Introduction to the Service Contract Act

Service Contract Act for Prevailing Wage contractors

The McNamara-O’Hara Service Contract Act was passed in 1966 with the intent to ensure all employees engaged on service based federal government contracts are paid as much as the prevailing rates in the location for the same work. According to the U.S. Department of Labor the Service Contract Labor Standards Act (SCLS) (formerly called The Service Contract Act or SCA) “Applies to federal and District of Columbia contracts that provide services. It establishes standards for wage rates and safety and health protections for employees performing work on covered contracts.”

When it applies:
• Federal Government contracts
• Specifically contracts for providing services within the U.S.
(does not include construction, freight, public utilities, radio, telephone or cable companies)
• Jobs or contracts over $2,500

What it mandates:
• Employees must be compensated with minimum prevailing wage and fringe benefits
based on role/classification (determined by DOL, varies state by state)
• Posting those rates on the job-site
• Full record keeping for a minimum of three years

Who it applies to:
• Full and Part-Time Employees
* (executive, administrative and professional employees may be exempted)

Why it’s important to your business:
• Fines/penalties for non-compliance
• Potential withholding of contract funds by the government
• Potential “debarment” no bidding for 3 years
• Opportunities to maximize your bottom line by leveraging fringe benefits in lieu of cash compensation.

“All occupations listed on the Wage Determination receive benefits as specified. Types and amounts of benefits and eligibility requirements are contractor’s prerogative. Benefits are vested and become due after the employee’s anniversary date.”

At Archer Jordan we are experts at building and administering bona fide fringe benefit packages for government contractors. Our plans ensure compliance, increase bid competitiveness and maximize profitability.

Additional information available on the DOL’s website here

5-Easy Steps to Fringe Benefit Compliance

In this FREE guide we’ll show you how to create a fringe benefit plan that secures your business