Prevailing Wage Forced 401(k)

[jrholbroo]

I am currently working on a prevailing wage project in MI regulated by the Davis-Bacon Act.

As part of the Davis-Bacon Act, part of my prevailing wage rate can be put towards bona-fide fringe benefits.

My employer has decided that the fringe benefits will be put into a 401(k) account. I've read somewhere that 401(k) fringe benefits must be "voluntary" by employees. Is that true?
Also, I'm not so sure that this was determined in contract documents, as the 401(k) information didn't come to be until the project started.

The employer is not providing ANY other benefits, for instance, no holiday pay, no vacation or sick time, no options for health or dental coverage. I didn't even get bereavement time. Possibly because they classify us as "temporary" for this job only. In that case, is the 401(k) even legal?

Also, if my employer is in the right, and I must comply with the 401(k), follow up with this question:

The employer offers a "401(k) match" as well as a profit sharing plan for their OTHER employees, but that is not offered to us because it is a Davis Bacon Project. Will they be held liable to match everything we have put in? Or is this fringe benefit considered "employer funds" anyway?

 

[jiggy78]

There would be no "match" because there is no deduction from your pay to match.

You don't have the right to dictate to your employer how the benefits portion of your pay is to be allocated. As long as they are complying with Davis Bacon then they are following the law. It's likely they simply find contributing to your 401k to be the easiest administratively.

 

[cbg]

Passive enrollment in a 401k is legal. It was a recent addition to the law but it is the law. By passive enrollment I mean that your employer automatically enrolls you in a 401k unless you take active steps to say you don't want it. Their plan document has to say that this is what will happen, but if this is what the plan document says, it IS legal.

401k's are very heavily regulated at the Federal level and there are many regs in place to ensure that employees are not restricted from access to them. Because of Federal laws regarding eligibility, it is QUITE possible for a temporary employee to be eligible to participate in the 401k even if he is not eligible for any other benefits.

 

[davew128]

There would be no "match" because there is no deduction from your pay to match.

You don't have the right to dictate to your employer how the benefits portion of your pay is to be allocated. As long as they are complying with Davis Bacon then they are following the law. It's likely they simply find contributing to your 401k to be the easiest administratively.

However they cannot FORCE her to participate. While they can passively enroll her, she has the ability to opt out and they cannot stop her. Thats sort of the point of CODA.

 

[jiggy78]

Well that's somewhat correct. Automatic enrollment through payroll deduction is legal so long as the employee can say "stop taking money out of my check". But that's not what is happening here. The employer has chosen to contribute to the employee's 401k as a fringe benefit. There is no payroll deduction the employee has a right to stop. The employee does not have a right to dictate to the employer how the fringe benefits required by the wage determination are to be allocated.

However they cannot FORCE her to participate. While they can passively enroll her, she has the ability to opt out and they cannot stop her. Thats sort of the point of CODA.

Please show me in Davis Bacon where it says the employee has a right to dictate to the employer how the fringe benefits are allocated. They may allow the employee to opt out and receive the money as taxable cash, but they don't have to.