Fringe Benefits Explained (for Davis-Bacon Jobs)
If you’re doing work on a government-funded project, you’ve probably been told to pay prevailing wages and include something called fringe benefits. But what are fringe benefits? Do you have to pay extra? Do you have to offer health insurance?
Don’t worry—we’re breaking it down in plain, simple language so you can stay out of trouble and keep your payroll on track.
What Are Fringe Benefits?
Fringe benefits are extra money or perks you give your employees on top of their hourly pay. The government says you have to offer these when working on Davis-Bacon or other prevailing wage jobs.
You can give fringe benefits in two ways:
As extra money (cash) added to their paycheck
As real benefits like health insurance, retirement plans, or paid vacation
Either one is okay—as long as the total adds up to what’s required by the job’s wage determination.
Example 1 – Meet William
William is a laborer working on a government construction project. According to the wage determination for his job, the required pay is:
$28/hour base wage
$6/hour fringe benefit
That means William must receive a total of $34/hour.
You have two ways to make that happen:
Option 1: Pay It All in Cash
You give William $34/hour in his paycheck. He doesn’t get health insurance or other benefits, just a higher wage.
This is allowed as long as he still gets the full amount required.
Option 2: Cash + Benefits
You decide to offer health insurance that’s worth $4/hour and pay the rest in cash.
So William’s compensation looks like this:
$28/hour in base wage (cash)
$4/hour toward health insurance
$2/hour as extra cash fringe
Total = $34/hour
Both options work. What matters is that William gets the full amount he’s owed, between cash and benefits.
Another Example – Meet Lisa
Lisa is a carpenter working on a federal job. Her wage determination says:
$33/hour base wage
$7/hour fringe benefit
You decide to offer health insurance that costs $3/hour and pay the rest in cash.
Here’s what Lisa’s pay looks like:
$33/hour in cash (base wage)
$3/hour goes to her health insurance
$4/hour is added to her paycheck as cash fringe
Total = $40/hour
That works! You’re offering a combination of benefits and cash, and you’ve covered the required total wage.
What Counts as a Fringe Benefit?
These DO count:
Health insurance
Retirement contributions (401k, pension)
Paid holidays or vacation
Life insurance
Approved apprenticeship or training programs
These DO NOT count:
Tools, boots, uniforms
Mileage or gas
Meals
Company cell phones or laptops
Only true employee benefits that go directly to the worker or a third-party plan qualify.
How to Show Fringe Benefits on Certified Payroll
When you fill out your WH-347 form (that’s the certified payroll report), there’s a section for fringe benefits.
You’ll need to:
List what kind of fringe benefits your workers get
Show the value of those benefits per hour
Make sure everything adds up correctly
Need help with that form?
👉 Check out our easy WH-347 guide here
Common Mistakes to Avoid
Not offering fringe at all (either as cash or benefits)
Counting things that don’t qualify (like gas or meals)
Guessing benefit values without real records
Using the same fringe numbers across all jobs, even when only some are covered by Davis-Bacon
Want to avoid even more certified payroll mistakes?
👉 Check out our post on the top certified payroll reporting mistakes here
Make It Easy on Yourself
If this sounds like a lot, that’s because it is. But you don’t have to figure it out alone.
At Davis Bacon Solutions, we help contractors:
Understand what they owe
Set up simple fringe benefit plans
Keep their certified payroll forms 100% compliant and audit-ready
Need Help?
Check out more resources on our blog or contact us if you want help with fringe benefit reporting or certified payroll support.
We’ll make it simple and get you back to work.