Updated September 11, 2026 · Federal certified payroll (Davis-Bacon / Copeland Act)
Fringe benefit credit vs. cash in lieu: worked examples
Every Davis-Bacon wage determination lists two numbers per classification: a basic hourly rate and a fringe benefit rate. You can satisfy the fringe portion by paying into bona fide benefit plans, by paying cash, or by a mix. The WH-347 (Rev. Jan 2025) makes you show which one you did, in columns 6A, 6B and 6C and in the page 2 credit table. These examples walk the arithmetic. The rates are made up for illustration; use the determination in your contract.
The two rules everything else follows from
- The total package must be met for every hour worked on the covered project. Base $30.00 + fringe $8.50 = $38.50 per hour, in any combination of cash wages and bona fide plan contributions. Fringe accrues per hour, not per week or per month.
- Overtime premium is computed on the basic rate, not on the fringe. 29 CFR 5.32(a) says fringe contributions are excluded when computing the overtime premium, but the rate used for the premium can never be less than the determination's basic hourly rate. Cash paid in lieu of fringe is likewise excludable (5.32(c)). So an overtime hour owes 1.5 × base, plus the fringe amount once, not 1.5 × the whole package.
Example 1: everything paid in cash
Worker: 40 straight-time hours, no plan contributions. You pay $38.50 per hour as cash wages.
| WH-347 field | Entry | Why |
|---|---|---|
| 6A straight time | $30.00 | The hourly rate paid, excluding cash in lieu of fringe. DOL's instruction for 6A: do not include cash in lieu here. |
| 6B fringe credit | $0.00 | No plan contributions. |
| 6C cash in lieu | $340.00 | 40 hours × $8.50. |
| 7A gross, this project | $1,540.00 | 40 × $38.50. |
| Page 2, box 5 | Checked, table left blank | DOL: if you meet the fringe obligation entirely in cash, check the box but do not complete the subsection; the cash is reported in 6C. |
Example 2: plan contribution plus cash
Same worker, 40 hours. You contribute $5.00 per hour to a bona fide health plan and pay the remaining $3.50 per hour in cash.
| WH-347 field | Entry | Why |
|---|---|---|
| 6A straight time | $30.00 | Cash wage rate for the classification. |
| 6B fringe credit | $200.00 | 40 hours × $5.00 hourly credit. DOL says 6B should equal hours × the hourly credit shown on page 2. |
| 6C cash in lieu | $140.00 | 40 hours × $3.50. |
| 7A gross, this project | $1,340.00 | 40 × ($30.00 + $3.50). Plan contributions are not wages paid to the worker, so they are not in gross. |
| Page 2, box 5 table | Plan name, type "health", plan number, "funded", $5.00 hourly credit, total hourly credit $5.00 | Required whenever 6B is non-zero. For a mix, DOL says enter the plan portion here and the cash portion in 6C. |
How a monthly or annual contribution becomes an "hourly credit" is its own topic. DOL's rules on computing the creditable rate are in 29 CFR 5.25 through 5.31, and for benefits that cover both covered and non-covered work DOL generally requires the contribution to be annualized over all hours worked rather than loaded onto the prevailing-wage hours. If a plan is "unfunded" (you provide the benefit directly rather than contributing to a third-party fund), 29 CFR 5.28 requires DOL approval before you take the credit. When in doubt, ask the contracting agency or DOL before the first payroll, not after an audit.
Example 3: an overtime week
Worker: 44 hours on the project, 4 of them overtime. Fringe handled as in Example 2 ($5.00 plan + $3.50 cash).
| Component | Calculation | Amount |
|---|---|---|
| Straight-time cash wages | 40 × $30.00 | $1,200.00 |
| Overtime cash wages | 4 × ($30.00 × 1.5) = 4 × $45.00 | $180.00 |
| Cash in lieu of fringe, all hours | 44 × $3.50 | $154.00 |
| Plan credit, all hours | 44 × $5.00 | $220.00 (6B, not in gross) |
| 6A entries | ST $30.00 / OT $45.00 | |
| 6C entry | 44 × $3.50 | $154.00 |
| 7A gross, this project | $1,200 + $180 + $154 | $1,534.00 |
Two things to notice. The fringe ($8.50 total, as plan plus cash) is owed on all 44 hours including the overtime hours; it is not time-and-a-half, but it does not stop at 40. And the overtime premium is on $30.00, the basic rate, per 29 CFR 5.32 and the CWHSSA clause in 29 CFR 5.5(b)(1). If you had been paying a regular rate above $30.00 for the same work, the premium is on the higher regular rate; the determination's basic rate is a floor, not a cap.
Example 4: the shortfall that gets caught in audits
Worker: 40 hours. Your payroll system pays $32.00 per hour cash and you contribute $4.00 per hour to a plan. That looks generous against the $30.00 base, but the package is $36.00 against a required $38.50: $2.50 per hour short, $100 for the week.
This is the pattern that shows up when general payroll software tracks benefits as a flat per-period amount and nobody converts it back to an hourly credit against the determination. Paying above the base does help: cash above the basic rate counts toward the fringe obligation. Here, the $2.00 above base plus the $4.00 plan credit is $6.00 of fringe against $8.50 required, which is where the $2.50 gap comes from. On the WH-347 you would report 6A at $32.00 and 6B at $160.00, and the numbers would not reach the determination. The fix is another $2.50 per hour in cash (6C) or plan credit, before the payroll is certified.
What FringeTrack checks
For every worker row, FringeTrack computes cash rate plus hourly fringe credit plus cash in lieu against the base plus fringe you enter for the classification, per hour actually worked, and flags any row that comes up short before the PDF is generated. It fills 6A, 6B and 6C and the page 2 credit table from the same data, so the three columns and the table agree with each other. It does not decide whether a plan is bona fide or approve an unfunded plan; that is between you, the plan and DOL.
Want to run one worker through the arithmetic first? The free fringe shortfall calculator uses the same rule.
Frequently asked
Can I pay the whole package in cash and skip benefits entirely?
Yes, for Davis-Bacon purposes. The Act allows the fringe obligation to be met in cash. State prevailing wage laws generally allow this too, but check the state's rules for any differences in how the cash portion is treated.
Do I owe fringe on overtime hours?
Yes, at the straight fringe rate for each overtime hour. What you do not owe is a 1.5× premium on the fringe portion (29 CFR 5.32).
Does vacation or holiday pay count as a fringe credit?
It can, if it is a bona fide plan or program under 29 CFR 5.29 and the credit is computed correctly. The specifics are outside what a worked example can settle; read 29 CFR 5.29 and DOL Fact Sheet 66E, and ask before you take the credit.