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Government Contractors

No Changes to the Department of Labor SCA Health & Welfare Rate

As far back as many can remember, there has been a yearly change in the Health & Welfare (“H&W”) rate. Last summer for instance, the H&W rate jumped $0.25 from $4.02 per hour to $4.27 per hour. However, as of July 28, 2016, the Department of Labor (“DOL”) Wage and Hour Division has made no changes to the Service Contract Act (“SCA”) (“H&W”) rate. The DOL has also issued a memorandum that retains the H&W rate at $4.27 for presumably next year.

With the exception of citing the Bureau of Labor Statistics Employment Cost Index, the memorandum provides no other commentary as to why the rate remains unchanged. However, it is possible that the recent changes in salary levels for the Fair Labor Standards Act, which increased the amount of employees subject to SCA, may have been a factor.

Government contractors with federal contracts subject to the SCA should ensure that employees are receiving the minimum H&W benefit per hour, and continue at $4.27 per hour until the DOL notifies otherwise.

For those not familiar with the SCA or contemplating entering the Federal contracting environment, every contract entered into by the Federal Government in excess of $2,500 where the principal purpose is to furnish services in the U.S. through the use of service employees is subject to SCA. The SCA’s basic requirement is that non-exempt workers performing on a covered contract are required to be paid specified minimum wages for their labor category and minimum fringe benefits. Additionally, the SCA requires that work not be performed in unsanitary, hazardous, or dangerous places which may impact the health and safety of covered employees.

For help determining if you are meeting the H&W rate or guidance on how to comply with the myriad of details surrounding the SCA, feel free to contact your local Cherry Bekaert GovCon professional.


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