SCA Questions and Answers

Plain answers to common questions about Service Contract Act (SCA) and New York prevailing wage fringe benefits, from Williamson Financial Group LLC.

What is SCA health and welfare fringe, in plain words?

The Service Contract Act (SCA) says you must pay a set hourly amount for health and welfare benefits on covered federal service contracts. It is on top of the base wage. As of August 10, 2026, the Department of Labor is posting $5.92 per hour on wage determinations, up from $5.55.1 Your wage determination may also list vacation and holiday benefits.3

What is the difference between New York prevailing wage and the SCA?

The SCA is a federal law. It covers federal service contracts over $2,500 and leaves out Davis-Bacon construction contracts.2 New York Labor Law Article 8 covers construction on public works projects.6 New York City also covers building service work under a city agency contract, and the City Comptroller sets its rates every year.6 The idea is the same: pay the wage and the benefit. The rules for paying the benefit differ, so check the law that fits your contract.

Can I pay fringe benefits as cash instead of insurance?

Yes, but allowed is not the same as smart. Under the SCA you can provide benefits, pay cash, or mix the two.3 Cash must go out on the regular payday.3 It also adds payroll tax cost, like higher workers' compensation premiums and more FICA and state taxes.4 New York allows cash too. Under Article 8, paying the required supplement weekly in cash with wages meets the rule.5 Our advice: start with real benefits.

Which wage determination applies to my contract?

The one in your contract. Each federal service contract carries a wage determination that lists a base wage and fringe benefits by job.3 The Department of Labor posts updated health and welfare rates on applicable wage determinations.1 Do not use a rate you found online. If you cannot find the wage determination, ask your contracting officer before you bid.

What records do I need to keep for an SCA audit?

Keep records for three years after the work ends. They should show:

  • Each employee's name, address, and Social Security number
  • Job class, wage rate, and fringe benefits or the cash paid instead
  • Daily and weekly pay and hours worked
  • Deductions
  • Wage and fringe listings that match the wage determination

The Wage and Hour Division can ask for a copy of your contract. The SCA has no reporting forms, so your records carry the weight.2

What happens if I underpay fringe benefits?

The Department of Labor can terminate your contract and make you liable for the government's resulting costs. It can withhold contract payments, take legal action to recover the underpayment, and debar you from future federal contracts for three years.2 A higher wage will not make up for missing fringe.3 You can challenge a violation or a debarment before an Administrative Law Judge.2

Does the new $5.92 rate apply right away?

Not always. The Department of Labor started posting it on August 10, 2026. You start using it on your contract's anniversary date or at the start of an option period. That happens only after your contracting officer formally notifies you.1

Can we team up on a government contract?

Yes. We welcome teaming and subcontracting with prime contractors on New York and federal projects. We handle fringe benefit math, enrollment, vendor coordination, and documentation. You keep your payroll and HR teams. Williamson Financial Group LLC is certified as an M/WBE by New York City, Nassau County, and the Port Authority of New York and New Jersey.

Learn more

Notes

  1. BoonGroup-Admin, "DOL Announces Updated SCA Health & Welfare Rates for 2026," The Boon Group, August 11, 2026, boongroup.com.
  2. U.S. Department of Labor, "Employment Law Guide: Service Contract Act," elaws, accessed October 28, 2026, webapps.dol.gov.
  3. U.S. Department of Labor, Wage and Hour Division, "SCA Compliance Principles," Prevailing Wage Resource Book, accessed October 28, 2026, dol.gov.
  4. Taylor Boon and Caitlin Kennedy, "Competitive and Cost-Conscious Contracting," Service Contractor (Professional Services Council), Fall 2018, pscouncil.org.
  5. New York State Department of Labor, "Article 8 Frequently Asked Questions," accessed October 28, 2026, dol.ny.gov.
  6. New York City Office of the Comptroller, "Workers' Rights FAQs," accessed October 28, 2026, comptroller.nyc.gov.

This page is general information, not legal advice. Check your own contract and wage determination.