Fringe Compliance Requirements

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Meeting the Fringe Requirements

29 CFR 4.17: Discharging fringe benefit obligations by equivalent means …

In general, the regulations permit an employer to discharge his obligation to furnish the fringe benefits specific in an applicable fringe benefit determination by furnishing any equivalent combination of “bona fide” fringe benefits or by making equivalent or differential payment in cash …

The Problem with Paying Cash

Contractors paying the fringe rate in cash through wages are at a competitive disadvantage on their labor costs because they incur additional expenses in the form of payroll burden including FICA and higher Workers Compensation premiums.

This example demonstrates the savings as a result of providing benefits versus paying the fringe in cash:

Assumption: Base Hourly Rate $16.00 + $4.02 Fringe Rate

No Benefits Paying Cash Providing Benefits
Cash Wages $19.71 $16.00
Fringe Paid to Benefit Plan $0.00 $4.02
Payroll Burden $2.90 $2.40
Total Cost Per Hour $22.25 $21.75

Annual Savings Per Employee: $1,043.50 

Total Annual Savings: $208,638.00
(Assuming 200 employees full-time employment status)
*Both wages and hours worked are based on assumptions.

“Workforce has saved us over $379,000 at our most recent benefit renewal. They have also handled all of the enrollments and on boarding seamlessly, which has been a great time saver.”

Workforce client since 2015

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