Putting in a great deal of effort and determination to secure a government opportunity can be rewarding. However, are you, as a contractor, well-equipped to handle the rules and regulations outlined in the Service Contract Labor Standards (SCLS), formerly known as the Service Contract Act (SCA)? If you offer non-professional services, you’ll want to keep reading. The purpose of this blog post is to shed light on the SCLS legislative mandates that may be present in solicitations that you win in the future. We’ll dive into these requirements and discuss how you, as the employer/contractor, can comply with the complex SCLS regulations so that you do not lose the opportunities you worked so hard to win.
What Are the Service Contract Labor Standards (SCLS)?
Service Contract Labor Standards (SCLS), formerly known as the Service Contract Act (SCA), were created to close the cap in labor standards protection by ensuring all major categories of government procurement are included.
SCLS requires contractors and subcontractors providing services on prime contracts greater than $2,500 to pay service employees no less than the wage rates and fringe benefits found in the county of work performed, or the rates contained in a predecessor contractor’s Collective Bargaining Agreement (CBA). You can find the wage determination rates in SAM.gov under wage determinations, service contracts. If you have a service contract that employs more than 5 employees and exceeds $2,500 then the Department of Labor must issue a wage determination, which we’ll go into more detail on below.
For contracts equal to or less than $2,500, contractors must pay the federal minimum wage determined in the Fair Labor Standards Act.
What Are Wage Determinations?
The Department of Labor must issue a wage determination for every service contract that employs more than five service employees and exceeds $2,500. If the contract requires less than five service employees, the contracting agency must obtain a wage determination from SAM.gov or submit an E98 request. An E98 form allows agencies to request a wage determination from the Department of Labor.
Wage determinations are based on geography, specifically counties. If the geographic scope for your contract is nationwide, there will be different locality rates and fringe benefit requirements depending on the location of the services. Depending on the scope of work required by a specific contract, multiple wage determinations may need to be incorporated into a contract.
Who Do the Service Contract Labor Standards (SCLS) Apply to?
SCLS is primarily applicable to contractors offering non-professional services. Non-professional services are usually able to be completed with the minimum of a high school education and little experience. For example, it can include various services such as administrative, janitorial, construction, healthcare, facility support, transportation, and security.
While this is a general rule of thumb, the best way to identify SCA applicable labor categories is going to the wage determinations section on SAM.gov and downloading the list of SCA applicable labor categories. This list will also include the minimum hourly rate that must be paid based off the county of work performed.
Wage determinations can include Standard, Non-standard, and Collective Bargaining Agreements (CBAs).
SCLS Exemptions
Just like any other law, there are always exemptions. SCLS do not apply to:
(a) Any contract for construction, alteration, or repair of public buildings or public works, including painting and decorating
(b) Any work required to be done in accordance with the provisions of 41 U.S.C.chapter 65
(c) Any contract for transporting freight or personnel by vessel, aircraft, bus, truck, express, railroad, or oil or gas pipeline where published tariff rates are in effect
(d) Any contract for furnishing services by radio, telephone, or cable companies subject to the Communications Act of 1934
(e) Any contract for public utility services
(f) Any employment contract providing for direct services to a Federal agency by an individual or individuals
(g) Any contract for operating postal contract stations for the U.S. Postal Service
How Do SCLS Fit into the GSA Multiple Award Schedule (MAS)?
SCLS wage determinations apply to some non-professional services under the Multiple Award Schedule, except for pricing offered for services outside the U.S. GSA updates MAS wage determinations once a year from the Department of Labor.
MAS contractors must comply with the base rate and fringe benefit rate requirements of the prevailing SCLS wage determinations currently incorporated into the GSA MAS contract.
It’s important to identify which labor categories on your GSA Schedule are SCLS applicable so that you can ensure all requirements are met when responding to bids and winning opportunities.
How to Remain Compliant with the Service Contract Act
As a GSA Schedule holder, you are very familiar with maintaining contract compliance and SCLS labor categories are not exempt from their own compliance requirements. Sometimes, contractors fail to comply with the SCLS regulations for various reasons, such as a lack of education about specific legislative mandates. The Department of Labor will investigate whether your company is complying with SCLS regulations. If any mandate violations are discovered, contractors may be subject to penalties or lose their awarded contract opportunities.
It’s easiest to address contract compliance with SCLS applicability in three sections.
Maintaining compliance with the SCLS includes:
- Have specified minimum wage and fringe benefits determined by the Bureau of Labor Statistics
- Make sure working conditions meet safety and health standards
- Inform employees of the required compensation due under the minimum wage and fringe benefits provisions of the contract on the day they begin work
Additional items that could be reinforced by the Department of Labor include record keeping, summary of liabilities and penalties for violations, and subcontractor compliance.
If a contractor violates the SCLS, the DOL has the authority to have contract funds withheld to reimburse underpaid employees, terminate the contract, hold the contractor liable for associated costs to the government, and debar the contractor from future government contracts for a period of three years. To avoid these consequences, it’s important to make sure you’re complying with the current wage determinations.
Following SCA Requirements
If you need further guidance or assistance in ensuring that your company complies with SCLS regulations, please don’t hesitate to contact us with any questions or concerns you have as you look to complete work for your federal customers. If you need help managing your GSA Schedule, one of our consultants would be happy to assist you.
