Difference between revisions of "McNamara-O'Hara Service Contract Act"

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|Regulatory bodies=The Department of Labor
 
|Regulatory bodies=The Department of Labor
 
|Date enacted=1965
 
|Date enacted=1965
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|Scope of the law=Government
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|Scope of the law=Government, Employment
 
|Short summary introduction=The McNamara–O'Hara Service Contract Act of 1965 (SCA), codified at 41 U.S.C. §§ 6701–6707, is a US labor law that requires the government to use its bargaining power to ensure fair wages for workers when it buys services from private contractors.
 
|Short summary introduction=The McNamara–O'Hara Service Contract Act of 1965 (SCA), codified at 41 U.S.C. §§ 6701–6707, is a US labor law that requires the government to use its bargaining power to ensure fair wages for workers when it buys services from private contractors.
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|Text of the law=(a) Definitions. “Act,” as used in this clause, means the Service Contract Act of 1965, as amended (41 U.S.C. 351, et seq.).
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|Text of the law=§6701. Definitions
  
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“Service employee,” as used in this clause, means any person engaged in the performance of this Agreement other than any person employed in a bona fide executive, administrative, or professional capacity, as these terms are defined in Part 541 of Title 29, Code of Federal Regulations, as revised. It includes all such persons regardless of any contractual relationship that may be alleged to exist between the Seller or subcontractor and such persons.
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In this chapter:
  
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(b) Applicability. This Agreement is subject to the following provisions and to all other applicable provisions of the Act and regulations of the Secretary of Labor (29 CFR Part 4). This clause does not apply to subcontracts administratively exempted by the Secretary of Labor or exempted by 41 U.S.C. 356, as interpreted in Subpart C of 29 CFR Part 4.
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(1) Compensation.—The term "compensation" means any of the payments or fringe benefits described in section 6703 of this title.
  
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(c) Compensation.  
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(2) Secretary.—The term "Secretary" means the Secretary of Labor.
  
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(1) Each service employee employed in the performance of this Agreement by the Seller or any subcontractor shall be paid not less than the minimum monetary wages and shall be furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor, or authorized representative, as specified in any wage determination attached to this Agreement.
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(3) Service employee.—The term "service employee"—
  
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(2)(i) If a wage determination is attached to this Agreement, the Seller shall classify any class of service employee which is not listed therein and which is to be employed under the Agreement (i.e., the work to be performed is not performed by any classification listed in the wage determination) so as to provide a reasonable relationship (i.e., appropriate level of skill comparison) between such unlisted classifications and the classifications listed in the wage determination. Such conformed class of employees shall be paid the monetary wages and furnished the fringe benefits as are determined pursuant to the procedures in this paragraph (c).
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(A) means an individual engaged in the performance of a contract made by the Federal Government and not exempted under section 6702(b) of this title, whether negotiated or advertised, the principal purpose of which is to furnish services in the United States;
  
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(ii) This conforming procedure shall be initiated by the Seller prior to the performance of subcontract work by the unlisted class of employee. The Seller shall submit Standard Form (SF) 1444, Request for Authorization of Additional Classification and Rate, to the Company no later than 30 days after the unlisted class of employee performs any subcontract work. The Company shall review the proposed classification and rate and promptly submit the completed SF 1444 (which must include information regarding the agreement or disagreement of the employees’ authorized representatives or the employees themselves) and all pertinent information to DOE for transmittal to the Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor. The Wage and Hour Division will approve, modify, or disapprove the action or render a final determination in the event of disagreement within 30 days of receipt or will notify DOE within 30 days of receipt that additional time is necessary.
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(B) includes an individual without regard to any contractual relationship alleged to exist between the individual and a contractor or subcontractor; but
  
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(iii) The final determination of the conformance action by the Wage and Hour Division shall be transmitted to the Company which shall promptly notify the Seller of the action taken. Each affected employee shall be furnished by the Seller
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(C) does not include an individual employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in part 541 of title 29, Code of Federal Regulations.
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with a written copy of such determination or it shall be posted as a part of the wage determination.
 
  
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(iv) (A) The process of establishing wage and fringe benefit rates that bear a reasonable relationship to those listed in a wage determination cannot be reduced to any single formula. The approach used may vary from wage determination to wage determination depending on the circumstances. Standard wage and salary administration practices which rank various job classifications by pay grade pursuant to point schemes or other job factors may, for example, be relied upon. Guidance may also be obtained from the way different jobs are rated under Federal pay systems (Federal Wage Board Pay System and the General Schedule) or from other wage determinations issued in the same locality. Basic to the establishment of any conformable wage rate(s) is the concept that a pay relationship should be maintained between job classifications based on the skill required and the duties performed.
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(4) United states.—The term "United States"—
  
