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2024 SCA Fringe Rate Update: New Rates and Implementation Guidelines

July 22, 2024


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.

Fringe Benefit Group Announces The Contractors Plan ICHRA; Innovative New Program Solves Health Insurance Challenges for Service Contract Act Contractors

May 22, 2023


AUSTIN, Texas–(BUSINESS WIRE)–Fringe Benefit Group, an industry leader in the design, implementation and administration of benefit plans for hourly and part-time workers, today announced The Contractors Plan ICHRA, a flexible, cost-effective, and compliant solution for Service Contract Act (SCA) and Davis-Bacon Act employers who face challenges in providing health benefits to their employees. By offering Individual Coverage Health Reimbursement Arrangements (ICHRA) as part of the fringe benefit package, prevailing wage contractors can fulfill their obligations while providing valuable health benefits to their employees. Employees can now choose their own individual health insurance plans based on their needs and not a one-size-fits-all group health plan.

Read the full Press Release here: https://www.businesswire.com/news/home/20230522005591/en/Fringe-Benefit-Group-Announces-The-Contractors-Plan-ICHRA-Innovative-New-Program-Solves-Health-Insurance-Challenges-for-Service-Contract-Act-Contractors

FBG Responds to Department’s NPRM

June 15, 2022


In response to the Department of Labor’s (Department’s) notice of proposed rulemaking (NPRM), updating the Davis-Bacon and Related Acts Regulations, Fringe Benefit Group worked with The Groom Law Group on comments promoting retirement savings and limiting the administrative burden on contractors.

In March, the Department issued the NPRM, representing the most comprehensive review of the Davis-Bacon Act regulations in 40 years. The Department encouraged interested parties to submit comments on this proposal by May 17, 2022.

The proposed updates were extensive and involved a broad range of changes. Our expertise allowed us to focus on the proposed rules that would have the greatest impact to our clients and their benefit plans. Based on our years of experience and countless conversations with contractors, we knew it was imperative to provide comments on two fundamental aspects: encouraging retirement benefits and addressing the advantage of simplifying administrative requirements.

Our comments emphasize that the Departments proposed updates can be enhanced for both covered workers and contractors. We underscore that covered workers should have access to the highest quality benefits, such as retirement savings. In addition, these benefits should be portable, so they do not risk losing access to them when moving from project to project. We also reiterate that covered contractors want to meet their DBRA requirements and use their fringe benefit programs to attract and retain superior workers.

These interests align with a regulatory scheme that appropriately protects workers’ interests but does not create excessive administrative requirements. Therefore, it is essential that requirements are consistent and streamlined, ultimately minimizing the potential of high administrative costs so as not to limit contractors’ ability to offer such benefits but rather to encourage them to provide the highest-quality benefits and workers’ access to them.

In direct support of congressional efforts to boost retirement savings, we encourage the Department to include a safe harbor provision to automatically qualify defined contribution pension plans (DCPPs) for the annualization exception when they meet the exception requirements. This change would help eliminate an unnecessary burden on contractors and administrators who would otherwise prepare submissions for all fringe benefit plans seeking an exception from an annualization requirement.

Having a safe harbor included in the DCPP would also help address time constraints and administrative complexity, which would help encourage small businesses or new entrants to pursue opportunities covered by the DBA or DBRA. And demographically, covered workers in these scenarios are the ones who could benefit the most by achieving improved financial security.

Alternatively, we proposed that the Department adopt a concept that has been used successfully in other contexts by federal agencies for many years and allow contractors to adopt “pre-approved” plans that have met the annualization requirements. This, again, benefits both covered workers and contractors by supporting the provision of worker benefits and affording timely and efficient administrative requirements for the contractors.

The proposed regulations also include a new provision that a contractor or subcontractor may not take Davis-Bacon credit for its administrative expenses incurred with the administration of fringe benefits. The Department has specially requested comments concerning “whether it should clarify this principle further concerning third-party administrative costs.”

In our response, we stressed that the Department should confirm that reasonable administrative expenses paid to a third party and directly related to the provision of fringe benefits should be creditable. Essentially, if the third party expense would not have been incurred “but for” the provision of fringe benefits, it should be creditable, encompassing administrative costs associated with providing fringe benefits to employees and the administration and delivery of benefits.

