Construction Leadership Council Mock Bid DayChris Nelson, AGC of Western Kentucky; Charles...

OFFICIAL PUBLICATION OF THE ASSOCIATED GENERAL CONTRACTORS OF WESTERN KENTUCKY, INC.

A Chapter of the Associated General Contractors of America

FALL 2013

Chris Nelson, AGC of Western Kentucky; Charles “Clay” Goodman, AGC Scholarship Winner; Melinda Patrician, AGC of America Education and Research Foundation; Danny Claiborne, MSU

Department of Industrial and Engineering Technology (article on page 3)

Construction Leadership Council Mock Bid Day(Article on page 4)

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FALL 2013 CONSTRUCTOR 1

FALL 2013

Contents:Executive Vice President’s Message – State of the Chapter .................................................... 2

National AGC Education and Research Foundation Director Visit ................................................................. 3

Construction Leadership Council Mock Bid Day .............. 4

Learning by Doing: Student Internships at MSU ............. 5

AGC Promotes Development of Skilled Workforce ............. 6

Healthcare Reform .......................................................... 7

Data Backup .................................................................. 8

Great Offers from Verizon Wireless ................................ 10

Don’t Worry, I Have Insurance to Cover It! .....................11

Distracted Driving – It’s Not Just An Accident ............... 12

Understanding Prevailing Wage Fringes ......................... 14

AGC Legislative Action Center – Getting Involved DOES Make A Difference .......................................... 18

Continuing Education .................................................. 18

AGC Pre-Holiday Mixer and Dance.............................. 20

AGC Spring Golf Outing .............................................. 22

Published byAssociated General Contractors of Western Kentucky

2201 McCracken BoulevardPaducah, Kentucky 42001

Phone: (270) 744-6261, (800) 599-6261Fax: (270) 744-9522

Email: [email protected]

Printed by Innovative Printing & Graphics, Inc. · Murray, KY

Executive Vice President ......................... Chris Nelson

Safety Director .......................................Scott Thomas

Communications Director ................ Cindy Robertson

Membership Director ............................. Teresa Dawes

Safety Consultant ....................................... Alan Loyd

A Chapter of the Associated General Contractors of America

OFFICIAL PUBLICATION OF THE ASSOCIATED GENERAL CONTRACTORS OF WESTERN KENTUCKY, INC.

2 CONSTRUCTOR FALL 2013 2 CONSTRUCTOR FALL 2013

The sour economy that has struck the nation has finally reached our region. We have been fortunate since the 2008 downturn not to feel the full brunt of the national recession. However, at the start of 2013 we have seen a significant slowdown in many sectors of the construction industry in Western Kentucky. Common with past patterns, some sectors of the industry slow down while others pick up during such times. Commercial and residential work is limping along or remaining stagnant. Industrial and heavy construction work in the region is on an upswing. This includes large-scale projects such as the Kentucky Dam Lock expansion, Olmstead Dam, Smithland hydroelectric facility, Calvert City chemical plants, Ledbetter and Kentucky Lake bridge replacements, Paducah riverfront, and small to mid-size manufacturing plants locating in the region.

As the health of the construction economy goes, so does the well being of the association. To examine the current status of the chapter, I would like to give a brief “state of the chapter” overview. This is a brief synopsis of key functions and services of the association which provide key “vital signs” to the health of the organization.

AGC of Western Kentucky Membership

Poor economies can have a culling effect on any membership organization. Under tough times, businesses take a hard look at where to make cuts and what investments are

not providing the best return on their monies. Membership organizations not providing valuable services, meeting the needs of members and, in a lot of instances, not keeping up with the times, will decline into ineffectiveness or go away altogether. I can say we have seen our share of business closures, buyouts, drops, etc., yet have maintained a steady membership of approximately 430 members over the past few years. New members continue to join yearly to offset any losses. These numbers are a key barometer to the “health” and mission of the association. One member relayed to me that during tough times, when money is tight, organizations such as ours should benefit the greatest due to the potential savings and cost-effective services we offer. I believe he is right! The numbers speak for themselves.

AGC/SIF Workers Compensation Fund

The “fund” established over thirty years ago offers substantial cost savings to firms who are eligible to participate. In 2013, the “fund” returned $16 million in dividend payments to its entire membership. Over $1 million came back to 175 of our participating chapter members. The average payout for those firms was approximately $6,000. For the past 18 years, dividend checks have been returned to qualifying members. Next year will be no different. There is no greater joy for AGC staff than to deliver these checks each year. The recent completion of a mandatory

Kentucky Department of Insurance audit revealed the “fund” is in the best shape fiscally than ever before. Our members can be proud to know they participate in the strongest self-insured construction industry fund in the state, if not the nation.