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(B) In the case of an Agreement modification, an exercise of an option, or extension of an existing Agreement, or in any other case where the Seller succeeds a subcontract under which the classification in question was previously conformed pursuant to paragraph (c) of this clause, a new conformed wage rate and fringe benefits may be assigned to the conformed classification by indexing (i.e., adjusting) the previous conformed rate and fringe benefits by an amount equal to the average (mean) percentage increase (or decrease, where appropriate) between the wages and fringe benefits specified for all classifications to be used on the Agreement which are listed in the current wage determination, and those specified for the corresponding classifications in the previously applicable wage determination. Where conforming actions are accomplished in accordance with this paragraph prior to the performance of subcontract work by the unlisted class of employees, the Seller shall advise the Company of the action taken but the other procedures in subdivision (c)(2)(ii) of this
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(A) includes any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, the outer Continental Shelf as defined in the Outer Continental Shelf Lands Act (43 U.S.C. §1331 et seq.), American Samoa, Guam, Wake Island, and Johnston Island; but
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clause need not be followed.
 
  
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(C) No employee engaged in performing work on this Agreement shall in any event be paid less than the currently applicable minimum wage specified under Section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended.
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(B) does not include any other territory under the jurisdiction of the United States or any United States base or possession within a foreign country.
  
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(v) The wage rate and fringe benefits finally determined under this subparagraph(c)(2) of this clause shall be paid to all employees performing in the classification from the first day on which subcontract work is performed by them in the classification. Failure to pay the unlisted employees the compensation agreed upon by the interested parties and/or finally determined by the Wage and Hour Division retroactive to the date such class of employees commenced subcontract work shall be a violation of the Act and this Agreement.
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§6702. Contracts to which this chapter applies
  
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(vi) Upon discovery of failure to comply with subparagraph (c)(2) of this clause, the Wage and Hour Division shall make a final determination of conformed classification, wage rate, and/or fringe benefits which shall be retroactive to the date such class or classes of employees commenced subcontract work.
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(a) In General.—Except as provided in subsection (b), this chapter applies to any contract or bid specification for a contract, whether negotiated or advertised, that—
  
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(3) Adjustment of Compensation. If the term of this Agreement is more than one year, the minimum monetary wages and fringe benefits required to be paid or furnished thereunder to service employees under this Agreement shall be subject to adjustment after one year and not less often than once every two years, under wage determinations issued by the Wage and Hour Division.
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(1) is made by the Federal Government or the District of Columbia;
  
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(d) Obligation to Furnish Fringe Benefits. The Seller or subcontractor may discharge the obligation to furnish fringe benefits specified in the attachment or determined under subparagraph (c)(2) of this clause by furnishing equivalent combinations of bona fide fringe benefits, or by making equivalent or differential cash payments, only in accordance with Subpart D of 29 CFR Part 4.
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(2) involves an amount exceeding $2,500; and
  
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(e) Minimum Wage. In the absence of a minimum wage attachment for this Agreement, neither the Seller nor any subcontractor under this Agreement shall pay any person performing work under this Agreement (regardless of whether the person is a service employee) less than the minimum wage specified by Section 6(a)(1) of the Fair Labor Standards Act of 1938. Nothing in this clause shall relieve the Seller or any subcontractor of any other obligation under law or contract for payment of a higher wage to any employee.
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(3) has as its principal purpose the furnishing of services in the United States through the use of service employees.
  
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(f) Successor Subcontracts. If this Agreement succeeds a subcontract subject to the Act under which substantially the same services were furnished in the same locality and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, in the absence of the minimum wage attachment for this Agreement setting forth such collectively bargained wage rates and fringe benefits, neither the Seller nor any subcontractor under this Agreement shall pay any service employee performing any of the subcontract work (regardless of whether or not such employee was
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(b) Exemptions.—This chapter does not apply to—
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employed under the predecessor subcontract), less than the wages and fringe benefits provided for in such collective bargaining agreement, to which such employee would have been entitled if employed under the predecessor subcontract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for under such agreement. Neither the Seller nor any subcontractor under this Agreement may be relieved of the foregoing obligation unless the limitations of 29 CFR 4.1b(b) apply or unless the Secretary of Labor or the Secretary’s authorized representative finds, after a hearing as provided in 29 CFR 4.10 that the wages and/or fringe benefits provided for in such agreement are substantially at variance with those which prevail for services of a character similar in the locality, or determines, as provided in 29 CFR 4.11, that the collective bargaining agreement applicable to service employees employed under the predecessor subcontract was not entered into as a result of arm’s length negotiations. Where it is found in accordance with the review procedures provided in 29 CFR 4.10 and/or 4.11 and Parts 6 and 8 that some or all of the wages and/or fringe benefits contained in a predecessor’s collective bargaining agreement are substantially at variance with those which prevail for services of a character similar in the locality, and/or that the collective bargaining agreement applicable to service employees employed under the predecessor subcontract was not entered into as a result of arm’s length negotiations, the Department will issue a new or revised wage determination setting forth the applicable wage rates and fringe benefits. Such determination shall be made part of the Agreement, in accordance with the decision of the Administrator, the Administrative
 
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Law Judge, or the Board of Service Contract Appeals, as the case may be, irrespective of whether such issuance occurs prior to or after the award of a subcontract (53 Comp. Gen. 401 (1973)). In the case of a wage determination issued solely as a result of a finding of substantial variance, such determination shall be effective as of the date of the final administrative decision.
 
