Department of Labor Introduces Dual Fringe Rates for Service Contract Act

The Department of Labor (DOL) has announced its 2017-18 adjustment for the Service Contract Act (SCA) Health and Welfare Fringe Benefits rate (“rate”) for all wage determinations issued on or after August 1, 2017.  In order to address the paid sick leave obligation created pursuant to Executive Order (EO) 13706, which is being implemented into service contracts, the agency has released two rates. The new hourly rate for uncovered contracts is $4.41 per hour. For contracts that contain the paid sick leave obligation, the new hourly rate is $4.13 per hour. The lower rate will partially offset the cost of compliance with EO 13706.

Coverage:  Government contractor employers who are subject to the SCA or EO 13706.

Effective:   All wage determinations issued after August 1, 2017.

Action Required: You should: (1) check your solicitations, modifications and revised wage determinations to determine whether the new rates are included in your new contracts or are being incorporated into your existing contracts; (2) ensure that you are tracking accruals for paid sick leave; and (3) and ensure that the rates are used as appropriate.

Produced in cooperation with Jackson Lewis P.C.