How to design an employee benefits program in construction

With labor shortages and rising demand for employees in the construction industry, contractors can’t rely on wages alone to attract and retain top talent. A strong employee benefits package is one of the clearest signals to employees that a company is worth staying at.

This guide explains how to design an employee benefits program that employees will appreciate.

Key advantages of employee benefit programs in construction

Here are a few advantages of offering a comprehensive benefits plan.

Attracting and retaining top field and office talent

Strong employee benefits help construction employers stand out from the competition, giving them an advantage in hiring and retaining people. In fact, nearly half of job seekers in the U.S. put “better benefits” as a top reason for finding a new role. 

To attract these job-seekers, offer benefits competitors tend to overlook like mental health support, fully paid family leave, pay on bad weather days, short-term disability insurance, and clothing and PPE stipends.

Keeping workers satisfied and productive

Competitive benefits attract and retain top talent, but they also keep employees engaged and productive in the long term. For instance, employers can provide benefits coverage between projects to support workers during gaps or accidental injury insurance to pay for hospital stays. These benefits support employee well-being and financial security, which cuts down on stress and creates a more stable environment. 

When teams feel supported, contractors see the results across the board. Workers show up to the next phase of the project, crews don’t walk off mid-job, and foremen don’t need to scramble to find last-minute replacement workers. Employers who invest in their workforce’s well being and development build a stronger employee experience over time.

Offsetting fringe benefit requirements

Public works jobs require employers to provide fringe benefits. These are any non-wage portion of the prevailing wage rate, paid on top of the base hourly rate. Employers can either choose to pay employees cash in lieu or provide traditional bona fide benefits packages to satisfy the fringe requirement. 

It’s worth noting that employers can stay compliant while reducing payroll taxes by meeting fringe requirements through contributions to a benefits plan rather than by paying cash. Under prevailing wage rules, employer contributions to benefits count as credits that offset the fringe rate. This cuts down on the taxable cash portion and saves the employer on payroll taxes.

For instance, if a worker is earning a $5 an hour fringe rate across 2,000 hours a year, routing that through a benefits plan instead of cash can generate meaningful savings in FICA, workers’ comp premiums, and sometimes general liability insurance.

Promoting regulatory compliance

Federal and state governments set their own specific rules for employers to follow. Here are a few that contractors should keep an eye out for:

• Employee Retirement Income Security Act (ERISA): This law establishes minimum participation and funding standards for benefit plans like life insurance, retirement, and pension.
• Affordable Care Act (ACA): Under the ACA, all companies with 50+ full-time employees (FTE) must provide health insurance to at least 95% of their workforce.
• Davis-Bacon Act: The Davis-Bacon Act requires contractors to pay workers fringe benefits like training programs and health insurance.
• Workers’ compensation: Nearly every state sets its own rules for how employers should provide coverage for illness and work-related injuries.

7 steps to design an employee benefits program for construction workers

What does employee benefits planning look like for construction teams? Building a benefits package for a construction workforce isn’t the same as checking off a standard HR list; prevailing wage requirements, project-based staffing, and a workforce split between field and office all factor in. Here’s a clear process for creating a construction worker benefits package that attracts and retains talent.

1. Define goals and objectives

Set clear and measurable goals that address the company’s specific problems, like turnover and labor shortages. For instance, if the goal is to stay competitive and attract new hires, offer sign on bonuses or pay on bad weather days. Defining goals up front makes it easier to create a plan that serves specific company and workforce needs.

2. Conduct research

Contractors who don’t match competitors’ benefits programs risk losing top talent. Start by reviewing job postings and salary ranges for similar companies in your area to identify in-demand benefits competitors aren’t offering, then add those benefits to your package. The goal is to exceed competitors’ offerings, not just match them.

3. Run a needs assessment

Start by asking employees which benefits matter most to them. Use focus groups and surveys to gather feedback, then review the results to spot trends and gaps in current offerings. 

Field crews and office staff have different priorities. For instance, laborers and tradespeople are more likely to flag injury coverage and healthcare access, while office employees may prioritize retirement plans and PTO. Breaking out responses by role keeps those needs from canceling each other out in the aggregate.

