Federal Government Contractors compliance with minimum wage, prevailing wages and overtime.

McNamara-O’Hara is also known as the Service Contract Act.  Service Contract Act (SCA) contract clauses are present in all Federal contracts.  The SCA requires contractors and subcontractors performing services under prime contracts in excess of $2,500 to pay service employees no less than the wage rates and fringe benefits found prevailing in the locality, or the rates contained in a predecessor contractor’s collective bargaining agreement, including prospective increases.   The fringe benefits portion of this requirement are usually vacation and holidays pay, known as “health and welfare” benefits.  The fringe benefits are separate and in addition to the hourly market rate required under the SCA.

The Labor Department issues SCA wage determinations for contracting agencies to incorporate into covered contracts, along with the required contract clauses.  This creates a standard pay for various industries and classes of workers.

Payment of Overtime

Employers with prime contracts in excess of $100,000 under the Contract Work Hours and Safety Standards Act (CWHSSA) must pay workers at least one and one-half times their regular rates of pay for all hours worked over 40 in a week.  The CHWSSA applies to federal service contracts and federal and federally assisted construction contracts. All federal contractors and subcontractors on CWHSSA covered contracts must pay their laborers and mechanics who work on the service contracts one and one-half times their basic rate of pay for all hours worked over 40 in a workweek. This Act also prohibits unsanitary, hazardous, or dangerous working conditions on federal and federally financed and assisted construction projects.

Enforcement Action

Both SCA and CWHSSA are tools used by the Labor Department to enforce minimum wage and overtime laws.  The statutes provide an important enforcement mechanism that is not found in the private sector.  Federal contractors must provide a fair wage and a safe working environment or faces contract cancelations.  The DOL can investigate all federal contractors and use debarment, emergency withholding of funds on federal contracts and termination of federal contracts as enforcement tools.

Some debarment actions that have taken place in the past have been based on violations of the minimum wage, overtime and record-keeping provisions of the SCA and CWHSSA.

If you have any concerns about this or want more information, call the Wage and Hour Division’s toll-free helpline at 866-4US-WAGE (487-9243) Information is also available on the Internet at http://www.dol.gov/whd/.

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