The Department of Labor has increased to $2.86 per hour the prevailing minimum health and welfare benefits under the Service Contract Act (SCA).  The SCA was established in 1965 to ensure prevailing rates were met in federal service contracts where the wage determinations include wages, vacation and holiday benefits and a prescribed minimum rate for other benefits not required by law.  DOL adjusts the rate annually based on Bureau of Labor Statistics.  The new rate, announced May 20, concerns only health and welfare benefits and is effective for contracts awarded on or after June 1.  SCA wage determinations previously contained high and low health and benefit fringe benefit levels.  The low benefit level, measured “employee by employee” was adjusted annually and the high benefit level, based on a contractor’s average fringe benefit costs for all service employees working on the contract, was set at $2.56 per hour.  In 2004, when the low benefit reached the same level as the high benefit, DOD started setting a single rate, though different methods of measuring compliance was maintained.  The average fringe-benefit wage determination will be issued only for contracts that qualify for the “formerly grandfathered high benefit rate.”

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