The 2026 SCA Health and Welfare Rate Is $5.92 an Hour. Here's What to Do.

By Sharman McElrath, Williamson Financial Group LLC · October 28, 2026

The rate went up. Your bid price did not. Let's fix that before it costs you.

The Department of Labor raised the Service Contract Act (SCA) health and welfare fringe rate to $5.92 per hour. It was $5.55. That is 37 cents more for every hour a covered employee works. Run that over a 40-hour week for a full year, and it adds up to about $770 per worker.

What changed?

• The standard rate rose from $5.55 to $5.92 per hour, about 6.7 percent.

• Contracts under Executive Order 13706 (paid sick leave) have a rate of $5.42.

• The Department of Labor began posting the new rate on wage determinations on August 10, 2026.

Does the new rate apply to me today?

Not always. You start using it on your contract's anniversary date or at the start of an option period. And only after your contracting officer formally notifies you. Mark those dates on your calendar now.

What counts toward the $5.92?

Three things can:

1. Bona fide benefits that cost at least the hourly rate

2. Cash paid in place of benefits

3. A mix of both

"Bona fide" means a legally enforceable plan, written down and shared with employees, with a real benefit purpose like medical or retirement coverage. [3] Group health, dental, and retirement plans are common examples.

One rule people miss: fringe is paid in addition to wages. A higher wage does not cancel it.

Is cash a smart way to meet the rate?

It is allowed. It is rarely smart. Cash in place of benefits must go out on the regular payday. It also adds payroll tax cost, including higher workers' compensation premiums and more FICA and state taxes. A competitor who funds real benefits carries less of that cost.

What should I do this month?

• Find your contract's anniversary date and option period dates

• Check whether your contracting officer has sent notice of the new rate

• Compare what you spend per hour on benefits to $5.92 (or $5.42 under EO 13706)

• Check how much of your fringe goes out as cash

• Check that your records show wages and fringe separately for each employee

What happens if I get it wrong?

The Department of Labor can terminate your contract and withhold payments. It can take legal action to recover underpayments. It can debar you from federal contracts for three years.

Need a second set of eyes?

Williamson Financial Group LLC is a certified M/WBE benefits broker in Valley Stream, New York. We help contractors meet the SCA with real benefits and clean records. Book a free 45-minute consultation or call (917) 780-6519.

Learn more about our SCA health and welfare fringe benefits help.

Notes

All pages below were opened on October 28, 2026.

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.