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Department of Labor Increases the SCA Health & Welfare Rate and Establishes Two Other Rates

On July 25, 2017, the Wage and Hour Division of the U.S. Department of Labor updated and increased the McNamara-O’Hara Service Contract Act (“SCA”) Health and Welfare (“H&W”) Fringe Benefit to $4.41 per hour (i.e., $176.40 per week or $764.40 per month). The increase will be effective as of August 1, 2017. This is an increase of 14 cents per hour, up from 2015-2016 rate of $4.27.

The new update also included a rate for those employees who fall under Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors. A new reduced rate of $4.13 per hour (i.e., $165.20 a week or $715.87 per month), for employees performing on contracts covered by the Order. Executive Order 13706 requires certain employees up to seven days (56 hours) of paid sick leave annually. The order applies to all new Federal contracts issued on or after January 1, 2017. The alternate H&W rate excludes the sick leave portion of the fringe rate discussed above. For further information, read our previously posted a blog on Executive Order 13706, Paid Sick Leave Now Required for Federal Contractors.

Lastly, a new SCA H&W Fringe Benefits rate was established for Hawaii to reflect the state’s law that requires most employers to provide health insurance coverage for their employees. A new rate of $1.91 per hour for employees is covered by the state’s health care requirement. If the employee is covered under Executive Order 13706 and under the state’s law, the rate will be $1.63 per hour. If the employee is not receiving the mandated health care benefits by the state, the H&W Fringe rate will be $4.41 per hour.

If you have any questions or concerns, please do not hesitate to contact one of our experienced GovCon professionals for assistance.

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