This recommendation is consistent with ERISA, the governing statute of employee benefit plans, allowing plan assets to “defray reasonable expenses of administrating the plan.” In other words, Congress and the Department have determined that benefit plan assets can be used to pay for plan administrative expenses. In addition, allowing employers to receive credit for reasonable expenses paid to third-party providers encourages them to utilize providers who can efficiently maximize the value to covered employees. Furthermore, any additional costs would disproportionately impact smaller businesses, which often struggle the most in absorbing added expenses.

We hope that the Department will incorporate our suggestions, making it easier to access retirement savings benefits and less burdensome for contractors to administer benefits and overall compliance.

U.S. DOL Announces 2021 SCA Fringe Rate

September 29, 2021


The Department of Labor’s Wage and Hour Division Made an Important Announcement

Per 29 C.F.R. subsection 4.52, the prevailing wage health and welfare fringe benefit rates will be increased under the McNamara-O’Hara Service Contract Act effective July 16th, 2021.

The new health and welfare fringe benefit rate will be $4.60 per hour.  This will impact both the employee-by-employee and average cost benefit rates.

Bids & Contracts Subjected to Executive Order 13706:

For contracts subject to EO 13706 (Paid Sick Leave for Federal Contractors), the new health and welfare fringe benefit rate will be $4.23 per hour.

Hawaii:

The SCA health and welfare fringe benefit rate will remain at $1.94 per hour.

All invitations for bids opened and service contracts awarded on or after July 16th, 2021, must include an updated SCA WD that complies with the regulatory health and welfare fringe benefit determination methodology.  Please check with your local state regulators for any fringe rate changes that may be taking place at the state or municipal levels as they are often reflective of the federal fringe rate.

The Department of Labor’s Wage and Hour Division Made An Important Announcement

July 23, 2021


Per 29 C.F.R. subsection 4.52, the prevailing wage health and welfare fringe benefit rates will be increased under the McNamara-O’Hara Service Contract Act effective July 16th, 2021.

The new health and welfare fringe benefit rate will be $4.60 per hour.  This will impact both the employee-by-employee and average cost benefit rates.

Bids & Contracts Subjected to Executive Order 13706:

For contracts subject to EO 13706 (Paid Sick Leave for Federal Contractors), the new health and welfare fringe benefit rate will be $4.23 per hour.

Hawaii:

The SCA health and welfare fringe benefit rate will remain at $1.94 per hour.

All invitations for bids opened and service contracts awarded on or after July 16th, 2021, must include an updated SCA WD that complies with the regulatory health and welfare fringe benefit determination methodology.  Please check with your local state regulators for any fringe rate changes that may be taking place at the state or municipal levels as they are often reflective of the federal fringe rate.

As the first company to offer a complete solution for prevailing wage workers, we have more than 40 years of experience analyzing government contractor’s needs, then creating and implementing the right plans benefit plans. We are prevailing wage experts, and we’re dedicated to helping you succeed. Our plans and services come fully administered and we maintain your compliance.

Fringe Benefit Group And eMars Simplify Compliance For Government Contractors

May 5, 2021


AUSTIN, Texas — May 4, 2021Fringe Benefit Group,  an industry leader in the design, implementation and administration of benefits for hourly and part-time workers, today announced it has established a partnership with eMars to simplify compliance reporting for government contractors using Fringe Benefit Group’s prevailing wage benefit plan, The Contractors Plan.

Fringe Benefit Group is known for its full-service suite of tools and services that greatly reduce the burden of plan enrollment and administration for employers. eMars’ Compliant Client is an easy and efficient way to audit payroll contributions from any payroll. Contractors must certify each week’s payroll and eMars’ verification process uses a Web browser to provide real-time validation of prevailing wage payroll compliance prior to certification and release of funds. Compliant Client ensures that contractors and their subcontractors have the correct prevailing wage base and fringe benefit amounts for the job classification of the jurisdiction where the work is being performed.

 

According to Brian Robertson, Executive Vice President of Fringe Benefit Group, “Mutual clients of The Contractors Plan and eMars will have a tool to avoid non-compliant contributions and ensure their employees receive bona fide fringe benefits that are accurate.”