Chapter ServicesTo remain effective, non-profit

organizations like our chapter must maintain the status as the “go to” group or primary provider of essential industry services. If not, others will fill the void. The number of members using the variety of services we offer has exceeded expectations. Even though times are slow for many, safety training numbers are keeping pace or are above average as compared to previous years. Continuing education course (electrical, plumbing and HVAC) enrollments continue to remain equal to or higher than normal. Informational offerings such as the chapter website and the introduction of the AGC app sustain and improve our ability to keep members informed at the click of a button. Data on the number of “hits” or use of each of these indicates how vital a resource this is to our members. As mentioned in the spring magazine, keeping up with technological advances will be a key to remaining relevant as a member-driven organization.

Workforce Development/Community Outreach

To meet future demands for a skilled workforce, the chapter initiated an annual Construction

State of the Chapterby Chris Nelson

Executive Vice President’s Message

FALL 2013 CONSTRUCTOR 3 FALL 2013 CONSTRUCTOR 3

Career Day event which continues to grow. Approximately 1,000 students from 16 far Western Kentucky schools participated in 2012. It is expected to grow to 1,200 in 2013, with over 30 vendors showcasing career opportunities in the construction industry. Since the inception of the William L. Kressenberg scholarship in 2003, over $50,000 has been awarded to local students. This financial investment is supporting the ongoing need for maintaining a viable workforce in the region. Last year, Charles “Clay” Goodman, a Murray State student who hails from Hickman, was awarded the scholarship. To give back to the community, the AGC, in partnership with Murray State University, will be hosting the 10th annual Boy Scout Merit Badge Day on November 2. Scouts earn merit badges in construction-related areas such as architecture, engineering, CAD, plumbing, electricity, welding, etc.

Each year 250 scouts from Western Kentucky, Northwest Tennessee, and Southern Illinois participate in this event. Many of our own members volunteer their time and talent to make this day a great success! Girls are included in outreach efforts as well. The AGC/MSU partnership also conducts a Girl Scout event similar to the Boy Scout Day. The last event introduced over 100 girls to the world and career opportunities of the construction industry.

I’m proud to say as a chapter we have weathered the storm quite well as these indicators suggest. However, we still face many uncertain realities related to the economy, federal and state budget deficits, healthcare reform, plant closures, etc. Speaking for board members and staff, we will make every effort to adapt, change, and move the organization forward in order to remain strong and relevant to our members.

National AGC Education and Research Foundation Director Visits

Awards Kressenberg Scholarship

The AGC of America allows one complimentary staff visit per year for any chapter who so desires. Melinda Patrician, Director of the Education and Research Foundation, was invited to the April 23 board meeting at Murray State University.

Melinda oversees and directs the screening and selection of over 100 student AGC scholarships annually. While in Murray, Melinda was given a tour of the Murray State University Department of Industrial and Engineering

facility and programs. She visited with faculty and students in the construction programs and experienced the mock bid day held by the CLC.

At the Board of Directors meeting, she awarded Charles “Clay” Goodman the William L. Kressenberg Scholarship for the 2013/2014 academic year. We are pleased that Melinda was afforded the opportunity to visit our region and experience the strong relationship that exists between the AGC and Murray State University.

Executive Vice President’s Message: State of the ChapterContinued from page 2

4 CONSTRUCTOR FALL 2013

Construction Leadership Council (CLC)

Mock Bid Day

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April 23 was a busy day! The Board of Directors held their annual meeting at Murray State University. National AGC Education and Research Foundation Director, Melinda Patrician, was visiting the chapter, and Murray State construction students participated in a real world drama–a mock bid day.

CLC members challenged 20 students to experience the pressures of preparing and submitting a completed bid in a timed event. The five teams were graded on completeness of documentation, bid amount, and meeting a timed deadline.

CLC members, students, and faculty were well pleased

with the exercise and results. Students commented it was a great experience and should be a required exercise for all future construction students.

A big “thank-you” goes out to Travis Watkins (Pinnacle, Inc.), CLC President, Ben Ashburn, MSU Faculty, CLC members Quentin Riley (Travis Construction), Keith Smith (Artisan Contractors), April Cooper (Ray Black & Son), Darren Smith (Pinnacle, Inc.), and Craig Schwettman (Pinnacle, Inc.) for putting together such a great event!


Learning By Doing: Student Internships At Murray StateBy Ben Ashburn, Lecturer

Murray State University, Department of Industrial and Engineering Technology

Benjamin Franklin is credited with a quote that I hold near and dear as an educator: “Tell me and I forget, teach me and I remember, involve me and I learn.” While it’s not feasible to completely do away with the lecture, it’s important to remember that education can and should take place outside of the classroom too. At Murray State, we take Franklin’s adage seriously by requiring at least one internship of our Engineering Technology students with an employer in their field of study, and strongly encourage them to pursue as many as possible throughout their college career.

