Contractors budgeting Service Contract Act (SCA) fringe benefit costs should be working from $5.55 per hour, not $5.36 — the figure sometimes still cited from before the Department of Labor's Wage and Hour Division issued its All Agency Memorandum No. 250 on July 7, 2025. That memorandum set the current SCA health and welfare fringe benefit rate at $5.55 per hour for contracts without an Executive Order 13706 paid-sick-leave requirement, and $5.09 per hour for contracts that do carry the EO 13706 requirement (since a portion of the fringe obligation is satisfied through paid sick leave on those contracts). DOL's fringe updates run on an annual cycle, and AAM 250 remains the current governing rate as of this writing.
When the New Rate Actually Applies
A rate change from an All Agency Memorandum doesn't retroactively apply to every SCA-covered contract the moment DOL issues it. The new benefit level applies to a particular contract only once the contracting officer modifies that contract to incorporate an updated wage determination — which typically happens when an option year is exercised, a new contract or extension is executed, or, for multi-year funded contracts, at least once every two years. Contractors should check the wage determination actually incorporated into their specific contract or task order rather than assuming the most recent AAM rate automatically governs.
What It Means for Contractors
Pricing a proposal or fringe benefit package against a stale $5.36 figure will understate your real compliance cost under any contract that has already picked up the AAM 250 rate. Contractors should verify the exact wage determination cited in their solicitation or contract via SAM.gov's wage determinations portal rather than relying on a remembered dollar figure, since the applicable rate depends on the specific wage determination's revision date and any EO 13706 sick-leave designation. Firms preparing proposals for new SCA-covered work should build in $5.55/hour (or $5.09/hour under EO 13706 contracts) as the current baseline until DOL issues its next annual update.
