Updated 2026 – 2027 Service Contract Act (“SCA”) Health and Welfare (“H&W”) Rates Have Yet to Be Officially Announced

“It’s the end of the world as we know it.

And I feel fine.”

One of the linchpins of the Service Contract Act (“SCA”) is the annual updating of the health and welfare (“H&W”) levels by the US Department of Labor (“DOL”) to account for inflation in the cost of furnishing fringe benefits. This process dates back until the 1990’s or so in my recollection. It was in response to the settlement of a lawsuit by the Service Employees International Union (“SEIU”) taking DOL to task for the haphazard updating of the SCA fringe benefit levels. DOL promised going forward they would do annual updating soon after the Bureau of Labor Statistics (“BLS”) data on annual fringe benefit cost became available. And that data traditionally has been made available by June of every year.

Normally, the timeline for the updating process is that the H&W rate is revised annually, in June or July, via an All Agency Memorandum (“AAM”) issued by the Wage-Hour Division. At least, that was the way it was done for about the last 30 years. It used to be sent out to agency officials and labor advisors on a DOL mailing list. But in the modern era, it was posted on the DOL website and at sam.gov. Although these memoranda were ostensibly “effective” in June or July of each year, contractors should take note that the new benefit levels are not self-executing. Rather, they appl to a particular contract only if and when the contracting officer modifies the contract to require the new levels. Typically, this occurs when an option is issued or a new contract is awarded.

This month the large SCA fringe benefit plan administrators like Boon, FCE and GSA all announced by various internet postings that DOL had issued new H&W rates. Those announcements said that for contracts subject to the Sick Leave Executive Order the rates would move from $5.09 an hour to $5.35 an hour. And for contracts not subject to the EO, the rate would move from $5.55 an hour to $5.81 an hour. That is a 26 cent an hour increase. This change was ostensibly made effective July 10, 2026. Historically, these fringe benefit plan administrators have monitored the DOL rate changes carefully and announced the changes prior to any official announcement. They have been reliable in their posting in the past. But the fact is that those announcements are not official. These are private companies, albeit insiders to the workings of DOL at least on the subject of H&W rate levels. But they are not the Government or an official source.

Meanwhile, I have fruitlessly searched the internet now periodically for more than a month trying to officially confirm the issuance of new H&W rates to no avail. In recent times, I covered the increases by posting a blog at www.awrcounsel.com website. See, e.g., https://www.awrcounsel.com/blog/2025/7/23/wage-and-hour-division-announces-new-service-contract-act-health-and-welfare-rates (posted in 2025). If you go to www.sam.gov, however, today all you will find is the 2025 All Agency Memorandum no. 250 with the old rates. Googling new rates is a dead-end search. There is no new All Agency Memorandum announcing new rates for 2026 – 2027 which I can find. Similarly, I cannot find any new WDs posted on www.sam.gov with the new H&W rates. It is as if DOL has gone dark. It is very disheartening and perplexing.

I consider this yet another example of the dysfunction of our federal government. They cannot even post public notices of the change anymore. The simplest tasks of governing are not being effectively performed. This is what happens when you have ineffective leadership and you fire the staff who are supposed to do the work. We get the government we deserve -- one that is flat on its back.