For those who are unfamiliar with internships, it is a temporary employment experience, typically done over a summer, that provides a student with the opportunity to apply in the real world what they have been taught in the classroom. These summer-long sessions inevitably provide a lot of “ah-ha!” moments as connections are made between the job and the many lectures, assignments, exams, and projects they’ve endured. Often the education begins before their first day on the job; as students are tasked with finding and interviewing for these opportunities themselves. Some students choose to relocate to different cities, states, or even countries to work–further enriching their experience.

Because an internship is for college credit, the student is expected to do some minor academic tasks, like submitting weekly work logs that describe their daily duties and what they learned from them. I’ve had the pleasure of working with thirteen

interns this summer–reading their work logs, communicating with them, and even visiting some of them on job sites ranging from chemical plants to contractor’s offices. Watching them explain to me with great pride and enthusiasm what they have done this summer, showing me around what has become their second home, and introducing me to supervisors and friends has been a real treat for me to say the least. It’s one of the many reasons why working in the field of education is such a privilege.

In addition to the benefit of on-the-job training, these students gain much more; as many of these summer experiences will turn into permanent employment offers when they graduate. It’s the perfect way for an employer and a student to do a “test drive” before they each commit. If it turns out to be a good fit, the intern has already been through a fair portion of the learning curve that all new employees navigate, smoothing the transition from college to career. At the very least, the result is a valuable addition to the student’s resume. Either way, most students remember their internship fondly, as one of the defining experiences of their higher education.

Students, however, aren’t the only ones who benefit from internships. Our industry partners gain a valuable asset when they hire interns for the summer because they are energetic and eager to contribute. They bring an infectious enthusiasm with them to work, lots of good ideas, a fresh perspective, and a morale boost that the office sometimes needs. I’ve been told that when an internship ends,

there is often a real void left by the student that the supervisor has to fill. If the void is large enough, sometimes the student continues to work part-time or on a co-op basis during school until they graduate–extending the test drive and solidifying the prospect for long-term employment. Most importantly, the employer gets the privilege of participating in a young professional’s education, and most would agree that is a rewarding experience.

Although the main function of an instructor’s job is to teach, we also try hard to provide opportunities for students and employers to connect. Throughout the year, faculty will bring as many employers on campus as we have the opportunity to. This can take the form of university-wide career fairs, or preferably, smaller department-specific employer information sessions, site visits, and guest lecturing. One of the more typical formats in the Engineering Technology department is to host an employer information session, where we invite our students to learn about the company and submit their resumes. The employer is also provided with a conference room to conduct student interviews and decide on which candidates to pursue further. Although all venues are effective, this particular option seems to provide the most benefit to both employers and students. Plus, it’s a great way for faculty and industry to form solid partnerships and get to know each other personally.

The faculty of the Department of Industrial and Engineering

Continued on page 6


Technology at Murray State invite you to take part in the education of our future leaders by, as Franklin said, involving them as they learn. Indeed, Franklin would agree with Michael Beane, surveying intern at the Olmsted Dam for URS Corporation, as he describes his experience over the last two summers: “Working as an intern really gives you the opportunity to get a feel for your field of study. When working as an intern, one takes what they learn in the classroom out to the field to practice what they have been preached–only then is it etched in stone.”

Learning By DoingContinued from page 5

AGC of Western Kentucky provided prizes for winners and contestants in the SkillsUSA Regional Carpentry Competition at the Skilled Craft Training Center of West Kentucky Community and Technical College, US Highway 45,

north of Mayfield. Trey Williams, a 2013 graduate

of Graves County High School, won first place in conduit bending and second place in home construction electrical wiring in the SkillsUSA national competition at Kansas City.

He also won first place in Kentucky’s statewide home construction wiring competition.

SkillsUSA is a partnership of students, teachers and industry working together to ensure America has a skilled workforce.

AGC of Western Kentucky Promotes Development of Skilled Workforce


Healthcare reform, also known as Obamacare, is technically the Patient Protection & Affordable Care Act. This is the most significant governmental regulatory overhaul of the U.S. healthcare system since the passage of Medicare/Medicaid in 1965.

The individual mandate requires that all individuals must purchase health insurance starting in January, 2014 to avoid penalties. You will have three main options for health insurance in 2014. You can buy health insurance from your employer, if they offer it. You can buy a plan through the exchange or traditional market, or you can go uninsured and pay a penalty. • Thepenaltiesin2014are$95

per person and $47.50 per child with a family maximum penalty of $285 or 1% of your household income, whichever is greater.

