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Fringe Benefit Requirements
29 CFR Subpart C
Section 4.170 Furnishing Fringe Benefits or Equivalents
| (a) |
General. Fringe Benefits required under the Act shall be furnished, separate from and in addition to the specified monetary wages, by the contractor or subcontractor to the employees engage in performance of the contract.
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| (b) |
Meeting the requirement, in general ... A contractor may dispose of certain of the fringe benefit obligations which may be required by an applicable fringe benefit determination, such as pension, retirement, or health insurance, by irrevocably paying the specified contributions for fringe benefits to an independent trustee or other third person pursuant to an existing “bona fide” fund, plan, or program on behalf of employees engaged in work subject to the Act's provisions. |
Section 4.171 “Bona Fide” Fringe Benefits
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To be considered a “bona fide” fringe benefit for purposes of the Act, a fringe benefit plan, fund or program must constitute a legally enforceable obligation which meets the following criteria:
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| (1) |
The provisions of a plan, fund or program adopted by the contractor, or by contract as a result of collective bargaining, must be specified in writing, and must be communicated in writing to the affected employees ... No contribution toward fringe benefits made by the employees themselves, or fringe benefits provided from monies deducted from the employee's wages may be included or used by an employer in satisfying any part of any fringe benefit obligation under the Act ...
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| (2) |
The primary purpose of the plan must be to provide systematically for the payment of benefits to employees on account of death, disability, advanced age, retirement, illness, medical expenses, hospitalization, supplemental unemployment benefits, and the like ...
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| (3) |
The plan must contain a definite formula for determining the amount to be contributed by the contractor and a definite formula for determining the benefits for each of the employees participating in the plan ... |
Section 4.172 Meeting Requirements for Particular Fringe Benefits - In General
Where a fringe benefit determination specifies the amount of the employer's contribution to provide the benefit, the amount specified is the actual minimum cash amount that must be provided by the employer for the employee. No deduction from the specified amount may be made to cover any administrative costs which may be incurred by the contractor in providing the benefits; as such costs are properly a business expense of the employer ...
Non “Bona Fide” Fringe Benefits
The following are not “bona fide” fringe benefits (nor can they be considered equivalent benefits for SCA purposes)
29 CFR Subpart C
Section 4.171
| (a) |
(5) Benefit Plans or trusts of the types listed in 26 U.S.C. 401(a) which are disapproved by Internal Revenue Service as not satisfying the requirements of section 401(a) of the Internal Revenue Code or which do not meet the requirements of the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. and regulations thereunder, are not deemed to be “bona fide” plans for purposes of the Service Contract Act.
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| (c) |
No benefit required by any other Federal law or by any state or local law, such as unemployment compensation, worker's compensation, or social security, is a fringe benefit for purposes of the Act.
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| (d) |
The furnishing to an employee of board, lodging, or other facilities under the circumstances described in $4.167, the cost or value of which is creditable toward the monetary wages specified under the Act, may not be used to offset any fringe benefit obligations as such items and facilities are not fringe benefits or equivalent benefits for purpose of the Act.
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| (e) |
The furnishing of facilities which are primarily for the benefit or convenience of the contractor or the cost of which is properly a business expense of the contractor is not the furnishing of a “bona fide” fringe benefit or equivalent benefit for the payment of wages ... Relocation expenses travel and transportation expenses incident to employment, incentive or suggestion awards, and recruitment bonuses, as well as tools and other material and services incidental to the employer's performance of the contract and the carrying on of his business, and the cost of furnishing, laundering, and maintaining uniforms and/or related apparel or equipment. Where employees are required by the contractor, by the contractor's government contract, by law, or by the nature of the work to wear such items.
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| (f) |
Contributions by contractors for such items as social functions or parties for employees, flowers, cards, or gifts on employee birthdays, anniversaries, etc. (sunshine funds), employee rest or recreation rooms, paid coffee breaks, magazine subscriptions, and professional association or club dues, may not be used to offset any wages for fringe benefits specified in the contract, as such items are not “bona fide” wages or fringe benefits or equivalent benefits for purposes of the Act. |
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