DOL Increases SCA Health and Welfare Benefit Level

August 1, 2017

 

Effective August 1, 2017, the prevailing health and welfare fringe benefits rate under the McNamara-O Hara Service Contract Act (the SCA) has been increased to $4.41 per hour a bump up from the previous rate of $4.27 per hour. The new rate was announced on July 25, 2017 in the Department of Labors (the DOLs) All Agency Memorandum 225 (AAM 225).

 

 

Notably, AAM 225 also introduces a special reduced health and welfare fringe benefit rate of $4.13 per hour for employees performing on contracts covered by Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors (Paid Sick Leave EO).  The revised levels announced in AAM 225 should be recognized and implemented for new contracts and modifications on and after August 1, 2017.

 

Interplay of Prevailing Benefit Rate and Paid Sick Leave EO Obligations

 

As a reminder, the Paid Sick Leave EO which became effective for contracts entered into after January 1, 2017, or contracts modified after the effective date requires certain federal contractors to provide up to 56 hours of paid sick leave annually.  Because employer contributions made to satisfy the Paid Sick Leave EOs requirements cannot be credited toward the employers SCA fringe benefit obligation, the reduced rate of $4.13 was specifically created to reduce the financial burden on contractors by excluding the sick leave portion of the calculated health and welfare rate.

The High and Low Rate Calculation

 

 

The DOL has historically maintained two separate fringe benefit rates: a low employee-by-employee rate and a high (average cost) rate.  Under AAM 225, the rates for each method are the same: $4.41 per hour .  While the rates have differed in the past, since 2004, the rate has been the same for both methods; only the method of calculation differs.

 

 

Impact on Hawaii WDs

 

 

In Hawaii, employers are typically required by law to provide healthcare coverage for employees.  Because the SCA does not allow contractors to claim credit towards fringe benefit obligations for fringe benefit payments required by law, Hawaii employers are faced with the unpleasant prospect of paying duplicate fringe benefits.

 

 

Accordingly, AAM 225 establishes a health and welfare benefit rate of $1.91 per hour for those employees for whom the contractor must provide healthcare benefits pursuant to Hawaii law.  Moreover, for employees performing on contracts covered by both Hawaii's healthcare act and the Paid Sick Leave EO, the health and welfare benefit rate is further reduced to $1.63 per hour .

 

 

Conclusion

 

 

The reduced fringe benefit rate should help reduce the cost of compliance with the Paid Sick Leave EO and should be incorporated in contractors compliance plans.

 

