U. S. DEPARTMENT OF LABOR ANNOUNCES CHANGE

In accordance with 29 C. F. R. Section 4.52, the prevailing health & welfare fringe benefits issued under the McNamara-O’Hara Service Contract Act (SCA) will be increased on June 17th, 2012.

HEALTH & WELFARE BENEFIT RATE INCREASES

Effective June 17th, 2012, the new SCA health & welfare benefit will be $3.71 per hour and will be posted on the Wage Determinations Online (www.wdol.gov) and Wage and Hour Division (WHD) (www.dol.gov/whd) websites.  This information taken directly from the DOL memorandum distributed by Deputy Administrator, Nancy Leppink.  For more information on the increase and it’s nuances, read the memorandum or visit the DOL on the web.

DO YOU STILL BID & PAY THE FRINGE OUT IN CASH WAGES?

If you are paying the health & welfare out in cash wages, based on a 17% payroll burden, you can expect to pay $0.63 more per hour in taxes, etc.   For a full-time employee (2,080 hours) that is an additional $1,310.40 per year.  With a workforce of 100 employees that would be an additional $131,400.00 per year, and on a 1-year guarantee with 4-option year contract your profits would be cut by $655,200.00.  And that’s assuming the fringe does not increase again.

DO YOU HAVE A BENEFIT STRATEGY IN PLACE? 

I speak with a lot of contractors that say “we have a benefit plan”.  However, once we dig into their plan we find out they are still leaving fringe dollars on the table.   Gaps are created with handling part-time employees, waiting periods, allowing employees to say “no, I don’t want the coverage”, retirement plans can create problems if they have matches and vesting schedules.  What will they now do with the extra $0.12 per hour and above all, who maintains their compliance?