Glossary
Fringe benefits
Fringe benefits are the part of a worker's pay package beyond the base wage, such as health insurance, pension and training, often set per hour.
By IntelCost Team ·
Fringe benefits are the part of a worker's pay package beyond the base hourly wage: health insurance, pension or retirement, vacation and holiday pay, apprenticeship training and similar benefits. On prevailing wage work, the wage determination sets the fringe for each craft, usually as a dollar amount per hour; some lines add a percentage of the base rate or footnotes for paid holidays and vacation.
How fringe works on public jobs
Under the Davis-Bacon Act and most state prevailing wage laws, the worker must receive at least the base rate plus the fringe for every hour worked. The employer can meet the fringe in three ways:
- Bona fide plans: contributions to health, pension or other qualifying benefit plans.
- Cash: paying the fringe amount as extra wages on the paycheck.
- A mix: plan contributions first, with any shortfall paid as cash.
The credit is per hour. Where a plan covers a worker's private work as well, the credit usually has to be spread across all hours worked, which the Department of Labor calls annualization. Check the agency's rules before counting a plan toward the fringe.
Example
Say a determination sets the fringe for an ironworker at $18.00 per hour (example values):
- Your health plan costs work out to $9.50 per hour
- Your retirement contribution is $3.00 per hour
- Fringe credit: $9.50 + $3.00 = $12.50 per hour
- Shortfall: $18.00 - $12.50 = $5.50 per hour, paid as cash
Cash paid in place of fringe is wages, so payroll taxes apply to it. Plan contributions are often treated differently. Ask your payroll provider or accountant how your plans are taxed, because it changes the burden on the rate.
Fringe benefits vs labor burden
| Fringe benefits | Labor burden | |
|---|---|---|
| What it is | Part of the worker's compensation | The employer's cost of having the worker on payroll |
| Examples | Health, pension, vacation, training | Payroll taxes, workers' comp, liability insurance |
| On public jobs | A fixed minimum per hour, set by the determination | Not set by the determination |
| Who it goes to | The worker, in benefits or cash | Government, insurers |
On open shop work, a company's own benefits are often rolled into burden. On prevailing wage work, keep fringe separate, because it is a legal minimum that has to be shown on certified payroll.
On union jobs
On union work, fringe amounts are set by the collective bargaining agreement and paid to the union's trust funds. The agreement and the funds' remittance rules decide what is owed.
The IntelCost Wage Calculator treats fringe according to the wage determination you pick for the project, and you can upload a SAM.gov wage determination to fill base and fringe for each craft. To read the fringe column correctly, see how to read a Davis-Bacon wage determination.