• 2015:$325peradultand$162.50 per child (up to a family maximum of $975) or 2% of household income, whichever is GREATER.

• 2016:$695peradultand$347.50 per child (up to a family maximum of $2085) or 2.5% of household income, whichever is GREATER.The government has only given

us the penalties through 2016, but we anticipate that they will increase each year.

Some portions of the law have already been delayed by Congress. The penalty on employers with more than 50 employees who do not offer health insurance has been delayed

until January 1, 2015. In 2015, those employers who have 50 or more employees will be required to provide minimum essential health benefits that are affordable. Employers with less than 50 employees are not required by law to offer health insurance at this time.

The government defines what the essential health benefits are and also defines what is affordable. Health insurance companies have a list of essential health benefits that must be included in all health insurance plans starting in 2014.

If an employee’s health insurance premium for the employee portion, not including dependent’s premium, is 9.5% or more of the employee’s salary then it is not considered affordable. If an employee’s health insurance is not affordable through their employer, they may purchase health insurance through the exchange, which is now also being called the Marketplace. They may be eligible for subsidies and/or tax credits based on their income. If a person makes less than 250% of poverty level, they may qualify for a government subsidy. If they make less than 400% of poverty level, then they may qualify for tax credits. Tax credits and subsidies are only available through the exchange. To see if you may qualify for a tax credit or subsidy, go to kff.org/interactive/subsidy-calculator.

Subsidies will also be available to employers. In order to qualify, a business must employ less than twenty five employees and the average wage must be less than $50,000. Subsidies will only be available through the

exchange and only for the first two years that health insurance is offered. Employers may receive a credit of up to 50% of their health insurance cost and the credits will decrease on a sliding scale as the group size and wages increase.

The KY Healthcare Exchange, also known as the Marketplace, is supposed to be up and running October 1st for January 1, 2014 effective dates. This means that in October you can receive quotes and enroll through the exchange but the insurance will not go in effect until January 1, 2014.

According to the US Department of Labor, employer’s have a responsibility to notify their employees about the new Health Care Exchange/Marketplace that will be available to them. Notification must be given to employees by October 1, 2013, whether or not group health insurance is provided. There are two sample forms, one for those employer’s who provide health insurance and another for those who do not, on the Department of Labor’s website at www.dol.gov/ebsa/healthreform.

Things are rapidly changing in health care reform. The information contained in this article was accurate at the time of its writing. However, Congress has already held special sessions and delayed certain portions of the law. That most certainly could happen again, which could cause portions of this article to be incorrect. For the latest on healthcare information, please contact your health insurance agent.

Healthcare ReformBy Crystal Reid, CIC

Vice President, Western Rivers Insurance • Paducah, Kentucky


Data BackupBy Mark Reid, Owner

Computer Sales & Consulting

How comfortable are you with your current data backup solution? Will it contain the needed data to recover when failure strikes, and how can you be sure it does? How long will it take you to recover in the event of failure? Was your backup configured by a computer professional or an employee? These are all major concerns when analyzing data backups.

Backup solutions have evolved tremendously over the years, and newer technologies are allowing us to change the way we backup our data in a robust and cost-effective manner. The latest in backup technology implements Hybrid Cloud Backup. This new technology allows for local disk image backups for fast recovery and the ability to send your critical data to an off-site storage facility in case of theft or disaster.

In computing, off-site data protection is the strategy of sending critical data out of the main location as part of a disaster recovery plan. Data can be sent electronically via a

remote backup service, which is known as electronic vaulting or e-vaulting. Sending backups off-site ensures systems and servers can be reloaded with the latest data in the event of a disaster, accidental error, or system crash. Sending backups off-site also ensures that there is a copy of pertinent data that isn’t stored on-site. Off-site backup services are convenient for companies that backup pertinent data on a daily basis.

Although some organizations manage and store their own off-site backups, many choose to have their backups managed and stored by third parties who specialize in the commercial protection of off-site data.

Hybrid on-site and off-site data vaulting, sometimes known as Hybrid Online Backup, involve a combination of Local backup for fast backup and restore, along with Off-site backup for protection against local disasters.

Hybrid Online Backup works by storing data to a local disk so that the backup can be captured at high speed, and then either the backup software or a D2D2C (Disk to Disk to Cloud) appliance encrypts and transmits data to a service provider. Recent backups are retained locally, to speed data recovery operations.

Is your company’s backup system sufficient? AGC member Computer Sales & Consulting is offering a free analysis and demonstration of Hybrid Backup. Having your own Cloud services gives you the ability to access and share your data instantly throughout the world with no additional setup on any PC. You simply log on to your Cloud device and provide user credentials to access your most current data. Call 270/519-6810 for your free analysis.


