2012 Service Contract Act Health & Welfare Fringe Benefit Changes

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  • July 11, 2012

Effective June 17, 2012, the Health & Welfare Fringe Benefit Rate issued under the McNamara-O’Hara Service Contract Act (SCA) increased to $3.71 per hour, as posted on the Wage Determinations Online (www.wdol.gov) and Wage and Hour Division (WHD) (www.dol.gov/whd) websites.

All Agency DOL Memorandum Number 211 announced the change in rate and affects new contracts being awarded on or after June 17, 2012 and existing contracts on their first anniversary date following June 17, 2012.

Based on the regulations adopted in 1996, SCA wage determinations (WDs) have contained two different health and welfare fringe benefit levels consisting of a “low level” or “employee-by-employee” level benefit and a “high Level” or “average cost” level benefit. The low level benefit was updated every year on June 1st, based upon the latest Bureau of Labor Statistics (BLS) data, and the high level benefit was grandfathered at $2.56 per hour. Both levels had different methods of determining compliance.

In 2004, when the BLS publication of Employer Costs for Employee Compensation indicated that the low level benefit was about to exceed the grandfathered high benefit of $2.56 per hour, the Wage and Hour Division announced* an increase of the fringe benefit rate for all wage determinations, although the two different methods for determining compliance would be retained.
*All Agency Memorandum Number 197

This policy continues again this year with the employee-by-employee benefit increased to $3.71 per hour, or $148.40 per week, or $643.07 per month. The average cost fringe benefit rate will also be $3.71 per hour. In accordance with the policy established in 1996 and continued since 2004, the average cost fringe benefit wage determination will be issued only for those contracts where the formerly grandfathered “high” benefit rate would have applied.

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