Meeting the Fringe Requirements
Under the SCA, 29 CFR 4.170(a): Discharging fringe benefit obligations by equivalent means …
In general, the regulations permit an employer to discharge his obligation to furnish the fringe benefits specific in an applicable fringe benefit determination by furnishing any equivalent combination of “bona fide” fringe benefits or by making equivalent or differential payment in cash …
Under the DBA, 29 CFR 5.31(a): Meeting wage determination obligations
A contractor or a subcontractor may discharge his minimum wage obligations by paying both straight time and fringe benefits by paying both in cash, making payments for “bona fide” fringe benefits of the types listed in the wage determination, or by a combination.
The Problem with Paying Cash
Contractors paying the fringe rate in cash through wages are at a competitive disadvantage on their labor costs because they incur additional expenses in the form of payroll burden including FICA and higher Workers Compensation premiums.