Fringe Benefit Requirement for Service Contract Act Increased to $4.02

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The Department of Labor has released its annual memorandum which specifies a rate increase for Service Contract Act (“SCA”) health and welfare fringe benefits. The new rate is $4.02 per hour, a 5.5% increase, and becomes effective July 22, 2014.

The new rate will be required in all invitations for bids opened, or other service contracts awarded on or after July 22, 2014. The contracting officer may adjust bids submitted using the old rates without obtaining a new wage determination before issuing the new contract. For existing service contracts, the new rate will go into effect on the anniversary date or the option renewal/modification date, depending on the terms of the contract.

The rate in Hawaii is dependent upon whether an employee is insured pursuant to the state’s mandatory health care law. Contractors operating in Hawaii should review the DOL memorandum and their applicable wage determination requirements.