How are Fringe Benefits Determined

Basis of Wage Determination and Computation of Fringe Benefits

Fringe benefits for prevailing wage workers are specified by the Administrator of the Wage and Hour Division of the U.S. Department of Labor. There are two types of fringe benefit determinations:

a)    Prevailing in the locality

 The prevailing minimum fringe benefits for various trade classifications in the locality become the minimum fringe benefit determination. This is based on the fringe benefits being paid at the time the determination is made. The information is usually taken from surveys in the area conducted by the Bureau of Labor Statistics, Department of Labor, and other Labor Department employee.

b)    Collective Bargaining Agreement

This determination is based on the CBA of the predecessor contractor. Each determination is limited to the specific contract that follows a contract wherein the contractor has entered a CBA.

How are the minimum wage rates for each benefit determined?

Wage determinations generally have provisions for vacation and holiday benefits prevailing in a certain locality. The determination also has provisions on the prescribed minimum rate for benefits that are not required by the law, such as insurance and pension.

The minimum for all benefits, excluding holiday and vacation, are phased in a four-year period. In the first year, the minimum will be $0.90 per hour plus one-fourth of the difference between $0.90 and the prescribed minimum rate. In the second year the rate will increase by one-third of the difference between the resulting rate for the first year and the prescribed rate. During the third year, the rate will increase by one-half of the difference of the resulting rate in the second year and the prescribed rate. In the fourth year and the succeeding years, the rate will be the prescribed rate.

If a single fringe benefit rate is paid to the majority of prevailing wage workers under the same trade classification, within the same locality, that rate will prevail. Normally, prevailing wage workers receive the same fringe benefits are subject to collective bargaining agreement.

Most contracts contain a prevailing fringe benefit rate of $2.56 per hour. This rate shall continue to be issued for contracts that indicate the rate of $2,56, as well as other successor contracts, until the determined fringe benefit rate as described above will equal or exceed $2.56 per hour.

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