  
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(g) Notification to Employees. The Seller and any subcontractor under this Agreement shall notify each service employee commencing work on this Agreement of the minimum monetary wage and any fringe benefits required to be paid pursuant to this Agreement, or shall post the wage determination attached to this Agreement. The poster provided by the Department of Labor (Publication WH 1313) shall be posted in a prominent and accessible place at the worksite. Failure to comply with this requirement is a violation of Section 2(a)(4) of the Act and of this Agreement. Publication 1313 is available at: http://www.dol.gov/esa/regs/compliance/posters/sca.htm or will be mailed on request.
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(1) a contract of the Federal Government or the District of Columbia for the construction, alteration, or repair, including painting and decorating, of public buildings or public works;
  
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(h) Safe and Sanitary Working Conditions. The Seller or subcontractor shall not permit any part of the services called for by this Agreement to be performed in buildings or surroundings or under working conditions provided by or under the control or supervision of the Seller or subcontractor which are unsanitary, hazardous, or dangerous to the health or safety of the service employees. The Seller or subcontractor shall comply with the safety and health standards applied under 29 CFR
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(2) any work required to be done in accordance with chapter 65 of this title;
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Part 1925.
 
  
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{{SectionHarm|Section=(i) Records. (1) The Seller and each subcontractor performing work subject to the Act shall make and maintain for three years from the completion of the work, and make them available for inspection and transcription by authorized representatives of the Wage and Hour Division, Employment Standards Administration, a record of the following:|Harms=Aggregation}}
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(3) a contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line or oil or gas pipeline where published tariff rates are in effect;
  
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(i) For each employee subject to the Act:
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{{SectionPersonalInformation|Section=(4) a contract for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934 (47 U.S.C. 151 et seq.);|Personal=Communication}}
  
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(A) Name and address and social security number;
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(5) a contract for public utility services, including electric light and power, water, steam, and gas;
  
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(B) Correct work classification or classifications, rate or rates of monetary wages paid and fringe benefits
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(6) an employment contract providing for direct services to a Federal agency by an individual; and
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provided, rate or rates of payments in lieu of fringe benefits, and total daily and weekly compensation;
 
  
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(C) Daily and weekly hours worked by each employee; and
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(7) a contract with the United States Postal Service, the principal purpose of which is the operation of postal contract stations.
  
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(D) Any deductions, rebates, or refunds from the total daily or weekly compensation of each employee.
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§6703. Required contract terms
  
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(ii) For those classes of service employees not included in any wage determination attached to this Agreement, wage rates or fringe benefits determined by the interested parties or by the Administrator or authorized representative under the terms of paragraph (c) of this clause. A copy of the report required by subdivision (c)(2)(ii) of this clause will fulfill this requirement.
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A contract, and bid specification for a contract, to which this chapter applies under section 6702 of this title shall contain the following terms:
  
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(iii) Any list of the predecessor subcontractor’s employees which had been furnished to the Seller as prescribed by paragraph (n) of this clause.  
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(1) Minimum wage.—The contract and bid specification shall contain a provision specifying the minimum wage to be paid to each class of service employee engaged in the performance of the contract or any subcontract, as determined by the Secretary or the Secretary's authorized representative, in accordance with prevailing rates in the locality, or, where a collective-bargaining agreement covers the service employees, in accordance with the rates provided for in the agreement, including prospective wage increases provided for in the agreement as a result of arm's length negotiations. In any case the minimum wage may not be less than the minimum wage specified in section 6704 of this title.
  
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(2) The Seller shall also make available a copy of this Agreement for inspection or transcription by authorized representatives of the Wage and Hour Division.
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(2) Fringe benefits.—The contract and bid specification shall contain a provision specifying the fringe benefits to be provided to each class of service employee engaged in the performance of the contract or any subcontract, as determined by the Secretary or the Secretary's authorized representative to be prevailing in the locality, or, where a collective-bargaining agreement covers the service employees, to be provided for under the agreement, including prospective fringe benefit increases provided for in the agreement as a result of arm's-length negotiations. The fringe benefits shall include medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, unemployment benefits, life insurance, disability and sickness insurance, accident insurance, vacation and holiday pay, costs of apprenticeship or other similar programs and other bona fide fringe benefits not otherwise required by Federal, State, or local law to be provided by the contractor or subcontractor. The obligation under this paragraph may be discharged by furnishing any equivalent combinations of fringe benefits or by making equivalent or differential payments in cash under regulations established by the Secretary.
  
