What is a Bona Fide Fringe Benefit
Merriam-Webster defines bona fide as:
- Made in good faith without fraud or deceit;
- Made with earnest intent: sincere
- Neither specious or counterfeit: genuine.
The Davis Bacon Act (DBA) prevailing wage rate is made up of two components — a basic hourly rate and a bona fide fringe benefits rate. The total of both the basic hourly rate and any fringe benefits rate listed in a wage determination of the contract comprise the DBA prevailing wage requirement for a given classification. The Service Contract Act (SCA) and state prevailing wage rules are often structured the same (with some exceptions). For example, the DBA (and some states) allows a contractor to pay more in fringe benefits with a corresponding reduction in the basic hourly wage. If the wage determination in a contract included an hourly wage of $20 and a fringe rate of $10, the employer could choose to provide an hourly wage rate of $17 and a fringe rate of $13.
A contractor’s prevailing wage obligation under DBA, SCA or state laws may be met by any combination of cash wages and credible “bona fide” fringe benefits provided for a covered worker.
Common fringe benefits that can be considered bona fide include:
Health insurance
Dental insurance
Life insurance
Disability insurance
Pension/retirement plan Apprenticeship training Vacation
Holidays Sick leave
Supplemental Unemployment Benefits
Apprentice & Safety Training Benefits
Benefits that are not considered bona fide include:
Use of a company truck or other vehicle
Tools
Uniforms
Cellular phone
Travel expenses
Any statutory benefits, such as:
• Workers compensation
• Unemployment compensation
• Social security contributions
Some states may be more restrictive in the benefits that they allow.