Union fringes are the per-hour contributions a signatory contractor owes to union benefit funds under a collective bargaining agreement (CBA). Typical funds include health and welfare, pension, annuity, apprenticeship and training, vacation, and industry advancement. Rates vary by local, trade, classification and sometimes by job location, and they change when the agreement renews.
Why it matters
Fringes are often a third or more of a union worker’s total hourly cost, so getting them wrong distorts job cost and bids. Contractors usually report and pay fringes monthly to each fund using remittance reports. Late or incorrect remittances can trigger audits, interest, liquidated damages under the trust agreement and, eventually, collection action. On prevailing wage jobs, union fringe contributions to bona fide plans can count toward the required fringe rate.
Worked example
Illustrative: a journeyman electrician earns $52.00 base. The CBA calls for $14.25 health and welfare, $9.80 pension, $4.10 annuity and $1.15 training, so $29.30 in fringes. Total hourly cost before payroll taxes and insurance: $81.30. A crew of six working 40 hours generates $7,032 in fringe contributions that week.
Common mistakes
- Using last year’s fringe rates after a CBA renewal.
- Paying fringes on the wrong hours basis, such as paid hours versus worked hours, when the agreement specifies one.
- Not allocating fringes to job cost, so union labor looks cheaper than it is.
How os.construction handles it
We’re building labor costing so fringes and burden are applied to each timecard hour by job and cost code. Fund remittance reporting is planned with founding union contractors.