If you hold a Service Contract Act (SCA) federal contract for services valued over $2,500, you’re required to pay specified prevailing wages and provide a specified fringe benefit rate (set by DOL Wage Determinations). The fringe benefit obligation can be paid in cash to employees or applied to bona fide benefits (health insurance, retirement contributions, paid leave above statutory minimums). Applying it to benefits — rather than cashing it out — provides material tax advantages, reduces employer payroll tax, and is more recruitment-effective. We design bona fide fringe benefit plans that satisfy DOL requirements and coordinate with your contract compliance officer. Similar principles apply to Davis-Bacon Act construction prevailing wages.