Davis-Bacon Fringe Annualization: the Formula With Examples

Published October 5, 2026

If you pay for a benefit plan all year and take credit for it on Davis-Bacon jobs, annualization decides how much credit you get per hour. The short version: spread the cost over every hour the worker worked, not just the Davis-Bacon hours.

The formula

29 CFR 5.25 says to divide the total cost of the fringe benefit contribution by the total number of hours worked on both private work and work covered by the Davis-Bacon and Related Acts, during the time period the cost covers. (Source: 29 CFR 5.25, rate of contribution or cost for fringe benefits (annualization), (c)(1).) That gives the rate of contribution per hour you can credit.

Hourly credit = total cost of the benefit for the period ÷ total hours worked in that period, private and Davis-Bacon work together

Worked example

A worker's health coverage costs the contractor $10,400 for the year. That year the worker works 2,000 hours: 1,200 on Davis-Bacon jobs and 800 on private jobs. The wage determination's fringe rate for the classification is $9.00 an hour.

The $3.80 an hour still owed is paid in cash or through other bona fide plans; the Statement of Compliance certifies that fringe benefits were paid in cash and/or to bona fide plans. (Source: DOL Wage and Hour Division: Form WH-347 (Rev. January 2025) and its instructions, page 2.)

The mistake

Dividing by Davis-Bacon hours only: $10,400 ÷ 1,200 = $8.67 an hour. That claims $3.47 an hour too much credit, about $4,160 over the year, and every hour of it is underpaid fringe. The private-work hours are in the denominator because the benefit covers the worker on private jobs too.

Per worker, not per crew

The rule is applied worker by worker when costs differ: "If the amount of contribution varies per worker, credit must be determined separately for the amount contributed on behalf of each worker." (Source: 29 CFR 5.25, rate of contribution or cost for fringe benefits (annualization), (c)(1).) In the example, a coworker on family coverage that costs $18,000 for the year, also working 2,000 hours, has a credit of $9.00 an hour. You cannot average the two and credit both workers the same.

On the WH-347, the credit for each worker goes in column 6B, with the plan detail and hourly credit for that worker on page 2. (Source: DOL Wage and Hour Division: Form WH-347 (Rev. January 2025) and its instructions, instructions.)

The exceptions

• Defined contribution pension plans. A defined contribution pension plan that provides immediate participation and essentially immediate vesting, meaning the benefit vests within the first 500 hours worked, is excepted from annualization. (Source: 29 CFR 5.25, rate of contribution or cost for fringe benefits (annualization), (c)(2).)
• Other plans, on request. Other benefits can be excepted only if the benefit is not continuous in nature and does not compensate both private and Davis-Bacon work, and a request is made to the Wage and Hour Division. (Source: 29 CFR 5.25, rate of contribution or cost for fringe benefits (annualization), (c)(2) and (c)(3).)

Year-round health coverage is continuous and covers the worker on private jobs too, so annualization applies to it.