Discharging Wage And Fringe Benefit Obligations

  1. Fringe benefits required under the SCA must be furnished, separate from and in addition to the specified monetary wages, by the contractor to the employees engaged in performance of the contract, as specified in the applicable SCA wage determination in a covered contract. A contractor must keep appropriate records separately showing amounts paid for wages and amounts paid for fringe benefits, and cannot simply assert that paying more than the required monetary wages offsets the fringe benefit requirement, or vice versa. 29 C.F.R. § 4.170.
  2. The obligation to furnish the specified benefits "may be discharged by furnishing any equivalent combinations of fringe benefits or by making equivalent or differential payments in cash," in accordance with 29 C.F.R. § 4.177.
  3. Thus, in the following example, where a fixed cost per employee health and welfare fringe benefit applies assume that the contractor provides vacation and holiday benefits the wage determination specifies, available records show that an individual service employee is being paid a monetary wage of $12.36 per hour, and the employer pays $1.60 per hour (up to 40 hours per week) for the employee's health insurance. The fringe benefit requirement would not be met
    1. Wage Determination requires
      Wage $10.25
      H&W benefits 3.71
      Total $13.96

    2. Contractor has paid
      Wage $12.36
      H&W benefits 1.60
      Total $13.96
  4. In this example, the contractor/subcontractor would be in compliance with the wage requirement of the applicable minimum monetary wage requirement. However, the fringe benefit requirement would not be met. The cost of the fringe benefits furnished payment is $2.11 below the minimum listed in the wage determination.
  5. In relation to this example, the contractor may discharge the obligation to furnish the specified benefits by furnishing any equivalent combination of fringe benefits, or by making equivalent or differential payments in cash as follows. If the contractor/subcontractor met the vacation and holiday benefit requirements, as listed on the wage determination, and beyond that, only provided health insurance benefits by contributing an hourly amount of $2.49 for the worker's health insurance, the remaining $1.22 could be paid as a cash equivalent, or that amount could be used to provide another benefit (such as by a contractor's contribution to the employee's 401(k) plan account) in order to be in compliance with the $3.71 H&W benefit required by the wage determination. It is important to note that employer contributions to bona fide fringe benefit plans must be made regularly, at least quarterly.

Consulting Services We Provide

  • Review public works preconstruction contracts
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  • Review DIR Fringe Benefits Statement PW-26
  • Monitor DIR wage determinations
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