Pay or Play—Impact on Fringe Benefit Rules for Federal Contract Workers

Pay or Play—Impact on Fringe Benefit Rules for Federal Contract Workers

The Affordable Care Act (ACA) requires applicable large employers (ALEs)—e.g., employers who averaged 50 or more full-time employees including full-time equivalents during calendar year 2015—to offer affordable, minimum value health coverage to their full-time employees or pay a penalty. This employer mandate is also known as the “employer shared responsibility” or “pay or play” rules. The Service Contract Act (SCA) and the Davis-Bacon Act and Related Acts (collectively, the DBRAs) generally require workers on certain federal service contracts to be paid prevailing wages and fringe benefits.

The ACA’s employer shared responsibility rules, the SCA and the DBRAs are separate laws which contain different, independent rules. ALEs subject to the employer shared responsibility rules as well as the SCA and DBRAs must comply with each separate law.

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