2024 SCA Fringe Rate Update: New Rates and Implementation Guidelines

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On July 16, 2024, the U.S. Department of Labor (DOL) issued All Agency Memorandum 246 (AAM 246), updating the 2024 Service Contract Act (SCA) Health and Welfare fringe rate. This annual update, which accounts for current economic conditions and inflation, is vital for employers and government-contracting employees.

All invitations for bids opened and service contracts awarded on or after July 2, 2024, must include the updated SCA Wage Determination (WD) that reflects the new fringe benefit rates. The fringe rate for non-EO 13706 contracts has increased to $5.36 per hour, up from $4.98. For contracts under Executive Order (EO) 13706, which established paid sick leave for federal contractor employees, the rate has risen to $4.93 per hour from $4.57. Additionally, employees covered by the Hawaii Prepaid Healthcare Act (HPHCA) will see an increase to $2.36 per hour and $1.93 per hour for those performing EO 13706 contracts.

Revised WDs with the updated rates will be available on SAM.gov and the DOL’s Wage and Hour Division website. For existing contracts with option years, the new rates will generally take effect on the contract anniversary date and require a contract modification. Employers should contact their contracting officer to implement these changes.