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{{SectionHarm|Section=(3) Failure to make and maintain or to make available these records for inspection and transcription shall be a violation of the regulations and this Agreement, and in the case of failure to produce these records, the Company, upon direction of DOE or the Department of Labor and notification to the Seller, shall take action to cause suspension of any further payment or advance of funds until the violation ceases.|Harms= Increased Accessibility}}
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(3) Working conditions.—The contract and bid specification shall contain a provision specifying that no part of the services covered by this chapter may be performed in buildings or surroundings or under working conditions, provided by or under the control or supervision of the contractor or any subcontractor, which are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to provide the services.
  
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(4) The Seller shall permit authorized representatives of the Wage and Hour Division to conduct interviews with employees at the worksite during normal working hours.
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(4) Notice.—The contract and bid specification shall contain a provision specifying that on the date a service employee begins work on a contract to which this chapter applies, the contractor or subcontractor will deliver to the employee a notice of the compensation required under paragraphs (1) and (2), on a form prepared by the Federal agency, or will post a notice of the required compensation in a prominent place at the worksite.
  
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(j) Pay Periods. The Seller shall unconditionally pay to each employee subject to the Act all wages due free and clear and without subsequent deduction (except as otherwise provided by law or Regulations, 29 CFR Part 4), rebate, or kickback on any account. These payments shall be made no later than one pay period following the end of the regular pay period in which the wages were earned or accrued. A pay period under this Act may not be of any duration longer than semimonthly.
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(5) General schedule pay rates and prevailing rate systems.—The contract and bid specification shall contain a statement of the rates that would be paid by the Federal agency to each class of service employee if section 5332 or 5341 of title 5 were applicable to them. The Secretary shall give due consideration to these rates in making the wage and fringe benefit determinations specified in this section.
  
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(k) Withholding of Payments and Termination of Agreement. The Company shall withhold or cause to be withheld from this or any other Agreement with the Seller such sums as DOE or an appropriate official of the Department of Labor requests or such sums as the Company decides may be necessary to pay underpaid employees employed by the Seller or
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§6704. Limitation on minimum wage
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subcontractor. In the event of failure to pay any employees subject to the Act all or part of the wages or fringe benefits due under the Act, the Company may, after authorization or by direction of DOE or the Department of Labor and written notification to the Seller, take action to cause suspension of any further payment or advance of funds until such violations have ceased. Additionally, any failure to comply with the requirements of this clause may be grounds for termination of the
 
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right to proceed with the subcontract work. In such event, the Company may enter into other subcontracts or arrangements for completion of the work, charging the Seller in default with any additional cost.
 
  
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(l) Subcontracts. The Seller agrees to insert this clause in all subcontracts subject to the Act.
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(a) In General.—A contractor that makes a contract with the Federal Government, the principal purpose of which is to furnish services through the use of service employees, and any subcontractor, may not pay less than the minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) to an employee engaged in performing work on the contract.
  
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(m) Collective Bargaining Agreements Applicable to Service Employees. If wages to be paid or fringe benefits to be furnished any service employees employed by the Seller or any subcontractor under this Agreement are provided for in a collective bargaining agreement which is or will be effective during any period in which this Agreement is being performed, the Seller shall report such fact to the Company, together with full information as to the application and accrual of such wages and fringe benefits, including any prospective increases, to service employees engaged in work on the Agreement, and a copy of the collective bargaining agreement. Such report shall be made upon commencing performance of the Agreement, in case of collective bargaining agreements effective at such time, and in the case of such agreements or provisions or amendments thereof effective at a later time during the period of subcontract performance such agreements shall be reported promptly after negotiation thereof.
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(b) Violations.—Sections 6705 to 6707(d) of this title are applicable to a violation of this section.
  
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(n) Seniority List. Not less than ten days prior to completion of any Agreement being performed at a Federal facility where service employees may be retained in the performance of the succeeding subcontract and subject to a wage determination which contains vacation or other benefit provisions based upon length of service with the Seller (predecessor) or successor (29 CFR 4.173), the Seller shall furnish the Company a certified list of the names, of all service employees on the Seller’s or subcontractor’s payroll during the last month of subcontract performance. Such list shall also contain anniversary dates of employment on the Agreement either with the current or predecessor subcontractors of each such service employee. The Company shall turn over such list to the successor at the commencement of the succeeding
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§6705. Violations
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subcontract.
 
  
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(o) Rulings and Interpretations. Rulings and interpretations of the Act are contained in Regulations, 29 CFR Part 4.
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(a) Liability of Responsible Party.—A party responsible for a violation of a contract provision required under section 6703(1) or (2) of this title or a violation of section 6704 of this title is liable for an amount equal to the sum of any deduction, rebate, refund, or underpayment of compensation due any employee engaged in the performance of the contract.
  
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(p) Seller’s Certification. (1) By entering into this Agreement, the Seller (and officials thereof) certifies that neither it(nor he or she) nor any person or firm who has a substantial interest in the Seller’s firm is a person or firm ineligible to be
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(b) Recovery of Amounts Underpaid to Employees.—
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awarded Government contracts by virtue of the sanctions imposed under Section 5 of the Act.
 