Don't Worry, I Have Insurance To Cover It!By David L. Kelly

Partner, Denton & Keuler LLP, Attorneys at Law555 Jefferson St., Suite 301 • Paducah, KY • [email protected]

As contractors, many members of this organization will undoubtedly take comfort in the fact they have purchased a general liability insurance policy. Many will believe that they will be afforded coverage under the policy in the event the contractor is ever sued by an owner claiming property damage due to the work performed by the contractor or one of its subs. Beware! If ever faced with such a lawsuit, your insurance carrier may very well take the position that no coverage is afforded under a general liability policy, thus exposing you and your company to the full extent of the liability for the event.

For example, suppose contractor A, a general contractor, installs the footer/foundation on a building through a subcontractor. Following substantial completion the owner occupies the building. At some point, the owner notices cracking in the exterior and interior walls that is determined to be the result of defective footings. The owner expends tens of thousands of dollars piering the footer and replacing the exterior brick as well as making interior repairs. Contractor A is later sued by the owner for the costs and expenses incurred in making the repairs caused by the defective footer. Naturally, Contractor A turns the claim over to his carrier expecting coverage for the suit. The contractor, however, may very well be informed by the carrier that coverage for the claim is not afforded under the policy since it involves damages allegedly caused by defective workmanship.

While courts across the country have reached different conclusions when faced with this question, the Kentucky Supreme Court has ruled that claims of faulty workmanship, “standing alone”, are not “occurrences” under commercial general liability policies because “a failure of workmanship does not involve the fortuity required to constitute an accident.” See, Cincinnati Insurance Co., v. Motorists Mutual Insurance Company, 306 S.W.3d 69 (Ky. 2010).

Similar to the policy at issue in the Cincinnati Insurance case, most standard commercial liability policies only provide coverage for “property damage” caused by an “occurrence.” An “occurrence” is typically defined in commercial liability policies as an “accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The Court explained that “[i]nherent in the plain meaning of ‘accident’ is the doctrine of fortuity.” According to the Court, to be “fortuitous,” the harm must be unintentional and also must be caused by a

chance event beyond the control of the insured. The Court had little difficulty determining that most contractors do not intend to defective work. However, since the contractor has “control” over a construction project, including the work of subcontractors, the Court determined that construction defects are not “accidents” but rather foreseeable consequences of a contractor’s work on a project. The bottom line being that the contractor who finds himself on the other end of a lawsuit by an owner claiming property damages as a result of the alleged defective workmanship of the contractor or one of his subs may not have the safety net of insurance coverage to fall back on.

Obviously this article is not designed to discuss all the potential issues that must be analyzed to determine if coverage is afforded when a contractor is faced with a lawsuit. However, it is food for fodder.

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Getting behind the wheel of a vehicle is probably the most dangerous thing we do on a daily basis, yet far too often, the focus is not fully on our driving responsibility. Distracted driving is not a new concept. Even before mobile phones, there were other forms of distraction such as: reading/writing, eating and drinking, looking for something in a console, glove-box, or floorboard, OR applying cosmetics and grooming. Years ago, I recall one driver I routinely passed on my morning commute along the interstate that would often shave– I’m talking full out face cream, razor, dipping cup and drying towel. I sometimes wondered if this guy ever mistakenly dipped his razor in his coffee cup or accidentally drank his “stubble concoction” instead of his coffee. I hope that’s the worst thing that happened.

While other forms of distraction can be just as dangerous, it’s certainly been the increased use of smart phones (especially texting and driving) that has created national attention from various safety organizations, phone companies, and insurance groups. Most states have a ban against texting and driving, which means, of course, it’s against the law. Accidents involving a law(s) being broken make

it much easier to prove negligence. In fatality cases, a wrongful death lawsuit and even criminal charges may be pursued. This could not only result in a civil lawsuit against the individual, but depending on the circumstances, it may potentially bring a company into play if it involved the driver of a company vehicle. In the last couple of years, I’ve noticed a push from insurance groups mandating companies develop a driving policy. Without a written policy and enforcement of that policy, companies are at greater liability risk for things such as texting and driving accidents.

You’ve probably seen TV ads or billboard signs concerning texting and driving. Large phone companies have jumped on the campaign of educating users (and especially young drivers) about the dangers of texting and driving. I believe these phone companies’ greatest intention is to reduce the number of accidents and deaths due to inappropriate texting. But I also guess there’s another reason for this campaign–to build a better defense in the event they wind up one day being named in a lawsuit. This would be similar to the warning labels that now appear on tobacco products, coffee lids, hairdryers and

any other product that lawsuits have brought to light.