February 12, 2026
Fortney Scott Attorney David Fortney Co-Chairs and Speaks at the Practicing Law Institute's Annual Wage & Hour Litigation and Compliance for 2026
February 5, 2026
DEI continues to be a high priority issue for the Trump Administration. Recent actions by multiple federal agencies, signal increased scrutiny of employer DEI programs. In the past week alone, the Administration has taken several significant actions: The EEOC filed a subpoena enforcement action against Nike based on a May 2024 Commissioner’s charge filed by EEOC Chair Andrea Lucas. The subpoena seeks company-wide information dating back to 2018, reflecting a more expansive approach to DEI-related investigation and increased willingness to pursue enforcement in federal court. The Chair of the Federal Trade Commission issued letters to 42 leading law firms warning that participation in the Mansfield Certification program may raise antitrust concerns. EEOC Chair Lucas was copied on the correspondence, highlighting coordinated federal agency attention to diversity-based initiatives. President Trump made additional demands on Harvard concerning its DEI-practices, substantially increasing the monetary demands from $200 million to $1 billion, while signaling the possibility of additional legal action, including potential criminal exposure. Federal funding was suspended for one of the largest infrastructure projects in the U.S., the $16 Billion Hudson Tunnel project, based on minority set aside contracting requirements, prompting litigation. This action, which impacts train services between New York City and New Jersey, underscores the intersection of DEI initiatives and federal funding risks. What should employers do now? In the current enforcement environment, employers should: Continue to assess DEI programs for legal risk. With a full EEOC quorum now in place, increased scrutiny of corporate DEI programs is likely. Although most employers have reviewed their DEI programs and made necessary changes to address legal compliance, the renewed focus on DEI requires ongoing assessment and update of DEI programs. Ensuring that these best practices remain in place and are followed is crucial. Prepare for the possibility of broader EEOC investigations. Recent enforcement activity reflects an increased willingness by the EEOC to pursue company-wide inquiries, often supported by expedited subpoena enforcement in matters that originate as individual discrimination charges filed by white employees and applicants. Evaluate participation in diversity rankings and certifications. Employers should evaluate whether participation in voluntary diversity assessments, ranking programs or other public reporting of diversity results unnecessarily raises the organization's profile and invites heightened scrutiny from the EEOC and other enforcement agencies. Please contact your FortneyScott attorney or email us at info@fortneyscott.com for additional information on how to be prepared and other best practices recommendations.
February 4, 2026
As we move further into 2026, employers should review notable changes to DC employment laws that may impact workplace policies and compliance obligations. Minimum and Living Wage Rates : From January 1, 2026, through June 30, 2026, any DC contract or government assistance recipient receiving $100,000 or more, as well as their subcontractors receiving at least $15,000 for contracts or $50,000 for government assistance, must pay at least the living wage rate of $17.95 per hour. Starting July 1, 2026, both the minimum wage rate and the living wage rate will increase to $18.40 per hour. For tipped employees, the base minimum wage increases to $10.30 per hour on July 1, 2026. Non-Compete Restrictions : Starting January 1, 2026, employers are banned from entering non-compete agreements with employees earning less than $162,164, and with medical specialists earning less than $270,274 Pay Stub Transparency : Starting January 1, 2026, employers must itemize all sources of compensation on employees’ pay stubs, including wages, bonuses, commissions, tips, service charges, etc.
February 3, 2026
In the second year of Trump 2.0, employers must stay alert to EEOC’s shifting priorities. Join FortneyScott attorneys on Tuesday, February 3, 2026 at noon EDT to learn what to expect from EEOC and the key steps employers must take now to ensure compliance with the new EEOC priorities. Key Topics to be Covered Include:  New Commission quorum , and how it will impact EEOC priorities; Current EEOC priorities , including eliminating unlawful DEI, protecting religious liberties, limiting sex discrimination to biological sex and focusing on anti-American discrimination; Notable EEOC enforcement actions , updates, and emerging trends in the Administration’s civil rights enforcement; and, Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a three-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
January 23, 2026
In the second year of Trump 2.0, employers must stay alert to EEOC’s shifting priorities. Join FortneyScott attorneys on Tuesday, February 3, 2026 at noon EDT to learn what to expect from EEOC and the key steps employers must take now to ensure compliance with the new EEOC priorities. Key Topics to be Covered Include: New Commission quorum , and how it will impact EEOC priorities; Current EEOC priorities , including eliminating unlawful DEI, protecting religious liberties, limiting sex discrimination to biological sex and focusing on anti-American discrimination; Notable EEOC enforcement actions, updates, and emerging trends in the Administration’s civil rights enforcement; and, Actionable strategies and key takeaway s to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a three-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
January 21, 2026