  
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(2) No part of this Agreement shall be subcontracted to any person or firm ineligible for award of a Government contract under Section 5 of the Act.
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(1) Withholding accrued payments due on contracts.—The total amount determined under subsection (a) to be due any employee engaged in the performance of a contract may be withheld from accrued payments due on the contract or on any other contract between the same contractor and the Federal Government. The amount withheld shall be held in a deposit fund. On order of the Secretary, the compensation found by the Secretary or the head of a Federal agency to be due an underpaid employee pursuant to this chapter shall be paid from the deposit fund directly to the underpaid employee.
  
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(3) The penalty for making false statements is prescribed in the U.S. Criminal Code, 18 U.S.C. 1001.(q Variations, Tolerances, and Exemptions Involving Employment. Notwithstanding any of the provisions in paragraphs (b) through (o) of this clause, the following employees may be employed in accordance with the following
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(2) Bringing actions against contractors.—If the accrued payments withheld under the terms of the contract are insufficient to reimburse a service employee with respect to whom there has been a failure to pay the compensation required pursuant to this chapter, the Federal Government may bring action against the contractor, subcontractor, or any sureties in any court of competent jurisdiction to recover the remaining amount of underpayment. Any amount recovered shall be held in the deposit fund and shall be paid, on order of the Secretary, directly to the underpaid employee. Any amount not paid to an employee because of inability to do so within 3 years shall be covered into the Treasury as miscellaneous receipts.
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variations, tolerances, and exemptions, which the Secretary of Labor, pursuant to Section 4(b) of the Act prior to its amendment by Pub. L. 92-473, found to be necessary and proper in the public interest or to avoid serious impairment of the
 
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conduct of Government business.
 
  
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(1) Apprentices, student-learners, and workers whose earning capacity is impaired by age, physical or mental deficiency or injury may be employed at wages lower than the minimum wages otherwise required by Section 2(a)(1) or 2(b)(1) of the Act without diminishing any fringe benefits or cash payments in lieu thereof required under Section 2(a)(2) of the Act, in accordance with the conditions and procedures prescribed for the employment of apprentices, student-learners, handicapped persons, and handicapped clients of sheltered workshops under Section 14 of the Fair Labor Standards Act of 1938, in the regulations issued by the Administrator (29 CFR Parts 520, 521, 524, and 525).
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{{SectionHarm|Section=(c) Cancellation and Alternative Completion.—In addition to other actions in accordance with this section, when a violation of any contract stipulation is found, the Federal agency that made the contract may cancel the contract on written notice to the original contractor. The Federal Government may then make other contracts or arrangements for the completion of the original contract, charging any additional cost to the original contractor.|Harms=Decisional Interference}}
  
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(2) The Administrator will issue certificates under the Act for the employment of apprentices, student-learners, handicapped persons, or handicapped clients of sheltered workshops not subject to the Fair Labor Standards Act of 1938, or subject to different minimum rates of pay under the two acts, authorizing appropriate rates of minimum wages (but without changing requirements concerning fringe benefits or supplementary cash payments in lieu thereof), applying procedures prescribed by the applicable regulations issued under the Fair Labor Standards Act of 1938 (29 CFR Parts 520, 521, 524, and 525).
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(d) Enforcement of Section.—In accordance with regulations prescribed pursuant to section 6707(a)–(d) of this title, the Secretary or the head of a Federal agency may carry out this section.
  
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(3) The Administrator will also withdraw, annul, or cancel such certificates in accordance with the regulations in 29 CFR Parts 525 and 528.
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§6706. Three-year prohibition on new contracts in case of violation
  
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(r) Apprentices. Apprentices will be permitted to work at less than the predetermined rate for the work they perform when they are employed and individually registered in a bona fide apprenticeship program registered with a State Apprenticeship Agency which is recognized by the U.S. Department of Labor, or if no such recognized agency exists in a State, under a program registered with the Bureau of Apprenticeship and Training, Employment and Training Administration, U.S. Department of Labor. Any employee who is not registered as an apprentice in an approved program shall be paid the wage rate and fringe benefits contained in the applicable wage determination for the journeyman classification of work actually performed. The wage rates paid apprentices shall not be less than the wage rate for their level of progress set forth in the registered program, expressed as the appropriate percentage of the journeyman’s rate contained in the applicable wage determination. The allowable ratio of apprentices to journeymen employed on the subcontract work in any craft classification shall not be greater than the ratio permitted to the Seller as to his entire work force under the registered
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(a) Distribution of List.—The Comptroller General shall distribute to each agency of the Federal Government a list containing the names of persons or firms that a Federal agency or the Secretary has found to have violated this chapter.
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program.
 
