Employers who have contracts with the federal government that are subject to the Service Contract Act (SCA) must meet the wage and benefit provisions of the contract’s Wage Determination (WD). The WD specifies the labor classifications, associated minimum hourly wage rate, the minimum hourly Health & Welfare (H&W) fringe rate, and the vacation and holiday benefits covered service employees are entitled to.
It is important to understand that the hourly H&W fringe benefit rate listed in each “fixed cost” wage determination is an employer obligation separate from the hourly cash wage the employee receives. The SCA employee is not entitled to receive any portion of this fringe rate in cash, although the employer may choose to discharge its obligation by simply paying the fringe rate to the employee in cash. Nor is the employee entitled to select which benefits the employer will provide.
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