Can I pay all fringe benefits as cash instead of funding a plan?

Yes. Under Section 4(b), you can pay the entire fringe benefit amount as cash added to the worker's hourly base rate. If the wage determination lists $35.50/hr base + $18.75/hr fringe, you would pay the worker $54.25/hr in gross wages and mark Section 4(b) on the WH-347 Statement of Compliance. You must pay the full fringe amount — partial cash payments without a plan to cover the remainder create a wage deficiency.

How do I convert a monthly health insurance premium to an hourly fringe credit?

Divide the monthly premium by the number of hours the employee actually works in that month. For example, if you pay a $960/month health plan premium and the employee works 160 hours that month, the hourly credit is $960 / 160 = $6.00/hr. You cannot use a standard 173.33-hour month if the employee works fewer hours — you must use actual hours worked to avoid overstating the credit.

What happens if my fringe benefit contributions don't add up to the required amount?

You must make up the difference in cash. If the wage determination requires $18.75/hr in fringe and your plan contributions only credit $12.00/hr, you owe the worker an additional $6.75/hr in cash. Failing to pay the full fringe amount is treated the same as underpaying the base wage — it triggers back wage liability, potential debarment, and other Davis-Bacon penalties.

What qualifies as a bona fide fringe benefit under Davis-Bacon?

Bona fide fringe benefits include contributions to health and welfare plans (medical, dental, vision), pension and retirement plans (401k, defined benefit), paid vacation and holidays, life insurance, disability insurance, apprenticeship and training funds, and other plans approved by the Secretary of Labor. Workers' compensation, unemployment insurance, and employer FICA taxes do NOT count as fringe benefits — those are statutory obligations, not voluntary benefits.

Where do fringe benefits appear on the WH-347 form?

Fringe benefits appear in two places on the WH-347. First, in Column 8 (Rate of Pay), where you list both the base rate and the fringe rate separately. Second, on the Statement of Compliance (page 2), where you check Section 4(a), 4(b), or 4(c) to indicate whether fringe is paid to approved plans, as cash, or a combination. If using Section 4(c), you must list the specific plans, the hourly amount credited to each, and the remaining cash amount.

Davis-Bacon Fringe Benefits Explained

Key Takeaways

Fringe benefits are a mandatory part of the prevailing wage — not optional extras.
Three payment options: funded plans (4a), all cash (4b), or a combination (4c).
Convert monthly/annual premiums to hourly credits using actual hours worked — never a standard month.
Any gap between plan contributions and the required fringe rate must be paid as cash to the worker.
Workers' comp, FICA, and unemployment taxes do NOT count as fringe benefits.

What Are Fringe Benefits Under Davis-Bacon?

Every Davis-Bacon wage determination has two components: the base hourly rate and the fringe benefit rate. Together they make up the total prevailing wage that contractors must pay workers on federally-funded construction projects.

You can look up the applicable rates for your project using the prevailing wage lookup process on SAM.gov.

Fringe benefits are not optional

They are a mandatory part of the prevailing wage. Failing to pay the full fringe amount creates a wage deficiency just as serious as underpaying the base rate. The DOL treats fringe shortfalls identically to base wage violations — both trigger back wage liability and can lead to Davis-Bacon penalties including debarment.

Types of Bona Fide Fringe Benefits

The Davis-Bacon Act recognizes several categories of bona fide fringe benefits. The key word is "bona fide" — the benefit must be a genuine, employer-funded contribution, not a statutory obligation like workers' compensation or employer FICA taxes.

Qualifying fringe benefit categories include:

Health & welfare: Medical, dental, and vision insurance premiums paid by the employer on behalf of the worker.
Pension & retirement: Contributions to 401(k) plans, defined benefit pension plans, or other qualified retirement accounts.
Vacation & holiday: Paid vacation days and holiday pay funded through an employer contribution to a vacation fund or trust.
Training funds: Contributions to apprenticeship and training programs approved by the Bureau of Apprenticeship and Training or a state apprenticeship agency.
Life & disability insurance: Employer-paid premiums for life insurance and short- or long-term disability coverage.

These do NOT count as fringe

Social Security (FICA), unemployment insurance (FUTA/SUTA), workers' compensation, and any other contribution mandated by law. These are employer obligations, not voluntary fringe benefits. Including them in your fringe calculation inflates your number and creates a deficiency.

The Three Ways to Pay Fringe: Sections 4(a), 4(b), and 4(c)

The Davis-Bacon Act gives contractors three options for meeting the fringe benefit requirement. Each option corresponds to a checkbox on the Statement of Compliance (page 2 of the WH-347 form).

You must check the correct section every week.

Section 4(a): All Fringe Paid to Approved Plans

Under Section 4(a), the contractor pays the entire fringe benefit amount into one or more bona fide benefit plans — health insurance, pension, vacation fund, training fund, etc. No cash is paid to the worker in lieu of fringe.

Example: Section 4(a)

Wage determination: $35.50/hr base + $18.75/hr fringe. You contribute $10.50/hr to a health plan, $5.25/hr to a pension, $2.00/hr to a vacation fund, and $1.00/hr to an apprenticeship training fund. Total plan contributions: $18.75/hr. The worker's gross pay is $35.50/hr, and you check Section 4(a) on the WH-347.

Section 4(b): All Fringe Paid as Cash

Under Section 4(b), the contractor pays the full fringe benefit amount directly to the worker as additional cash wages. No plan contributions are made. The worker receives the base rate plus the full fringe amount in their paycheck.

