If you specialize in services, you are well aware that there are several labor regulations surrounding your workers, especially if you offer those services to the federal government. As a GSA Schedule contractor, you have already gone through the phases of getting your solutions awarded to your contract, but you must also ensure you are keeping up and complying with the latest regulations. One of these is the Service Contract Act (SCA), or often referred to as the Service Contract Labor Standards (SCLS).
Under the SCA, there are certain Wage Determinations (WDs) you need to follow depending on the nature of your services and the locality in order to remain compliant. Since the Department of Labor (DOL) recently updated some Health and Welfare Fringe Benefit Rates in June of 2023, let’s dive into what the SCA is, how to find your applicable Wage Determinations, and how these rates are calculated.
First, let’s talk about what the SCA is and how it fits into federal contracting. The Service Contract Act (SCA), formerly known as the McNamara-O’Hara Service Contract Ac of 1965, sets minimum wage and benefit standards for employees who work on federal service contracts. This legislation was created to ensure businesses who work on federal contracts pay their workers fair wages and benefits comparable to the locality where the work is performed.
The SCA applies to federal services contracts that exceed $2,500. According to the Federal Acquisition Regulation (FAR) Subpart 22.10, these contracts must contain mandatory provisions regarding minimum wages and fringe benefits, safe and sanitary working conditions, notification to employees of the minimum allowable compensation, equivalent Federal employee classifications, and wage rate.
Contracts that fall under the SCA include, but are not limited to cleaning services, maintenance services, food services, custodial services, and others. You can check out a full list in the SCA Directory of Occupations.
However, there are some exceptions. These include:
In June 2023, the DOL announced an increase in the Health and Welfare Fringe Benefit Rates for those affected by the Service Contract Act wage determinations. Health and Welfare Fringe Benefit Rates include life, accident, health insurance place, sick leave, pension plans, etc.
The low-level (employee-by-employee) benefit is now $4.98 per hour or $199.20 per week or $863.20 per month. The high-level (average cost) benefit rate is now $4.98 per hour. If you receive a wage determination after June 27, 2023, that does not contain the new Health and Welfare rate of $4.98, we suggest you contact the Wage and Hour Division (WHD) of the DOL. More information about the rate raise can be found on the WHD site.
With these changes, you may be wondering how the SCA wage determination (WD) rates are decided. A WD is a set of wages, fringe benefits, and work rules that the DOL has ruled to be prevailing in a given locality.
The DOL’s SCA WD rate is calculated to ensure employees working on government contracts receive fair wages and benefits. It’s determined by considering established wage rates and fringe benefits for a given labor category in the locality where the work is performed. What exactly does this mean? Here’s a general outline of how the rate is calculated:
Keep in mind that specific rules and exceptions may apply depending on a host of contract circumstances, but this is the general way rates are determined.
You can research the current WDs on SAM.gov’s Wage Determinations page using WD number, SCA Identifier, or category. The DOL also publishes a Prevailing Wage Resource Book outlining everything you need to know about wage determination requirements, SCA directory of occupations, and obtaining SCA wage determinations.
Hopefully after this blog you have a better understanding of the SCA (or SCLS as it’s referred to) and how to find your Wage Determinations. Unfortunately, this isn’t the only regulation you have to keep up with as a GSA contractor. From sales reporting to modifications and remitting your Industrial Funding Fee (IFF), your contract requires a lot of maintenance to keep it running smoothly. If you want to learn more about contract maintenance, check out our link below, or one of our consultants would be happy to help you stay on top of your GSA Schedule.