The Wage and Hour Division has released the new fringe rates for 2018/2019.

The Wage and Hour Division’s All Agency Memorandum 227 sets the Service Contract Act (SCA) Health and Welfare Fringe Benefit rate for $4.48 per hour, an increase from the previous year’s fringe rate of $4.41 per hour. This new fringe rate became effective on July 11, 2018.

In addition, the All Agency Memorandum sets a Welfare Fringe Benefit rate of $4.18 per hour for contracts under the SCA that are also bound by EO 13706. This also represents a small increase with the health and welfare rate increasing from $4.13 per hour.

Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors, requires that employers that contract with the federal government provide their employees with up to 56 hours of paid sick leave annually; this comes out to seven days paid sick leave. This rule applies to “new” government contracts entered into on or after the Executive Order’s effective date, January 1, 2017. This paid leave can also be applied to family care and any employee absences that occur as a result of domestic violence, sexual assault, and stalking.

These increased fringe rates already present many interesting considerations with respect to both providing meaningful benefits and with compliance. Most notably, under this new fringe rate, there is potential for a given contractor to have five different contracts with five different fringe rates.

Talk about a compliance minefield!

Our comprehensive compliance services navigate this changing landscape and guard against potential compliance pitfalls so that you don’t have to. Our ability to create flexible plans that are customized to the fringe keeps you compliant and covered in the most cost-efficient way.

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