Service Contract Act

The Service Contract Act, hereto referred to as SCA was enacted to prevent wage busting and displacement of workers. In the act, wages, benefits, vacation and holiday policies are specified as well as other working conditions for employees who fall under certain SCA classifications.

Anyone wishing to bid for a federal service contract in Massachusetts, New England, Boston or elsewhere, must meet the requirements of the act and develop strategies to make sure they also stay in compliance.

Before bidding on a project or negotiating the project price, it’s important to have a sound and thorough understanding of the financial and operation implications of the SCA.

The SCA enforces compensation requirements on the general contractors as well as their subcontractors providing services to the federal government. Make sure to note that the SCA applies to service contracts performed within the U.S. when the contract value exceeds $2500. If a portion of the contract is performed outside of the U.S., it does not apply as well as if a certain federal contract is exempt.

So, how does one make sure all their ducks are in a row as far as the SCA is concerned? Here is a helpful checklist to use as your measuring stick:

-Employee duties they actually perform dictate the classification of that job under the act and the rate of pay they’re entitled to under the applicable wage determination.

-When starting a new federal contract, previous or incumbent employees should be offered first right of refusal by the contractor within ten days. This can be done by acquiring copies of the predecessor’s service employment contract.

-Payable wages must meet prevailing wage rates and fringe benefits.

-The regular pay rate of such an employee shall not include any fringe benefit payments which are excluded from the regular rate under the FLSA.

-An employer may be able to apply a Special Minimum Wage when employing workers with disabilities. This exception applies only to prevailing wage and not fringe benefits. The employer must obtain the appropriate certification from the Department of Labor.

-The SCA specifies a distinction between temporary, part-time, and full-time employees and entitles them to an amount of the fringe benefits that is proportionate to the amount of time spent in work subject to the SCA.

-The SCA requires extensive record keeping. You must keep available such things as the employee’s basic information, correct work classification, wage rates and fringe benefits provided; hours worked, pay rates applied, paid vacation and holidays for three years from the completion of a given work assignment.

Should an employer not comply with the requirements of SCA, the Department of Labor has the authority to withhold the violator’s contract funds in order to reimburse the employees, as well as terminate the contract, holding the contractor liable for associated costs. Lastly, the violator can be prevented from participating in future federal contracts for three years.