As employers prepare to face the second year of Trump 2.0, FortneyScott is convening a three-month, complimentary training initiative to help clients stay ahead of the curve and confidently navigate the shifting terrain. From February through April of 2026, our Workplace Legal Compliance Series will deliver timely, practical insights through: Monthly Webinars featuring FortneyScott attorneys unpacking the latest developments. DC Insider—Employer Update Podcasts offering candid analysis from Washington insiders. Real-Time Alerts on breaking regulatory changes impacting your business. This exclusive program is tailored to equip employers with the tools they need to strengthen their compliance strategies, mitigate risk, and adapt to the new enforcement priorities taking shape in 2026. Whether you're a federal contractor, a multi-state employer, or simply seeking clarity in a volatile legal environment, FortneyScott’s training series is your go-to resource for substantive updates and actionable guidance . How to Participate : Register now for the FortneyScott Workplace Legal Compliance webinars, podcast notifications and alerts: Register here for all 3 webinars (February 3, March 3 and April 9). Sign Up for notifications of new podcast episodes of DC Insider—Employer Update. Sign Up here to receive Workplace Legal Compliance alerts and updates. If you have an immediate questions or feedback, please contact any of the FortneyScott attorneys or email info@fortneyscott.com .
Show More
February 12, 2026
Fortney Scott Attorney David Fortney Co-Chairs and Speaks at the Practicing Law Institute's Annual Wage & Hour Litigation and Compliance for 2026
February 5, 2026
DEI continues to be a high priority issue for the Trump Administration. Recent actions by multiple federal agencies, signal increased scrutiny of employer DEI programs. In the past week alone, the Administration has taken several significant actions: The EEOC filed a subpoena enforcement action against Nike based on a May 2024 Commissioner’s charge filed by EEOC Chair Andrea Lucas. The subpoena seeks company-wide information dating back to 2018, reflecting a more expansive approach to DEI-related investigation and increased willingness to pursue enforcement in federal court. The Chair of the Federal Trade Commission issued letters to 42 leading law firms warning that participation in the Mansfield Certification program may raise antitrust concerns. EEOC Chair Lucas was copied on the correspondence, highlighting coordinated federal agency attention to diversity-based initiatives. President Trump made additional demands on Harvard concerning its DEI-practices, substantially increasing the monetary demands from $200 million to $1 billion, while signaling the possibility of additional legal action, including potential criminal exposure. Federal funding was suspended for one of the largest infrastructure projects in the U.S., the $16 Billion Hudson Tunnel project, based on minority set aside contracting requirements, prompting litigation. This action, which impacts train services between New York City and New Jersey, underscores the intersection of DEI initiatives and federal funding risks. What should employers do now? In the current enforcement environment, employers should: Continue to assess DEI programs for legal risk. With a full EEOC quorum now in place, increased scrutiny of corporate DEI programs is likely. Although most employers have reviewed their DEI programs and made necessary changes to address legal compliance, the renewed focus on DEI requires ongoing assessment and update of DEI programs. Ensuring that these best practices remain in place and are followed is crucial. Prepare for the possibility of broader EEOC investigations. Recent enforcement activity reflects an increased willingness by the EEOC to pursue company-wide inquiries, often supported by expedited subpoena enforcement in matters that originate as individual discrimination charges filed by white employees and applicants. Evaluate participation in diversity rankings and certifications. Employers should evaluate whether participation in voluntary diversity assessments, ranking programs or other public reporting of diversity results unnecessarily raises the organization's profile and invites heightened scrutiny from the EEOC and other enforcement agencies. Please contact your FortneyScott attorney or email us at info@fortneyscott.com for additional information on how to be prepared and other best practices recommendations.
February 4, 2026
As we move further into 2026, employers should review notable changes to DC employment laws that may impact workplace policies and compliance obligations. Minimum and Living Wage Rates : From January 1, 2026, through June 30, 2026, any DC contract or government assistance recipient receiving $100,000 or more, as well as their subcontractors receiving at least $15,000 for contracts or $50,000 for government assistance, must pay at least the living wage rate of $17.95 per hour. Starting July 1, 2026, both the minimum wage rate and the living wage rate will increase to $18.40 per hour. For tipped employees, the base minimum wage increases to $10.30 per hour on July 1, 2026. Non-Compete Restrictions : Starting January 1, 2026, employers are banned from entering non-compete agreements with employees earning less than $162,164, and with medical specialists earning less than $270,274 Pay Stub Transparency : Starting January 1, 2026, employers must itemize all sources of compensation on employees’ pay stubs, including wages, bonuses, commissions, tips, service charges, etc.
February 3, 2026
In the second year of Trump 2.0, employers must stay alert to EEOC’s shifting priorities. Join FortneyScott attorneys on Tuesday, February 3, 2026 at noon EDT to learn what to expect from EEOC and the key steps employers must take now to ensure compliance with the new EEOC priorities. Key Topics to be Covered Include:  New Commission quorum , and how it will impact EEOC priorities; Current EEOC priorities , including eliminating unlawful DEI, protecting religious liberties, limiting sex discrimination to biological sex and focusing on anti-American discrimination; Notable EEOC enforcement actions , updates, and emerging trends in the Administration’s civil rights enforcement; and, Actionable strategies and key takeaways to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a three-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
January 23, 2026
