Service Contract Act (SCA)

Government contractors are subject to additional ‘Prevailing Wage’ laws.

The McNamara-O’Hara Service Contract Act (SCA) covers contracts entered into by federal and District of Columbia agencies where the principal purpose of the contract is to furnish services in the U.S. through the use of “service employees.”

The Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees no less than the wage rates and fringe benefits determined by the U.S. Department of Labor, or the rates and benefits contained in a predecessor contractor’s collective bargaining agreement.  The Department of Labor issues wage determinations on a contract-by-contract basis in response to specific requests from contracting agencies.  These determinations are incorporated into the contract.

Some of the most common issues faced by SCA contractors include:

  • Incorporation of SCA stipulations into the contract
  • Inclusion of the proper wage determination
  • Proper classification of workers
  • Separation of fringe benefit payments
  • Calculation of holidays and vacations, especially to part time or temporary workers

Effective January 18, 2013 were the additional requirements of Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts. Under this order, an incumbent contractor must maintain and provide a list of all employees working on a contract and a successor contractor must make a bona fide offer of continued employment to qualified workers in accordance with the implementing regulations.

Contractors and subcontractors on prime contracts in excess of $100,000 are also required, pursuant to the Contract Work Hours and Safety Standards Act, to pay employees one and one-half times their basic rates of pay for all hours over 40 worked on covered contract work in a workweek.

The U.S. Department of Labor has a full page of helpful links to regulations and resources at SCA resources.

For four years I served as the Department’s government contract enforcement specialist for the New England states. Prior to that I routinely conducted many SCA investigations.   Please contact me to see how I may assist you in training, conducting an internal audit or during an investigation by your contracting agency or the U.S. Department of Labor’s Wage and Hour Division.