Cell phone laws are created by each state and can vary, but most states are very similar. It also appears some states are becoming more aggressive against those involving texting and driving. In New Jersey, a high profile texting and driving case generated a lot of attention. A 19-year old male who was texting and driving struck a couple. The couple survived, but both suffered partial leg amputations. According to various reports, the couple settled their lawsuit against him for $500,000. In a twist, the 19-year old female who was texting the young male was also named in the lawsuit. The couple’s attorney argued that while the young female “may not have been physically present, she was electronically present”. During depositions, the female never clearly stated whether she knew the young man was driving or not, but said she knew he could’ve been driving at the time the text conversations were going on. This was also enough for the attorney to pursue some responsibility toward her. This would be like aiding and abetting a crime. The judge eventually cleared the young female of any responsibility, although the

Distracted Driving–It’s Not Just An AccidentBy Scott Thomas, Safety Director, AGC of Western Kentucky


couple’s attorney said they plan to appeal this ruling. I certainly feel for the victims and they need to be properly compensated for their losses, but it’s scary how something so simple can cause so much physical, mental, and financial burden to all those remotely involved. There are some states and lawyer groups who feel criminal charges may also be appropriate–much like drinking and driving cases. Just in the last year or two, you’re seeing more and more guilty drivers spending time behind bars, especially in fatal accidents. I really see this as just the beginning to how these cases are prosecuted.

FYIKentucky’s current law prohibits

any driver from texting and driving, while drivers under 18 are barred from use of all handheld electronics, such as cell phones. These are also

considered “primary” laws, meaning an officer can pull you over for the offense without witnessing some other violation. Right now, the fines for these violations are relatively low, at $25 for first offense and $50 for additional offenses, plus court costs. However, in August 2013, Kentucky Governor Steve Beshear issued an executive order to add a 3-point penalty for texting and driving offenses. So, in addition to the fines, drivers and possibly companies could face higher insurance premiums for violations. License suspension in Kentucky results after 12 points in a 2-year period for adult drivers or 7 points for those under age 18.

In 2012, the Federal Motor Carrier Safety Administration (FMCSA) made the laws tougher on all drivers of commercial motor vehicles (CMVs). Along with a ban on texting, these drivers

are prohibited from hand-held phone communication. They can communicate with hands-free phones only if it can be initiated by the use of a single button control. A “push to talk function” violates the rule if it requires the driver to hold the device or continue pressing a button while driving. It also prohibits the driver from having to “reach” for the device to initiate conversation. Fines for the drivers can be up to $2,750 per offense. Penalties for employers can be up to $11,000 per violation. While the rule doesn’t require employers to have a policy restricting cell phone use, such a policy is highly recommended to help avoid these penalties. Without a policy, your company may unfortunately find itself defending a position of “aiding and abetting” an accident or violation.


It’s tough everywhere. Upcoming jobs are Prevailing Wage because the government is the only one with money to spend. Experienced Prevailing Wage contractors now see twice as many bidders from farther away competing for the same project, or see companies who have never before sought Prevailing Wage work. Contractors who have avoided Prevailing Wage up until now may find this is the only work available. No matter the circumstance, everyone must work harder and smarter to get their share of the pie.

As a Prevailing Wage contractor, one monetary advantage you may have over the competition is simply how your company addresses the fringe requirement of the Prevailing Wage rate. Consider how you might answer these questions…• AreyoupayingPrevailingWagefringesascashsimply

because you don’t know what else to do?• Areyouapplyingeverycentofeveryfringebenefityou

provide (including holiday and vacation pay) towards the Prevailing Wage rate you must pay your employees?

• Doyouknowhowtoreceivethemostpossiblecreditforthe health and life insurance premiums that you pay?

• Has your401(k)been setup formaximumbenefitonPrevailing Wage projects or is it only partially working for you?

• Areyoureceivingtheappropriatecreditforanycompany-sponsored apprenticeship training?

• DoyouhaveawrittenCompanyFringeBenefitProgramand are you absolutely sure it is in strict compliance with all of the Prevailing Wage statutes, codes and regulations?

• Doyou reallyunderstandyourPrevailingWage fringeobligations?

• WhenthePrevailingWageauditorwalksinyourdoor,can you easily produce a clear audit trail of all fringes paid that will satisfy his requirements?

• Do your employees fully understand all that you arepaying on their behalf?

• Bottom line, are you needlessly paying out too muchmoney?If you provide vacation or holiday pay, and do not

receive fringe benefit credit, you must pay that money again as some other type of fringe, which means you are paying twice. If you are not receiving credit for all the insurance premiums you pay, but only the auditor’s calculated hourly amount, you are again paying twice. Although there is no “Prevailing Wage for Dummies” book, the guidelines for receiving credit for employer-paid fringe benefits on Prevailing Wage projects are absolute and defined, they are just hard to find. There simply is no good resource produced from a contractor’s point of view.

