Difference between revisions of "Service Contract Act of 1965"

Revision as of 18:59, 7 December 2022

Introduction

The Service Contract Act (also referred as the McNamara-O'Hara Service Contract Act) protects worker's on federal contracts when the contract's principal purpose is to provide services in the United States using service employees. Minimum wages and fringe benefits must be based on rates that the Secretary of Labor determines as prevailing for service employees.^[1]

Definitions

A “service employee” is an employee, excluding an executive, administrative, or exempt professional employee under 29 CFR Part 541, who is actively working in performance of a service pursuant to contract covered by the SCA.

Is Your Company Required to Comply with the SCA?

To answer this, it must first be determined if the contract is one covered by the Service Contracts Act. The easiest way of determining this is to check the solicitation or request for bids which sometimes indicates whether the SCA will apply to a particular contract. If this is unclear, look at the contract, FAR 52.222-41 - Service Contract Labor Standards needs to be in the contract or subcontract

Formulating Your Bid/Proposal

In formulating a bid you will need to be aware of the applicable DoL SCA wage determination. That wage determination will eventually be attached and incorporated into your contract. Under wage determinations, the required pay will be determined by the place where the contract will be performed. In determining the minimum wage and benefits for particular jobs, employers are required to identify job tasks for each employee and match or “map” those to the comparable DOL labor category.

Wage Determinations

Here is an example of a wage determination

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  Click again on the icon to see the determination

You can find Wage Determinations on SAM. Effective 9/26/2005, The Department of Labor (DOL) is amended two regulations to allow for full implementation of the Wage Determinations OnLine (WDOL) Internet Web site (http://www.wdol.gov) as the source for federal contracting agencies to use when obtaining wage determinations issued by the DOL for service contracts subject to the McNamara-O'Hara Service Contract Act (SCA) and for construction contracts subject to the Davis-Bacon Act and Related Acts (DBRA).

You can find wage determinations here:

https://sam.gov/search/?index=sca&sort=-modifiedDate&page=1&pageSize=25&sfm%5BsimpleSearch%5D%5BkeywordRadio%5D=ALL&sfm%5Bstatus%5D%5Bis_active%5D=true

Regulatory Responsibility

The Secretary of Labor is tasked with enforcing the provision of the SCA by issuing regulations, orders, conducting hearings, deciding disputes and taking other action as appropriate. Wage determinations are specific to each contract. The Department of Labor has made many regulations implementing the SCA into practice. These regulations involve various matters from procedure to compensation and safety standards, all of which can be found in various parts of Title 29 of the Code of Federal Regulations.

As the requirement to be in compliance with the SCA are very detailed, the Secretary of Labor, through the Wage and Hour Division of the Employment Standards Administration, provides assistance to contractors to learn and navigate the SCA. This assistance consists of publishing brochures and other explanatory literature, copies of which may be found at local Wage and Hour Division offices. The Wage and Hour Division also provides much information on its website. There is also the Wage and Hour Division helpline which is reached toll free by dialing 1-866-4USWAGE.

The Department of Labor may request reports on the costs of employee pay and benefit per contract so the contractor should keep meticulous records tracking this information to that it is readily produced when requested.

Contractor Requirements

For prime contracts exceeding $2,500, contractors and subcontractors performing work are required to pay their employees at least at the wage rate and with the benefits of private employers in the locality at which the work is being performed. If there was a prior contactor with a collective bargaining agreement, the new contractor must pay the rates set forth in that agreement.

References

1. ↑ codified at 41 U.S.C. §§ 6701–6707