DOL Increases SCA Health & Welfare Fringe RateJuly 31, 2017 Alert
Under SCA, contractors performing services on contracts are required to pay service employees the wage rates and fringe benefits prevailing in that area.
Under the McNamara-O’Hara Service Contract Act (SCA), contractors and subcontractors performing services on prime contracts that exceed $2,500 are required to pay service employees no less than the wage rates and fringe benefits prevailing in that area or the rates (including prospective increases) that are in a predecessor contractor’s collective bargaining agreement (CBA.)
Effective August 1, 2017, the prevailing health and welfare fringe benefits will increase to the rate of $4.41 per hour from the previous rate of $4.27 per hour.
Under Executive Order (EO) 13706, Establishing Paid Sick Leave for Federal Contractors, certain federal contractors are required to provide employees up to 56 hours (seven days) of paid sick leave each year. This includes time for family care, as well as for absences resulting from domestic violence, sexual assault and stalking. EO 13706 is applicable to new federal contract agreements that result from solicitations issued on or after January 1, 2017, or that are awarded outside of the solicitation process after January 1, 2017.
The DOL Wage and Hour has established an alternate health and welfare rate for those employers who must comply with EO 13706, that excludes the sick leave portion of the calculated health and welfare rate. The SCA health and welfare fringe rate for employees performing on contracts covered under EO 13706 will be $4.13 per hour.
We will follow up with any additional information regarding any action that may be required for future reporting. Thank you for choosing Paylocity as your Payroll Tax partner. Should you have any questions please contact your Paylocity Account Manager.