On July 16, 2021, the Department of Labor’s Wage and Hour Division issued All Agency Memorandum No. 237, announcing that the prevailing health and welfare fringe benefit rate under the Service Contract Act (SCA) would increase for 2021. The 2021 SCA fringe rate has increased to $4.60 per hour. Effective, July 16, 2021, the Wage and Hour Division (WHD) will post the SCA health and welfare fringe benefits rate of $4.60 per hour at SAM.gov and Wage and Hour Division websites.
The 2021 SCA Fringe Rate For EO 13706 Contracts
Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors (EO 13706), requires certain employers that contract with the federal government to provide their employees with up to 56 hours (seven days) of paid sick leave annually, including for family care and absences resulting from domestic violence, sexual assault, and stalking. EO 13706 applies to new contracts with the federal government that result from solicitations issued on or after January 1, 2017 (or that are awarded outside the solicitation process on or after January 1, 2017).
The 2021 SCA fringe rate benefits level for employees performing on contracts covered by EO 13706 will be $4.23 for each hour of work on the contracts (which, based on a 40-hour workweek, is $169.20 per week, or $733.20 per month).
Learn more on the Department of Labor’s website: https://www.dol.gov/whd/govcontracts/eo13706/
A Brief History of Fringe Rates Under the Service Contract Act
SCA compliance for government contractors is determined by the Wage and Hour Division. The WHD calculates the contractor’s average fringe benefit cost for all service employees working on a contract. There is a second means of determining the fringe that is determined on an employee-by-employee basis.
In 2004, the WHD announced (in All Agency Memorandum Number 197) that it would increase the fringe benefit rate for all wage determinations and retain the two different methods for determining compliance. That policy will continue again in 2021. As such, both the employee-by-employee benefit and average cost fringe benefit rates will be $4.60 per hour (which, based on a 40-hour workweek, is $184.00 per week, or $797.33 per month).
A Simple Solution to Health and Welfare Benefits
Government contractors turn to us when they’re facing the unique challenges that come with fringe benefits. Our solutions emphasize compliance, flexibility, lower costs, and a competitive edge. At Boon, we take an adaptable approach to benefits because that’s the approach that meets our clients where they are. For every shift in legislation or new fringe rate, we’re there creating benefit options that meet the unique needs of government contractors. Better benefit solutions are what we do best.
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