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Quick Reference to Standard Wage Rates for Certain Service Workers
How to Calculate Fringe Benefits

Discharging Fringe Benefit Obligations Under the Public Service Contract Act

In order to meet their obligation under Public Act 99-142, employers are allowed to pay the fringe benefit portion of the prevailing wage rate in cash, by incurring costs for bona fide fringe benefits or by a combination of cash and benefits.

An employer can pay less than the required, minimum hourly wages as long as the hourly rate plus the fringe benefit provided equals the total wage required.

In order to receive credit, the employer must provide bona fide benefits and those common to the specific industry. No credit can be taken for any benefit required by law (e.g, social security contributions or workers compensations, etc.).

An employer may take credit for the annual cost of a benefit by converting the costs to an hourly cash equivalent (annual cost of fringe benefit divided by total number of hours worked in the year). If the cost of a benefit varies per employee, the credit must be individually determined.

Employees excluded from a benefit plan for whom the employer makes no contribution or incurs no cost must be paid in cash or furnished other bona fide fringe benefits equal in monetary value. If the plan requires contributions to be made during eligibility waiting period, credit may be taken. No credit is allowed for contributions for employees who by definition are not eligible to participate in the plan.

Contributions made to defined contribution pension plans (e.g. money purchase pension plans, most 40 1k plans, etc.) are fully credited if the plan provides for immediate participation and immediate 100% vesting. When there is no immediate vesting, credit is allowed based on the effective annual rate of contributions for all hours worked during the year (e.g. a contribution of $2,000.00 made on behalf of a particular employee who worked a total of 2000 hours of both covered contract and noncovered private hours would result in a credit of $1.00/hour).

If an employee is terminated before the benefit is received and the employer has taken credit toward the prevailing wage fringe benefit obligation, the employee must be paid at termination.

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