  
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(s) Tips. An employee engaged in an occupation in which the employee customarily and regularly receives more than $30 a month in tips may have the amount of these tips credited by the employer against the minimum wage required by Section 2(a)(1) or Section 2(b)(1) of the Act, in accordance with Section 3(m) of the Fair Labor Standards Act and Regulations 29 CFR Part 531. However, the amount of credit shall not exceed $1.34 per hour beginning January 1, 1981.
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(b) Three-Year Prohibition.—Unless the Secretary recommends otherwise because of unusual circumstances, a Federal Government contract may not be awarded to a person or firm named on the list under subsection (a), or to an entity in which the person or firm has a substantial interest, until 3 years have elapsed from the date of publication of the list. If the Secretary does not recommend otherwise because of unusual circumstances, the Secretary shall, not later than 90 days after a hearing examiner has made a finding of a violation of this chapter, forward to the Comptroller General the name of the person or firm found to have violated this chapter.
  
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To use this provision:
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§6707. Enforcement and administration of chapter
  
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(1) The employer must inform tipped employees about this tip credit allowance before the credit is utilized;
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(a) Enforcement of Chapter.—Sections 6506 and 6507 of this title govern the Secretary's authority to enforce this chapter, including the Secretary's authority to prescribe regulations, issue orders, hold hearings, make decisions based on findings of fact, and take other appropriate action under this chapter.
  
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(2) The employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether the employer elects to take a credit for tips received);
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(b) Limitations and Regulations for Variations, Tolerances, and Exemptions.—The Secretary may provide reasonable limitations and may prescribe regulations allowing reasonable variation, tolerances, and exemptions with respect to this chapter (other than subsection (f)), but only in special circumstances where the Secretary determines that the limitation, variation, tolerance, or exemption is necessary and proper in the public interest or to avoid the serious impairment of Federal Government business, and is in accord with the remedial purpose of this chapter to protect prevailing labor standards.
  
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(3) The employer must be able to show by records that the employee receives at least the applicable Service Contract Act minimum wage through the combination of direct wages and tip credit; and
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(c) Preservation of Wages and Benefits Due Under Predecessor Contracts.—
  
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(4) The use of such tip credit must have been permitted under any predecessor collective bargaining agreement applicable by virtue of Section 4(c) of the Act.
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(1) In general.—Under a contract which succeeds a contract subject to this chapter, and under which substantially the same services are furnished, a contractor or subcontractor may not pay a service employee less than the wages and fringe benefits the service employee would have received under the predecessor contract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for in a collective-bargaining agreement as a result of arm's-length negotiations.
  
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(t) Disputes Concerning Labor Standards. The U.S. Department of Labor has set forth in 29 CFR Parts 4, 6, and 8 procedures for resolving disputes concerning labor standards requirements. Such disputes shall be resolved in accordance with those procedures and not the Disputes clause, if any, of this Agreement. Disputes within the meaning of this clause include disputes between the Seller (or any of its subcontractors) and the Company, DOE, the U.S. Department of Labor, or the employees or their representatives.
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(2) Exception.—This subsection does not apply if the Secretary finds after a hearing in accordance with regulations adopted by the Secretary that wages and fringe benefits under the predecessor contract are substantially at variance with wages and fringe benefits prevailing in the same locality for services of a similar character.
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(d) Duration of Contracts.—Subject to limitations in annual appropriation acts but notwithstanding any other law, a contract to which this chapter applies may, if authorized by the Secretary, be for any term of years not exceeding 5, if the contract provides for periodic adjustment of wages and fringe benefits pursuant to future determinations, issued in the manner prescribed in section 6703 of this title at least once every 2 years during the term of the contract, covering each class of service employee.
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(e) Exclusion of Fringe Benefit Payments in Determining Overtime Pay.—In determining any overtime pay to which a service employee is entitled under Federal law, the regular or basic hourly rate of pay of the service employee does not include any fringe benefit payments computed under this chapter which are excluded from the definition of "regular rate" under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)).
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(f) Timeliness of Wage and Fringe Benefit Determinations.—It is the intent of Congress that determinations of minimum wages and fringe benefits under section 6703(1) and (2) of this title should be made as soon as administratively feasible for all contracts subject to this chapter. In any event, the Secretary shall at least make the determinations for contracts under which more than 5 service employees are to be employed.
 
|Categories of personal information covered=Professional
 
|Categories of personal information covered=Professional
 
}}
 
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Revision as of 00:29, 30 October 2020

McNamara-O'Hara Service Contract Act
Short Title The Service Act (SCA)
Official Text McNamara-O'Hara Service Contract Act
Country/Jurisdiction United States
State or Province
Regulatory Bodies The Department of Labor
Date Enacted 1965
Scope of the Law Government, Employment
Information
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The McNamara–O'Hara Service Contract Act of 1965 (SCA), codified at 41 U.S.C. §§ 6701–6707, is a US labor law that requires the government to use its bargaining power to ensure fair wages for workers when it buys services from private contractors.

