Certified Payroll Fringe Benefits, Explained
Fringe benefits are the part of prevailing wage that trips up the most contractors — and the most common finding in Department of Labor audits. Here's how they work on certified payroll.
The total wage package
Each prevailing-wage classification has a required base hourly rate plus a required hourly fringe benefit. Together they're the total package you must deliver for every hour worked in that classification. For example, if the determination lists $40.00 base + $15.00 fringe, you owe $55.00 of total value per hour.
Two ways to satisfy the fringe
- Bona fide plans, funds, or programs: contributions to genuine benefit plans — health insurance, retirement, approved apprenticeship, and similar. On the WH-347 Statement of Compliance this is box 4(a).
- Cash in lieu: pay the fringe amount directly to the worker as wages. On the Statement of Compliance this is box 4(b).
- A combination is allowed — part to plans, the remainder in cash.
How it shows up on the WH-347
Column 6 asks for the rate of pay including fringe benefits, and the Statement of Compliance is where you declare how the fringe was paid. If you pay fringe in cash, it's part of the worker's gross wages; if you pay into plans, it isn't in the check but must still be documented.
The audit pitfalls
- Miscalculating the hourly fringe — for example, taking an annual plan cost and not dividing it correctly across all hours worked (annualization).
- Crediting non-bona-fide items as fringe.
- Paying below the total package once base and fringe are combined.
Because fringe allocation spans multiple plans and every hour worked, it's easy to get wrong by hand — and expensive when you do.