Example: Section 4(b)

Same wage determination — $35.50/hr base + $18.75/hr fringe. You pay the worker $54.25/hr in gross wages ($35.50 + $18.75). No plan contributions are made. You check Section 4(b) on the WH-347. This is the simplest option, but it increases your payroll tax burden since fringe paid as cash is subject to FICA, FUTA, and workers' comp premiums.

Section 4(c): Combination of Plans and Cash

Under Section 4(c), the contractor pays part of the fringe to approved plans and makes up the remainder in cash to the worker. This is the most common approach for contractors who offer health insurance but don't have enough plan contributions to cover the full fringe requirement.

Example: Section 4(c)

Same wage determination — $35.50/hr base + $18.75/hr fringe. You contribute $12.00/hr to a health plan. The remaining $6.75/hr ($18.75 − $12.00) is paid as cash to the worker. The worker's gross pay is $42.25/hr ($35.50 base + $6.75 cash fringe). Check Section 4(c) and list the health plan contribution ($12.00/hr) and the cash balance ($6.75/hr) on the Statement of Compliance.

Worked Example: Full Fringe Calculation With Real Numbers

Let's walk through a complete example from wage determination to WH-347 reporting.

Wage determination: Electrician — $35.50/hr base rate + $18.75/hr fringe benefit.

Your benefit plans:

Health & welfare plan: $960/month employer premium
401(k) pension: employer match of $3.00/hr

Step 1: Convert the monthly health premium to an hourly credit. The electrician works 160 hours this month.

Hourly credit = $960 / 160 = $6.00/hr.

Step 2: Add up all plan contributions.

Health: $6.00/hr + Pension: $3.00/hr = $9.00/hr total plan contributions.

Step 3: Calculate the cash shortfall.

Required fringe: $18.75/hr − Plan contributions: $9.00/hr = $9.75/hr cash owed to the worker.

Step 4: Calculate the worker's gross hourly pay.

Base rate: $35.50 + Cash fringe: $9.75 = $45.25/hr gross pay.

Step 5: Report on the WH-347.

Column 8 (Rate of Pay): List $35.50 base rate and $18.75 fringe rate.
Statement of Compliance: Check Section 4(c). List the health plan ($6.00/hr), pension ($3.00/hr), and cash balance ($9.75/hr).

Use our free WH-347 generator to fill this in automatically — it calculates the cash balance for you.

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How to Calculate Hourly Fringe Credit for Monthly and Annual Contributions

Many benefit plans charge monthly or annual premiums, not hourly rates. You need to convert these to an hourly credit to determine whether your plan contributions satisfy the wage determination's fringe requirement.

Monthly premium: Divide the monthly cost by the number of hours the employee actually worked that month.

Premium is $960/month and the worker logged 160 hours: credit is $960 / 160 = $6.00/hr
Worker only logged 120 hours (weather delays): credit is $960 / 120 = $8.00/hr

Annual premium: Divide the annual cost by the number of hours the employee actually worked during the year (or the expected annual hours if computing mid-year).

$6,000/year life insurance for an employee who works 2,000 hours/year: credit is $6,000 / 2,000 = $3.00/hr

Always use actual hours worked

You must use actual hours worked, not a standard 2,080-hour year or 173.33-hour month. Overstating the hourly credit by using a lower denominator than actual hours creates a fringe shortfall that the DOL will catch during an audit.

Common Fringe Benefit Mistakes

These are the errors the DOL finds most frequently during Davis-Bacon investigations:

1. Not Paying the Full Fringe Amount

This is the most common violation. The contractor contributes to a health plan but doesn't calculate the hourly credit correctly, leaving a gap between plan contributions and the required fringe rate.

Any shortfall must be paid as cash to the worker. There is no grace period and no de minimis exception.

2. Using the Wrong Hourly Credit Calculation

Dividing a monthly premium by 173.33 hours (a standard month) when the worker only clocked 140 hours overstates the hourly credit. The DOL requires you to use actual hours worked as the denominator.

Overstating the credit means underpaying the worker.

3. Counting Statutory Obligations as Fringe

Employer FICA contributions, workers' compensation premiums, and unemployment insurance taxes are not bona fide fringe benefits. Including them in your fringe calculation inflates your number and creates a deficiency.

4. Not Documenting Plan Contributions

You must maintain records proving that fringe benefit contributions were actually made to the plans listed on your WH-347. During an investigation, the DOL will request plan statements, premium invoices, and contribution receipts.

If you can't document the contributions, the DOL treats them as unpaid.

5. Applying the Wrong Fringe Rate

Different classifications on the same wage determination can have different fringe rates. A Laborer might have a $15.80/hr fringe rate while an Electrician on the same project has $18.75/hr.

Make sure you're applying the correct fringe rate for each worker's classification.

Tip: Avoid all five mistakes at once

Our free WH-347 generator auto-calculates fringe credits from your plan contributions, flags shortfalls, and handles the Statement of Compliance sections for you.

How Fringe Benefits Appear on the WH-347

Fringe benefits are reported in two key locations on the WH-347 certified payroll form:

Column 8 — Rate of Pay: You list the base hourly rate and the fringe rate as separate line items. For our Electrician example, you would enter $35.50 (base) and $18.75 (fringe).
Statement of Compliance (page 2): You check the applicable section — 4(a), 4(b), or 4(c) — and provide details. If you check 4(c), you must itemize each plan, the hourly amount credited, and the cash remainder.

Signed under penalty of perjury

The Statement of Compliance is signed under penalty of perjury. Discrepancies between reported fringe contributions and actual plan payments are treated as false statements. Getting this reporting right is critical.

Our free WH-347 generator walks you through the fringe benefit sections and auto-calculates the cash balance when you enter your plan contributions.

Davis-Bacon Fringe Benefits: Cash vs. Funded Plans Explained