Text of the law

§6701. Definitions

In this chapter:

(1) Compensation.—The term "compensation" means any of the payments or fringe benefits described in section 6703 of this title.

(2) Secretary.—The term "Secretary" means the Secretary of Labor.

(3) Service employee.—The term "service employee"—

(A) means an individual engaged in the performance of a contract made by the Federal Government and not exempted under section 6702(b) of this title, whether negotiated or advertised, the principal purpose of which is to furnish services in the United States;

(B) includes an individual without regard to any contractual relationship alleged to exist between the individual and a contractor or subcontractor; but

(C) does not include an individual employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in part 541 of title 29, Code of Federal Regulations.

(4) United states.—The term "United States"—

(A) includes any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, the outer Continental Shelf as defined in the Outer Continental Shelf Lands Act (43 U.S.C. §1331 et seq.), American Samoa, Guam, Wake Island, and Johnston Island; but

(B) does not include any other territory under the jurisdiction of the United States or any United States base or possession within a foreign country.

§6702. Contracts to which this chapter applies

(a) In General.—Except as provided in subsection (b), this chapter applies to any contract or bid specification for a contract, whether negotiated or advertised, that—

(1) is made by the Federal Government or the District of Columbia;

(2) involves an amount exceeding $2,500; and

(3) has as its principal purpose the furnishing of services in the United States through the use of service employees.

(b) Exemptions.—This chapter does not apply to—

(1) a contract of the Federal Government or the District of Columbia for the construction, alteration, or repair, including painting and decorating, of public buildings or public works;

(2) any work required to be done in accordance with chapter 65 of this title;

(3) a contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line or oil or gas pipeline where published tariff rates are in effect;

(4) a contract for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934 (47 U.S.C. 151 et seq.); Communication "Personal#list" contains a listed "#" character as part of the property label and has therefore been classified as invalid.

(5) a contract for public utility services, including electric light and power, water, steam, and gas;

(6) an employment contract providing for direct services to a Federal agency by an individual; and

(7) a contract with the United States Postal Service, the principal purpose of which is the operation of postal contract stations.

§6703. Required contract terms

A contract, and bid specification for a contract, to which this chapter applies under section 6702 of this title shall contain the following terms:

(1) Minimum wage.—The contract and bid specification shall contain a provision specifying the minimum wage to be paid to each class of service employee engaged in the performance of the contract or any subcontract, as determined by the Secretary or the Secretary's authorized representative, in accordance with prevailing rates in the locality, or, where a collective-bargaining agreement covers the service employees, in accordance with the rates provided for in the agreement, including prospective wage increases provided for in the agreement as a result of arm's length negotiations. In any case the minimum wage may not be less than the minimum wage specified in section 6704 of this title.

(2) Fringe benefits.—The contract and bid specification shall contain a provision specifying the fringe benefits to be provided to each class of service employee engaged in the performance of the contract or any subcontract, as determined by the Secretary or the Secretary's authorized representative to be prevailing in the locality, or, where a collective-bargaining agreement covers the service employees, to be provided for under the agreement, including prospective fringe benefit increases provided for in the agreement as a result of arm's-length negotiations. The fringe benefits shall include medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide any of the foregoing, unemployment benefits, life insurance, disability and sickness insurance, accident insurance, vacation and holiday pay, costs of apprenticeship or other similar programs and other bona fide fringe benefits not otherwise required by Federal, State, or local law to be provided by the contractor or subcontractor. The obligation under this paragraph may be discharged by furnishing any equivalent combinations of fringe benefits or by making equivalent or differential payments in cash under regulations established by the Secretary.

(3) Working conditions.—The contract and bid specification shall contain a provision specifying that no part of the services covered by this chapter may be performed in buildings or surroundings or under working conditions, provided by or under the control or supervision of the contractor or any subcontractor, which are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to provide the services.

(4) Notice.—The contract and bid specification shall contain a provision specifying that on the date a service employee begins work on a contract to which this chapter applies, the contractor or subcontractor will deliver to the employee a notice of the compensation required under paragraphs (1) and (2), on a form prepared by the Federal agency, or will post a notice of the required compensation in a prominent place at the worksite.

(5) General schedule pay rates and prevailing rate systems.—The contract and bid specification shall contain a statement of the rates that would be paid by the Federal agency to each class of service employee if section 5332 or 5341 of title 5 were applicable to them. The Secretary shall give due consideration to these rates in making the wage and fringe benefit determinations specified in this section.

§6704. Limitation on minimum wage

(a) In General.—A contractor that makes a contract with the Federal Government, the principal purpose of which is to furnish services through the use of service employees, and any subcontractor, may not pay less than the minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) to an employee engaged in performing work on the contract.

(b) Violations.—Sections 6705 to 6707(d) of this title are applicable to a violation of this section.

