction Page and is called "Statement of Compliance and DAGS ECP for Payroll Affidavits". http://hawaii.gov/pwd/Members/ib/forms/index_html. The DAGS adapted form is actually four worksheets.

Act 10 only pertains to the worksheet of the adapted form labeled "Weekly Statement of Compliance" which lists the itemized fringe benefits. The Certifited Payroll worksheet form is unchanged. WSD will be focusing their educational efforts in the comming months on this issue as well as some of the American Recovery and Reinvestment Act (ARRA) issues.