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Home>>> Service Contract Act

Service Contract Act

The McNamara-O'Hara Service Contract Act (SCA) applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services to the United States through the use of service employees.

The Service Contract Act requires contractors and subcontractors performing services on covered federal or District of Columbia contracts in excess of $2,500 to pay service employees in various classes no less than the monetary wage rates and to furnish fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement. Safety and health standards also apply to such contracts.

The prevailing wage and hour requirements of the Service Contract Act (SCA) are administered by the Wage and Hour Division (WHD). The Service Contract Act covers contracts and any bid specifications in excess of $2,500, whether negotiated or advertised, 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 definition of a service employee includes any employee engaged in performing services on a covered contract other than a bona fide executive, administrative, or professional employee who meets the exemption criteria set forth in 29 CFR Part 541.

The Service Contract Act does not apply to certain types of contractual services. These statutory exemptions include:

  • Contracts for construction, alteration, and/or repair of public buildings or public works, including painting and decorating (those covered by the Davis-Bacon Act)

  • Work required in accordance with the provisions of the Walsh-Healey Public Contracts Act

  • Contracts for transporting freight or personnel where published tariff rates are in effect

  • Contracts for furnishing services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934

  • Contracts for public utility services

  • Employment contracts providing for direct services to a federal agency by an individual or individuals

  • Contracts for operating postal contract stations for the U.S. Postal Service

  • Services performed outside the U.S. (except in territories administered by the U.S., as defined in the Act)

  • Contracts administratively exempted by the Secretary of Labor in special circumstances because of the public interest or to avoid serious impairment of government business.

Basic Provisions/Requirements The Service Contract Act requires contractors and subcontractors performing services on prime contracts in excess of $2,500 to pay service employees in various classes no less than the prevailing wage rates and fringe benefits found prevailing in the locality, or the rates (including prospective increases) contained in a predecessor contractor's collective bargaining agreement as provided in wage determinations issued by the Department of Labor.

These determinations are incorporated into the service contract. For contracts equal to or less than $2,500, contractors are required to pay the federal minimum wage of $7.25 per hour effective July 24, 2009. Contractors must also, under the provisions of the Contract Work Hours and Safety Standards Act and the Fair Labor Standards Act, pay employees at least one and one-half times their regular rate of pay for all hours worked over 40 in a workweek.

Finally, employers must notify employees working in connection with the contract of the compensation due them under the prevailing wage and fringe benefits provisions of the contract.

 



 

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