SCA Health and Welfare Benefit Changes

July 12, 2011

Effective June 17, 2011 the prevailing health and welfare fringe benefits required by the McNamara-O’Hara Service Contract Act (SCA) increased from $3.50 to $3.59 per hour. The Department of Labor (DoL) issued a memorandum on June 10, 2011, announcing the change.  The new benefit rate is derived from the latest DoL Bureau of Labor Statistics, Employment Cost Index, summary of Employer Cost for Employee Compensation.

Don’t let the increase impact your bottom line – know your rights as a Federal contractor. – “Fair Labor Standards Act and Service Contract Act-Price Adjustment (Multiple Year and Option Contracts)” as well as FAR 52.222-44 “Fair Labor Standards Act and Service Contract Act-Price Adjustment” authorize adjustment of fixed price SCA-covered contracts when SCA wage determinations require an increase to the minimum wage or fringe benefits. Contractors are allowed an hourly adjustment equal to the new hourly fringe benefit rate less the hourly cost of the actual benefits provided by the contractor.

Do not delay; the FAR clauses also stipulate that the claim must be submitted within 30 days of the effective modification incorporating a new wage determination.