WeeklyCertified / Guides / Fringe Benefits on Certified Payroll: Credit, Cash, and the Math
Fringe Benefits on Certified Payroll: Credit, Cash, and the Math
How do fringe benefits work on certified payroll?
Every wage determination classification lists a base rate plus a fringe rate. You satisfy the fringe by contributing to bona fide benefit plans, paying the amount in cash on the paycheck, or a mix. The combined base plus fringe must be met for every hour worked, including overtime hours.
The single most common certified payroll mistake is treating the wage determination's number as one rate. It is two: a base hourly rate and a fringe rate, and compliance means meeting both for every hour worked.
The two ways to pay fringe
Take a real line from a current Georgia building determination (GA20260100): electrician, $38.65 base + $12.75 fringe.
You can satisfy the $12.75 three ways:
- Plan credit (column 6B). You contribute to bona fide plans: health insurance, pension, life insurance, bona fide vacation or holiday funds. The hourly value of those contributions is your credit.
- Cash in lieu (column 6C). You add the fringe to the paycheck as ordinary wages. Simple, always valid, and how many small subs handle it.
- A mix. $8.50 of plan credit and $4.25 cash also works, as long as credit plus cash covers the required $12.75 for every hour.
The current WH-347 separates these into their own columns and, on page 2, asks you to itemize each plan with a per-worker hourly credit. That grid is new discipline compared with the old form, and it is where weak plan-credit claims get exposed.
The overtime interaction, worked out
Overtime premium is 1.5 times the basic rate only. Fringe is owed at its straight rate for all hours, but never multiplied. For our electrician working 40 straight hours and 3 overtime hours, paying full fringe as cash:
| Line | Calculation | Amount |
|---|---|---|
| Straight time | 40 h × $38.65 | $1,546.00 |
| Overtime | 3 h × ($38.65 × 1.5 = $57.98) | $173.94 |
| Fringe as cash | 43 h × $12.75 | $548.25 |
| Gross for the week | $2,268.19 |
Two things people get wrong live in this table. First, the overtime rate is built from $38.65, not from $51.40 (base plus fringe). Second, the fringe applies to all 43 hours, not 40. Underpaying three hours of fringe looks tiny per week and compounds into a real back-wage number over a project.
Annualization: the quiet trap
If your company pays $800 a month for a worker's health plan and the worker splits time between prevailing-wage and private jobs, you generally cannot credit the whole $800 against the public-work hours alone. The credit is computed across all hours worked. The honest shortcut for a small sub who cannot track this cleanly is to pay more of the fringe as cash; cash never needs annualizing.
What to put on the form
- 6B gets your per-hour plan credit, if any.
- 6C gets your per-hour cash in lieu, if any.
- Page 2's fringe table gets each plan's name, type, plan number, funded status, and each worker's hourly credit with a total.
The free generator pulls your determination's base and fringe from SAM.gov, checks your entries against the minimum, and does this exact arithmetic to the cent, including the fringe-on-all-hours rule. The choice of plans versus cash stays yours; the math should never be the thing that gets you.
Questions
Can I just pay the whole fringe amount as cash?
Yes. Paying the full fringe rate as additional cash wages, reported in column 6C of the WH-347, fully satisfies the requirement, and it is the simplest path for many small subcontractors without formal benefit plans.
Does overtime multiply the fringe rate?
No. Overtime premium is computed on the basic hourly rate. The fringe amount is owed at its straight rate for every hour worked, overtime hours included, but it is not multiplied by 1.5.
What counts as a bona fide plan?
Genuine benefit programs such as health insurance, pension or retirement contributions, life insurance, and bona fide holiday or vacation plans, contributed irrevocably for the worker. The WH-347 fringe table asks for each plan's name, type, number, and funded status.
What is annualization?
When a contractor's plan contributions cover both public and private work, the hourly credit generally must be computed over all hours worked in the year, not just Davis-Bacon hours. Claiming the full contribution against only public-work hours overstates the credit.