§6705. Violations

(a) Liability of Responsible Party.—A party responsible for a violation of a contract provision required under section 6703(1) or (2) of this title or a violation of section 6704 of this title is liable for an amount equal to the sum of any deduction, rebate, refund, or underpayment of compensation due any employee engaged in the performance of the contract.

(b) Recovery of Amounts Underpaid to Employees.—

(1) Withholding accrued payments due on contracts.—The total amount determined under subsection (a) to be due any employee engaged in the performance of a contract may be withheld from accrued payments due on the contract or on any other contract between the same contractor and the Federal Government. The amount withheld shall be held in a deposit fund. On order of the Secretary, the compensation found by the Secretary or the head of a Federal agency to be due an underpaid employee pursuant to this chapter shall be paid from the deposit fund directly to the underpaid employee.

(2) Bringing actions against contractors.—If the accrued payments withheld under the terms of the contract are insufficient to reimburse a service employee with respect to whom there has been a failure to pay the compensation required pursuant to this chapter, the Federal Government may bring action against the contractor, subcontractor, or any sureties in any court of competent jurisdiction to recover the remaining amount of underpayment. Any amount recovered shall be held in the deposit fund and shall be paid, on order of the Secretary, directly to the underpaid employee. Any amount not paid to an employee because of inability to do so within 3 years shall be covered into the Treasury as miscellaneous receipts.

(c) Cancellation and Alternative Completion.—In addition to other actions in accordance with this section, when a violation of any contract stipulation is found, the Federal agency that made the contract may cancel the contract on written notice to the original contractor. The Federal Government may then make other contracts or arrangements for the completion of the original contract, charging any additional cost to the original contractor. Decisional Interference


(d) Enforcement of Section.—In accordance with regulations prescribed pursuant to section 6707(a)–(d) of this title, the Secretary or the head of a Federal agency may carry out this section.

§6706. Three-year prohibition on new contracts in case of violation

(a) Distribution of List.—The Comptroller General shall distribute to each agency of the Federal Government a list containing the names of persons or firms that a Federal agency or the Secretary has found to have violated this chapter.

(b) Three-Year Prohibition.—Unless the Secretary recommends otherwise because of unusual circumstances, a Federal Government contract may not be awarded to a person or firm named on the list under subsection (a), or to an entity in which the person or firm has a substantial interest, until 3 years have elapsed from the date of publication of the list. If the Secretary does not recommend otherwise because of unusual circumstances, the Secretary shall, not later than 90 days after a hearing examiner has made a finding of a violation of this chapter, forward to the Comptroller General the name of the person or firm found to have violated this chapter.

§6707. Enforcement and administration of chapter

(a) Enforcement of Chapter.—Sections 6506 and 6507 of this title govern the Secretary's authority to enforce this chapter, including the Secretary's authority to prescribe regulations, issue orders, hold hearings, make decisions based on findings of fact, and take other appropriate action under this chapter.

(b) Limitations and Regulations for Variations, Tolerances, and Exemptions.—The Secretary may provide reasonable limitations and may prescribe regulations allowing reasonable variation, tolerances, and exemptions with respect to this chapter (other than subsection (f)), but only in special circumstances where the Secretary determines that the limitation, variation, tolerance, or exemption is necessary and proper in the public interest or to avoid the serious impairment of Federal Government business, and is in accord with the remedial purpose of this chapter to protect prevailing labor standards.

(c) Preservation of Wages and Benefits Due Under Predecessor Contracts.—

(1) In general.—Under a contract which succeeds a contract subject to this chapter, and under which substantially the same services are furnished, a contractor or subcontractor may not pay a service employee less than the wages and fringe benefits the service employee would have received under the predecessor contract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for in a collective-bargaining agreement as a result of arm's-length negotiations.

(2) Exception.—This subsection does not apply if the Secretary finds after a hearing in accordance with regulations adopted by the Secretary that wages and fringe benefits under the predecessor contract are substantially at variance with wages and fringe benefits prevailing in the same locality for services of a similar character.


(d) Duration of Contracts.—Subject to limitations in annual appropriation acts but notwithstanding any other law, a contract to which this chapter applies may, if authorized by the Secretary, be for any term of years not exceeding 5, if the contract provides for periodic adjustment of wages and fringe benefits pursuant to future determinations, issued in the manner prescribed in section 6703 of this title at least once every 2 years during the term of the contract, covering each class of service employee.

(e) Exclusion of Fringe Benefit Payments in Determining Overtime Pay.—In determining any overtime pay to which a service employee is entitled under Federal law, the regular or basic hourly rate of pay of the service employee does not include any fringe benefit payments computed under this chapter which are excluded from the definition of "regular rate" under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 207(e)).

(f) Timeliness of Wage and Fringe Benefit Determinations.—It is the intent of Congress that determinations of minimum wages and fringe benefits under section 6703(1) and (2) of this title should be made as soon as administratively feasible for all contracts subject to this chapter. In any event, the Secretary shall at least make the determinations for contracts under which more than 5 service employees are to be employed.



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