[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR22.406-2]



[Page 425-426]

 

            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,



[[Page 426]]



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 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.