5 ThingsBy following these guidelines, a contractor will be in

compliance and will receive the maximum allowable credit for the fringes paid on any Prevailing Wage project. All items can be verified in the Code of Federal Regulations (29 CFR 5), the Kentucky Statutes (KRS 337), the Kentucky Regulations (803 KAR) and the Federal DOL Field Auditors Handbook. The requirements are not complicated, just different and detailed.

Keep in mind, these procedures do not have to be followed to legally pay fringes, but must be followed to take credit on Prevailing Wage projects. Listed on the following pages are the “5 Things”.

Understanding Prevailing Wage FringesBy Robert Ely, Advantage Resource, Inc.

Continued on page 16


1. Only a Bona Fide Fringe CountsA Bona Fide fringe is specifically defined in the Prevailing

Wage regulations as the only type of fringe that may count towards the required Prevailing Wage rate. Bona Fide fringes are limited to:a) Insurance. Defined as medical or hospital care, life

insurance, disability and sickness insurance or accident insurance. Workman’s compensation or government-required unemployment insurance cannot be counted because these are required of the employer by law. Bona Fide insurance, for fringe purposes, is solely for the benefit of the employee or his dependents.

b) Holiday and Vacation Pay (paid time off). Is specifically allowed by law if calculated and funded in a way that complies with the other listed requirements. This is frequently a very large expense incurred by the employer where no prevailing wage credit is taken.

c) Pensions on Retirement. Contributions to a properly designed 401k plan can be used to deposit any or all of the required fringes on a Prevailing Wage project and may be used to offset other Retirement Plan contributions. Because these are not defined as employee deferrals, there is no additional wage related burden. It is important to have a third party who is well versed on prevailing wage, as well as the construction industry in general, to assist in the implementation of the pension plan. Too many times a contractor accepts a cookie-cutter plan while not being fully aware of all the options available.

d) Apprenticeship Program. Defraying the cost of an Apprenticeship Program is considered Bona Fide if the program is properly registered and approved with the appropriate governmental agency. Specific guidelines are to be followed in determining the amount of the fringe that is allowable as a credit. Any contractor with such a program should seek guidance from a knowledgeable party when determining this amount.

e) Other Approved Fringe. Defined as any fringe not otherwise described above. 29 CFR 5.29 (e) states “. . . it will be necessary for the Secretary to examine the facts and circumstances to determine whether they are “bona fide” in accordance with requirements of the act . . . Contractors or subcontractors seeking credit under the act for costs incurred for such plans must request specific permission from the Secretary under §5.5(a)(1)(iv) ”. 803 KAR 1:085 is nearly identical, and says “. . . it will be necessary for the executive director to examine the facts and circumstances to determine whether they are “bona

fide” in accordance with the requirements of the statute. Employers seeking credit for such plans shall request specific permission from the executive director. . . ” If the contractor desires a furnished fringe be allowable as part of the required Prevailing Wage rate, specific approval must be requested from the DOL.

f) Cash. Cash is always acceptable as a fringe; however, any Prevailing Wage fringe amount paid in cash shall be paid as regular wages and is subject to the associated burden (matching FICA, workman’s comp, liability insurance, etc.). Any contractor who pays cash as a fringe should do so only because the employee is worth more on an hourly basis and not because the contractor feels it to be the only option.

2. The Benefit Program is to be communicated to your employees in writing

A well-constructed Company Benefit Plan is not Prevailing Wage specific. Instead, the plan is constructed with benefits awarded and paid in a way that allows the company to take credit on Prevailing Wage projects. The plan should be designed to answer, vice create, questions posed by employees. Simply put, the plan defines the fringe being furnished, who gets which fringe, when they get it, how calculations are performed, and how required Prevailing Wage fringes are paid. It is very important to be detailed and specific. Do not be tempted to use a fill-in-the-blank document that does not do this.

3. Fringe is to be expressed and paid as a cash value per hour

The required fringe on a Prevailing Wage project is expressed as a dollar value per hour; therefore, any fringe must be expressed and paid as a dollar value per hour. A contractor who does not fund fringes this way must accept an auditor-determined hourly rate as the fringe allowed.

There are two specific types of benefits: Fixed Rate Benefits and Calculated Benefits.

A Fixed Rate Benefit costs an employer the same amount no matter the number of hours worked or the wage of the employee (ex: health insurance). According to the Federal DOL Auditors Handbook, these benefits are to have their costs annualized. This means the cost of the benefit is spread over the number of hours worked in a year.