The Contractors Plan has nearly four decades of experience providing bona fide fringe benefits to construction contractors who compete under prevailing wage regulations such as the Davis-Bacon Act and state prevailing wage laws. Many non-union contractors pay workers comp and general liability insurance premiums as well as payroll taxes (e.g. FICA) by combining required fringe amounts with base wages and funding the total on the employee’s paycheck. These fringe contributions on the paycheck can create unnecessary payroll burden costs of tens of thousands of dollars per year. The Contractors Plan allows employers to offer bona fide benefits, including a wide variety of health and retirement plan options, to their workforce with minimal administrative burden.

Wage and Hour Issues Additional Guidance on Workplaces Laws

July 31, 2020


The Department of Labor’s Wage and Hour Division (WHD) recently published additional guidance for employers and workers on how the requirements and protections of the Family and Medical Leave Act (FMLA), the Fair Standards Act (FLSA), and the Families First Coronavirus Response Act (FFCRA) affect the workplace. The WHD understands how critically important this information is to employers and workers.

This guidance is the latest addition to compliance assistance materials that address critical issues in all three laws. The information provided includes a Fact Sheet for Employees, a Fact Sheet for Employers, and a Questions and Answers resource about paid sick and expanded family and medical leave under the FFCRA.

WHD has also released two FFCRA guidance posters, one for federal workers and one for all other employees, and offers simple Quick Benefits Tips to determine how much paid leave the FFCRA allows employees to take.

Furthermore, WHD provides employers and employees information on everyday issues they face when responding to the coronavirus and its effects on wages and hours worked under the FLSA and job-protected leave under the FMLA at https://www.dol.gov/agencies/whd/pandemic

U.S. DOL Announces 2020 SCA Fringe Rate

July 16, 2020


The Health & Welfare Fringe Benefit Rates will remain $4.54 for those affected Service Contract Act wage determinations.

The low-level (employee-by-employee) benefit will remain $4.54 per hour or $181.60 per week or $786.93 per month. Also, Wage and Hour Division (WHD) will continue to issue SCA wage determinations based on the average cost method of compliance. The high-level (average cost) benefit rate will remain $4.54 per hour.

Additional SCA Health & Welfare Fringe Benefit Rate Information

All service contracts that contain paid sick leave (EO 13706) will utilize the lower fringe rate of $4.22 SCA health & welfare benefit rate.

Click here for more information.

DC Paid Family Leave

July 14, 2020


On July 1st, the District of Columbia (DC) Office of Paid Family Leave (OPFL) began working with employers and workers to administer the paid leave benefits under the DC Paid Family Leave Act (the Act). The Act is an insurance program that governs whether a worker will be eligible for paid leave benefits.

The Paid Leave Act provides up to 8 weeks to bond with a new child, six weeks to care for a family member with a severe health condition, and two weeks to care for your serious health condition. Employees may take any combination of family, parental, and/or medical leave up to the limits stated in a 52-week period. The Paid family leave may be taken intermittently; however, the combined leave total may not exceed eight weeks in the 52 weeks.

A qualifying business is any business performing services in DC that pays unemployment insurance (UI) taxes for its employees.  Once an employer has paid UI tax for one fiscal quarter for their worker, they will automatically be recognized as a covered employee for paid family leave. The paid leave benefits are paid by the DC government and funded by a quarterly employer payroll tax.

The OPFL will be hosting outreach and engagement events that include the Paid Family Leave webinars on:

Thursday, July 16, 2020

PFL Webinar

1:30 – 2:30 p.m. EST

REGISTER HERE

Thursday, July 30, 2020

PFL Webinar

1:30 – 2:30 p.m. EST

REGISTER HERE

WHD Cancels In-Person Prevailing Wage Seminars in 2020

July 7, 2020


The Wage and Hour Division (WHD) announced they would not be hosting in-person Prevailing Wage (PW) seminars for the rest of 2020. The cancelation of in-person workshops is due to safety and health concerns related to the COVID-19 pandemic.

Instead, the WHD plans to offer virtual PW seminars that will provide training and outreach on topics such as the Service Contract Act, the Davis-Bacon Act, Executive Orders 13658 and 13706, wage determinations, and conformances, and compliance assistance and enforcement processes.

Additional updates on virtual seminar dates and registration will be coming soon. For more information and compliance assistance resources on prevailing wages, please visit the Davis-Bacon and Related Acts webpage.