4. Finalize the plan and find providers

It’s time to start outlining the final construction benefits package. Common elements include:

• Health insurance
• Dental insurance
• Vision insurance
• Retirement plans
• Life insurance
• Disability insurance
• Workers’ compensation
• Paid time off, paid sick leave, holiday pay
• Commuter benefits or travel per diems
• Remote work policies for office employees

When relevant, compare plans across providers to see which ones offer the right coverage at the best price. Repeat for each included benefit. 

5. Build around fringe benefit requirements.

Contractors handling public works projects need to pay prevailing wage fringe rates. A benefits package designed with that in mind can satisfy the fringe requirement while reducing what you owe in cash wages.

To see how your benefits package stacks up against your fringe obligations, follow these steps: 

• Find the required fringe rate: Identify the prevailing wage fringe rate (per hour, per classification) for each worker classification on the job.
• Add up your benefits contributions: Calculate the hourly value of your employer-sponsored benefit contributions per employee.
• Calculate the offset: The hourly value of your benefits contributions reduces the fringe rate you owe in cash; this is the prevailing wage fringe credit. It also lowers your taxable cash wages, which reduces payroll taxes and workers’ comp premiums.
• Find the gap: If your benefits contributions fully cover the required fringe rate, no additional cash payment is owed. If there’s a shortfall, you’ll need to make up the difference in cash wages.

6. Talk to a benefits broker.

Meet with a broker to find out which carriers operate in your region, what plans best fit your workforce style and mix, and how to navigate requirements like ACA thresholds and ERISA rules. They’ll also negotiate with insurers to secure lower rates. 

7. Choose the right software for seamless benefits administration.

Benefits software that connects enrollment directly to payroll eliminates manual re-entry. When an employee makes their elections, deductions update without anyone entering changes by hand. Without that integration, a new hire’s health plan enrollment and their paycheck live in separate systems, and errors are common. Miter Benefits supports the full workflow, from plan setup and open enrollment through to automatic deduction updates once enrollment closes.

Best practices for a construction benefits program

By following these employee benefits planning tips, contractors can build competitive programs:

• Centralize benefits administration on a single platform: It’s easy to introduce errors when benefits and payroll live in separate systems. If a worker’s bona fide fringe elections aren’t reflected in payroll, the system has no way to know the fringe requirement is already covered, and finance ends up paying cash in lieu on top of it. Contractors need a platform where HR, benefits, and payroll share the same data.
• Align benefits with employee needs: Every good benefits package addresses the actual pain points of a construction workforce, like injury coverage and healthcare access for field crews or retirement plans and flexibility for office staff. Discussing benefits packages during toolbox talks or through mobile surveys tells employers what’s working and what needs improvement.
• Clarify benefits for employees: Especially in construction, it can be difficult for employers to tell team members which benefits they have and how to access them. Contractors might need to share this information through multiple channels, such as jobsite bulletin boards, crew meetings, and text-based notifications. Emails and employee handbooks might not make it to the field, leaving workers out of the loop.
• Track benefits use: Keep an eye on which extra benefits employees use and what they haven’t touched. There’s little point in spending money on benefits, like per diem plans, supplemental accident insurance, and safety training reimbursements, if no one takes advantage of them.
• Review yearly: Review benefit offerings annually to see whether the existing package meets employee and company needs. If health insurance deductibles climb too high, it’s time to find a more favorable health plan. Similarly, if no one uses the expensive tool allowance, drop it.

Managing benefits across disconnected systems creates real problems for contractors. When benefits and payroll don’t talk to each other, enrollment data has to be manually reentered, deductions get missed or entered incorrectly, and HR teams spend more time cleaning up errors than managing their workforce. Add job costing into the mix, and the problem compounds. If benefit contributions aren’t feeding into labor costs automatically, job estimates are understated, and profitability numbers can’t be trusted.

Contractors need benefits administration that’s integrated with HR, payroll, and job costing in the same platform. Miter is built for exactly that. Contractors can manage payroll, benefits, and compliance without manually syncing data across separate systems. When an employee completes enrollment, deductions flow into payroll automatically, and benefit contributions feed into fully-burdened labor costing so every labor cost is accounted for.