Contracts issued subject to the Service Contract Act (“SCA”—also known as the Service Contract Labor Standards) require contractors and subcontractors to, among other things, pay an hourly health and welfare benefit specified in an applicable Wage Determination (“WD”). The Department of Labor (“DOL”) issues an updated health and welfare benefit amount annually, which is subsequently incorporated into revised WDs.
Most recently, on July 7, 2025, DOL issued All-Agency Memorandum No. 250 (the “AAM”) establishing a new H&W rate for contractors. The AAM specified the following:
There are some important things to keep in mind. First, if a company has a state or local sick leave requirement, but not one under Executive Order 13706, they must still provide the higher health and welfare benefit. Second, the requirement to pay this higher amount does not attach until a new WD is issued with this amount and that new WD is incorporated into a contract. If a company pays this higher amount early, they may not be able to recover the difference through a price adjustment with the contracting agency. Third, this requirement is only for non-exempt workers that are performing the work on the...
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