In the second year of Trump 2.0, employers must stay alert to EEOC’s shifting priorities. Join FortneyScott attorneys on Tuesday, February 3, 2026 at noon EDT to learn what to expect from EEOC and the key steps employers must take now to ensure compliance with the new EEOC priorities. Key Topics to be Covered Include: New Commission quorum , and how it will impact EEOC priorities; Current EEOC priorities , including eliminating unlawful DEI, protecting religious liberties, limiting sex discrimination to biological sex and focusing on anti-American discrimination; Notable EEOC enforcement actions, updates, and emerging trends in the Administration’s civil rights enforcement; and, Actionable strategies and key takeaway s to ensure compliance with Title VII, the PWFA, etc. This webinar is the first in a three-part series designed for compliance professionals, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
January 21, 2026
As employers prepare to face the second year of Trump 2.0, FortneyScott is convening a three-month, complimentary training initiative to help clients stay ahead of the curve and confidently navigate the shifting terrain. From February through April of 2026, our Workplace Legal Compliance Series will deliver timely, practical insights through: Monthly Webinars featuring FortneyScott attorneys unpacking the latest developments. DC Insider—Employer Update Podcasts offering candid analysis from Washington insiders. Real-Time Alerts on breaking regulatory changes impacting your business. This exclusive program is tailored to equip employers with the tools they need to strengthen their compliance strategies, mitigate risk, and adapt to the new enforcement priorities taking shape in 2026. Whether you're a federal contractor, a multi-state employer, or simply seeking clarity in a volatile legal environment, FortneyScott’s training series is your go-to resource for substantive updates and actionable guidance . How to Participate : Register now for the FortneyScott Workplace Legal Compliance webinars, podcast notifications and alerts: Register here for all 3 webinars (February 3, March 3 and April 9). Sign Up for notifications of new podcast episodes of DC Insider—Employer Update. Sign Up here to receive Workplace Legal Compliance alerts and updates. If you have an immediate questions or feedback, please contact any of the FortneyScott attorneys or email info@fortneyscott.com .
December 18, 2025
Join FortneyScott attorneys for a complimentary webinar on how employers should prepare for 2026 based on the significant changes in 2025. The Trump Administration begins 2026 with a quorum at the EEOC, new leadership at all the DOL agencies, and the likelihood that the NLRB quorum will be restored soon, so employers should expect aggressive action by all the workforce agencies. This session will provide critical insights into: What to expect from EEOC with its new quorum; An activated DOL, including the new Wage & Hour Division priorities, such as revisions to the Biden-era rules on white collar exemptions and joint employment; new Opinion Letters and compliance tools, how AI is being addressed, and expected developments; Whether OFCCP will survive in 2026, and changes affecting Federal contractors and grant recipients; and Practical steps employers should consider before 2026 begins. This is the final presentation in FortneyScott’s four-part Workplace Legal Compliance Webinar Series 2025, designed for in-house counsel, compliance professionals, HR leaders, and business executives.
December 18, 2025
Join FortneyScott attorneys for a timely webinar addressing the Trump Administration’s escalating enforcement efforts targeting “illegal DEI” practices among federal contractors, grant recipients, and higher education institutions. In recent months, the Administration has initiated certification demands, expanded DOJ investigations under the False Claims Act, and increased EEOC scrutiny under Title VII. This session will provide critical insights into: The latest developments in federal investigations and enforcement; DEI programs under legal challenge; and Practical steps employers—especially federal contractors and grant recipients—should take now to mitigate legal risk and ensure compliance with EEO laws. This is the third installment in FortneyScott’s four-part Workplace Legal Compliance Webinar Series, designed for in-house counsel, compliance professionals, HR leaders, and business executives.
December 10, 2025
December 18, 2025 at noon EDT CLICK HERE to Register Join FortneyScott attorneys for a complimentary webinar on how employers should prepare for 2026 based on the significant changes in 2025. The Trump Administration begins 2026 with a quorum at the EEOC, new leadership at all the DOL agencies, and the likelihood that the NLRB quorum will be restored soon, so employers should expect aggressive action by all the workforce agencies. This session will provide critical insights into: What to expect from EEOC with its new quorum; An activated DOL, including the new Wage & Hour Division priorities, such as revisions to the Biden-era rules on white collar exemptions and joint employment; new Opinion Letters and compliance tools, how AI is being addressed, and expected developments; Whether OFCCP will survive in 2026, and changes affecting Federal contractors and grant recipients; and Practical steps employers should consider before 2026 begins. This is the final presentation in FortneyScott’s four-part Workplace Legal Compliance Webinar Series 2025, designed for in-house counsel, compliance professionals, HR leaders, and business executives. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
November 19, 2025
The longest US government shutdown has ended; the House will return to Washington and Congress will resume operations; the EEOC has a quorum and can fully operate; the leadership teams for all DOL agencies now are in place; the NLRB waits to learn the fate of its Members; and, the U.S. Supreme Court will be confronting its Emergency Rulings (the “shadow docket”) in merits rulings on the regular docket in several high stakes cases. Everyone in Washington, the US, and, indeed, the whole world is watching and trying to plan their next steps. Join the Employment Law Alliance (ELA) for an engaging and timely webinar where speakers will discuss what is likely to unfold regarding the workplace and beyond. They will offer practical guidance both for US companies and those that do business with the US .
More Posts