Note: Because government guidelines and requirements are constantly revised, Please check all references and numbers cited for any applicable revisions.
Inquiry:
Dear Paul: I attended your conference of months ago sponsored by the SBA. It was an excellent presentation. I want your opinion on the following because talking to many accountants , I get different answers:
1. If our company benefits, which we offer employees total above the $3.24 do we have to pay the $3.24 in addition to the minimum wage in the WD? Example: Free online training classes, Direct Deposit, Life insurance, Credit Union, FICA, WIC and a certain percentage of their Health Insurance company paid under United health insurance plans.
2. Can we separate out the portion of the $3.24 that is health insurance and only be responsible for paying that portion back into the employees salary? For example if the company contributes $1.00 per hour to health insurance per individual, can we pay that only in addition to the employee that does not want to participate in the company health insurance plans?
3. If we offer and pay a portion of their health insurance, can we require them to sign a waiver or acknowledging their benefits are above the $3.24 health and welfare requirement and that they understand.
We pride ourselves in being fair and always wants to do the right thing and we were awarded a $4 million 8a competitive contract along with another small business contract for $70k.
Response:
Lets keep this portion simple:
Your Wage Determination for your area clearly should outline the required Fringe Benefits amounts or equivalent. If you are offering other fringe benefits such as training, Direct Deposit, Credit Union, etc., that are over and above the Specific Fringe Benefits listed under the Wage Determination, that is your choice. You would not include these costs as part of the Required Fringe Benefits or the set Fringe Rate.
Be sure to closely and carefully read what is included in the Base Hourly Fringe Rate and what is not. For example, Leave may not be included in that base rate, where Sick Time may be included.
Below is the answer to a similar question to the DOL (Department of Labor) on this issue.
And whenever you get to the point where you are totally confused, consider doing what I do; Call the DOL directly and obtain an opinion. But remember to also obtain a legal reference to their opinion so you can review and interpret for yourself.
Can the contractor pay the employees their fringe benefits in cash instead of furnishing the required fringe benefits?
Yes. Fringe benefit obligations may be discharged by paying to the employee on his regular payday, in addition to the monetary wage required, a cash amount per hour in lieu of the specified fringe benefits, provided such amount is equivalent to the cost of the fringe benefits required. Records are kept separately showing the amounts to be paid for fringe benefits.