A Calculated Benefit is paid as a dollar value per hour for actual hours worked and is often expressed as a percentage of the employee wage. An example of a Calculated Benefit would be a fixed (ex: 3%) 401k contribution. This would equate to .45/hour for a 15.00/hour wage and .60/hr for a 20.00/hour wage. Paid Time Off is another example of a Calculated Benefit.

Understanding Prevailing Wage FringesContinued from page 14


EQUIPMENT APPRAISALSKeith Stout, Certified Senior Appraiser

Equipment Appraisers Association of North America

346 Lake Days Farm, Eddyville, KY 42038270-388-4000 Fax 270-388-4001

Cell 405-823-0555www.stoutmanagement.com

MANAGEMENT INC.

4. Benefit contributions must be irrevocably made to the benefit of the employee

This is self explanatory. Any fringe benefit monies paid cannot be reverted back to the employer. This does not, however, “…prevent return to the contractor or subcontractor of sums which he had paid in excess of the contributions actually called for by the plan, as where such excess payments result from error or from the necessity of making payments to cover the estimated cost of contributions…” (29 CFR 5.26). Kentucky regulations (803 KAR 1.085) mirror the federal code.

5. The Benefits Program must be administered by a trustee or a third party, not affiliated with the employer, subject to an enforceable commitment

No matter how badly a contractor wants to administer a benefit program in-house, the regulations are clear. Fringe benefit monies must be paid to an outside source and are not to be under the control of the contractor. Experienced Prevailing Wage contractors know this as one of the major reasons some fringes are not allowed when an audit is performed.

It is important to note that these “5 Things” are really one thing with five equally important parts. Determine the

fringes to be furnished, and then follow these steps to put the Company Benefits Program in place. Doing so will ensure compliance and will allow maximum credit towards the Required Fringe on Prevailing Wage projects.

Finally, unless the Contractor just wants to, there is no reason to pay any part of the Prevailing Wage fringe as cash, and there is no reason to pay fringes and not receive Prevailing Wage credit. When the auditor shows up, be a “this is what we do” Contractor, not a “what will you let me have” Contractor.

Robert Ely is the President of Advantage Resource Inc. Based in Lexington, Kentucky, Advantage Resource provides fringe benefits administration and compliance assistance to prevailing wage contractors. More information can be found by visiting www.advantageresource.com or via email request to [email protected].

1750 Alexandria Drive Ste 100 (40504) ~ PO Box 4099 ~ Lexington, KY 40544‐4099 ~ p (859) 313‐5472 ~ f (859) 313‐5473 ~ www.advantageresource.com


AGC of Western Kentucky’s Legislative Action CenterGetting Involved DOES Make a Difference

When legislation is introduced that can affect the construction industry, AGC uses its Legislative Action Center to inform members to take action to encourage legislators to make decisions that are favorable to the industry.

One of our calls to action resulted in a Kentucky House Representative publicly addressing fellow legislators during a legislative session, stating how overwhelmed he was with correspondence from our members, and asking that we “call off the dogs”.

AGC retains registered lobbyists to advance our position on legislative and regulatory changes, but your personal involvement is important. When you respond to an AGC Legislative Alert, you help provide a powerful, unified voice to communicate our industry’s legislative priorities.

AGC members DO make a difference on political issues. When you receive an AGC Legislative Alert, please take time to respond.

Stay informed, spread the word, take action–help us fight for legislation that’s positive for the construction industry.

LegislativeAction Center

AGC of Western Kentucky is accredited by the State of Kentucky, Department of Housing, Buildings & Construction, to provide continuing education required for Electrical, Plumbing, and HVAC license renewal.

Rave reviews: “Fast reporting of CEU’s to State” “I never lost interest” “Great learning experience” “Relaxed, fun atmosphere” “Knowledgeable instructors” “Hands-on approach makes it easy to understand” “Relevant, practical information that’s useful immediately” “Plenty of time for questions” “Good class participation”

Course schedules/registration available at www.agcwky.org.

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800.599.8621

Contact the risk advisors at Peel & Holland today. We’ll work with you to construct a plan that will grow one of the most important things in your business:

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Join us for this different type of get-together–a refreshing, fun change from our usual holiday party.

Friday, November 22, Walker Hall, Paducah - Our evening begins at 6:30 p.m. with a chance for you to meet and mingle in a casual atmosphere while enjoying delicious hors d’oeuvres and drinks. Hang around and dance to the music of The Cruisers.

Get in the holiday mood – meet, greet, eat, and dance! We look forward to seeing you there!

Before the madness hits, kick off the holiday season at our newest event – AGC’s Pre-Holiday Mixer and Dance!

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