- When it comes to government contracting 'fringe rate' is a pretty simple and straightforward concept. However due to foggy enforcement over the years, there're more than a couple misconceptions surrounding fringe rate.
- By requiring contractors to pay fringe rates, the government is attempting to ensure the health and safety of everyone who works on a government contract. The rate increases reflect rising health care costs along with inflation.
- Most of the time what makes compliance difficult is all the classifications. Where was the work was performed? What are the qualifications of that individual(s) and are there any other stipulations in the contract? Doing the right thing can be a challenge.
- This is where fringe rates are different. Every worker on an SCA contract is to be paid the current fringe rate as determined by the DOL. However, that still doesn't mean contractors are getting it right.
Fringe Rate Increases
- Contractors often think once a fringe rate is "locked in" (static) by the contract. This is a mistake. The SCA rule is VERY clear. Contractors should (almost always) be paying whatever the current fringe rate is.
- Unless the DOL has given written permission stating otherwise, the contract fringe rate should be updated. Without the contract officer's blessing, paying a lower fringe rate is unacceptable.
- Furthermore, in re-bidding situations, if you're not paying current fringe rates... that's the kind of thing that might prevent you from keeping your contract.
When is the Fringe Rate Updated?
- The effective date on which the fringe rate changes is another problem for contractors. Often the fringe rate change is announced after the effective date. Technically you should have already complied with a law that didn't exist yet (which is really unfair).
- And while this might be a small compliance violation, it still goes down on the books as a violation.
- Don't let fringe rates on contracts lag. Save yourself the headaches and financial consequences, by subcontracting this "hot mess" to someone that specializes in government contracting.
- Keeping up with government contracting rates, rules, and effective dates is not why most contractors went into business. With Axim FSG as your compliance sub, you can increase contract profitability by reducing your compliance burden - all while allowing you to keep focused on the job.
- Three Common Service Contract Act Compliance (SCA) Stumbling Blocks
- How Cash-in-lieu Opt-Outs Increase Costs for Federal Contractors
- The Government Contractor’s Guide to Service Contract Act (SCA) Compliance
- How “No Change” to the SCA Health & Welfare Benefit Rate Impacts Government Contractors
- SCA Compliance Checklist Part 8: Fringe Benefits
- SCA Compliance Checklist Part 7: ACA Compliance
- SCA Compliance Checklist Part 6: Subcontractor Compliance
- SCA Compliance Checklist Part 5: Fringe Rate
- SCA Compliance Checklist Part 4: Base Wages
- SCA Compliance Checklist Part 3: Labor Categories