[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR22.406-2]

[Page 410-411]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 22_APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS--Table of Contents
 
    Subpart 22.4_Labor Standards for Contracts Involving Construction
 
Sec.  22.406-2  Wages, fringe benefits, and overtime.

    (a) In computing wages paid to a laborer or mechanic, the contractor 
may include only the following items:
    (1) Amounts paid in cash to the laborer or mechanic, or deducted 
from payments under the conditions set forth in 29 CFR 3.5.
    (2) Contributions (except those required by Federal, State, or local 
law) the contractor makes irrevocably to a trustee or a third party 
under any bona fide plan or program to provide for medical or hospital 
care, pensions, compensation for injuries or illness resulting from 
occupational activity, unemployment benefits, life insurance, disability 
and sickness insurance, accident insurance, or any other bona fide 
fringe benefit.
    (3) Other contributions or anticipated costs for bona fide fringe 
benefits to the extent expressly approved by the Secretary of Labor.
    (b)(1) The contractor may satisfy the obligation under the clause at 
52.222-6, Davis-Bacon Act, by providing wages consisting of any 
combination of contributions or costs as specified in paragraph (a) of 
this subsection, if the total cost of the combination is not less than 
the total of the basic hourly rate and fringe benefits payments 
prescribed in the wage determination for the classification of laborer 
or mechanic concerned.
    (2) Wages provided by the contractor and fringe benefits payments 
required by the wage determination may include items that are not stated 
as exact cash amounts. In these cases, the hourly cash equivalent of the 
cost of these items shall be determined by dividing the employer's 
contributions or costs by the employee's hours worked during the period 
covered by the costs or contributions. For example, if a contractor pays 
a monthly health insurance premium of $112 for a particular employee who 
worked 125 hours during the month, the hourly cash equivalent is 
determined by dividing $112 by 125 hours, which equals $0.90 per hour. 
Similarly, the calculation of hourly cash equivalent for nine paid 
holidays per year for an employee with an hourly rate of pay of $5.00 is 
determined by multiplying $5.00 by 72 (9 days at 8 hours each), and 
dividing the result of $360 by the number of hours worked by the 
employee during the year. If the interested parties (contractor, 
contracting officer, and employees or their representative) cannot agree 
on the cash equivalent, the contracting officer shall submit the 
question for final determination to the Department of Labor as 
prescribed by agency procedures. The information submitted shall 
include--
    (i) A comparison of the payments, contributions, or costs in the 
wage determination with those made or proposed as equivalents by the 
contractor; and
    (ii) The comments and recommendations of the contracting officer.
    (c) In computing required overtime payments, (i.e., 1\1/2\ times the 
basic hourly rate of pay) the contractor shall use the basic hourly rate 
of pay in the

[[Page 411]]

wage determination, or the basic hourly rate actually paid by the 
contractor, if higher. The basic rate of pay includes employee 
contributions to fringe benefits, but excludes the contractor's 
contributions, costs, or payment of cash equivalents for fringe 
benefits. Overtime shall not be computed on a rate lower than the basic 
hourly rate in the wage determination.