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Code of Federal Regulations (Last Updated: May 6, 2024) |
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Title 29 - Labor |
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Subtitle A - Office of the Secretary of Labor |
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Subpart B - Interpretation of the Fringe Benefits Provisions of the Davis-Bacon Act |
§ 5.28 - Unfunded plans.
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§ 5.28 Unfunded plans.
(a) The costs to a contractor or subcontractor which may be reasonably anticipated in providing benefits of the types described in the act Act, pursuant to an enforceable commitment to carry out a financially responsible plan or program, are considered fringe benefits within the meaning of the act Act (see 1(b)(40 U.S.C. 3141(2)(B) of the act(ii)). The legislative history suggests that these provisions were intended to permit the consideration of fringe benefits meeting these requirements, among others, these requirements and which are provided from the general assets of a contractor or subcontractor. (Report of the House Committee on Education and Labor, H. Rep. No. 308, 88th Cong., 1st Sess., p. 4; see also S. Rep. No. 963, p. 6.)
(c) It is in this manner that the act provides for the consideration of unfunded plans or programs in finding prevailing wages and in ascertaining compliance with the Act. At the same time, however, there is protection against the use of this provision(b) No type of fringe benefit is eligible for consideration as a so-called unfunded plan Such a benefit plan or program, commonly referred to as an unfunded plan, may not constitute a fringe benefit within the meaning of the Act unless:
(1) It could be reasonably anticipated to provide the benefits described in the actAct;
(2) It represents a commitment that can be legally enforced;
(3) It is carried out under a financially responsible plan or program; and
(4) The plan or program providing the benefits has been communicated in writing to the laborers and mechanics affected. (See S. Rep. No. 963, p. 6.)
; and
(5) The contractor or subcontractor requests and receives approval of the plan or program from the Secretary, as described in paragraph (c) of this section.
(c) To receive approval of an unfunded plan or program, a contractor or subcontractor must demonstrate in its request to the Secretary that the unfunded plan or program, and the benefits provided under such plan or program, are “bona fide,” meet the requirements set forth in paragraphs (b)(1) through (4) of this section, and are otherwise consistent with the Act. The request must include sufficient documentation to enable the Secretary to evaluate these criteria. Contractors and subcontractors may request approval of an unfunded plan or program by submitting a written request in one of the following manners:
(1) By mail to the United States Department of Labor, Wage and Hour Division, Director, Division of Government Contracts Enforcement, 200 Constitution Ave. NW, Room S–3502, Washington, DC 20210;
(2) By email to unfunded@dol.gov (or its successor email address); or
(3) By any other means directed by the Administrator.
act(d) Unfunded plans or programs may not be used as a means of avoiding the
are intended toAct's requirements. The words “reasonably anticipated”
which can perhaps be best described as onerequire that any unfunded plan or program be able to withstand a test
actof actuarial soundness. Moreover, as in the case of other fringe benefits payable under the
act. (See S. Rep. No. 963, p. 6.) The legislative history suggests that in order to insure against the possibility that these provisions might beAct, an unfunded plan or program must be “bona fide” and not a mere simulation or sham for avoiding compliance with the
actAct. To prevent these provisions from being used to avoid compliance with the
committee contemplates that theAct, the
of Labor in carrying out his responsibilities under Reorganization Plan No. 14 of 1950,Secretary
themay direct a contractor or subcontractor to set aside in an account assets which, under sound actuarial principles, will be sufficient to meet
obligationfuture
The preservation of this accountobligations under the plan.
would, of course, also be essentialSuch an account must be preserved for the purpose intended
This is implemented by the contractual provisions required by § 5.5(a)(1)(iv).. (S. Rep. No. 963, p. 6.)
[88 FR 57744, Aug. 23, 2023]