Wage and Hour Issues
As a condition of doing business with the federal government, contractors are required to comply with special regulations concerning the wages certain employees are to be paid, and the number of hours certain contractor employees can work per week. These regulations are in addition to those wage and hour regulations imposed on all employers. The major wage and hour regulations for government contractors are as follows:
Q. What is the McNamara—O’Hara Service Contract Act (SCA)?
A. The McNamara-O’Hara Service Contract Act requires government contractors to pay their employees working on federal government contracts the prevailing wage rates and fringe benefits. The Service Contract Act applies to every contract entered into by the United States in excess of $2,500.00. Contractors and subcontractors performing on such federal contracts must observe minimum wage and safety and health standards, and must maintain certain records of compliance with the SCA, unless a specific exemption applies.
Every service employee performing any of the government contract work under a service contract in excess of $2,500.00 must be paid not less than the monetary wages, and must be furnished fringe benefits, which the Secretary of Labor has determined to be prevailing in the locality for the classification in which the employee is working or the wage rates and fringe benefits (including any accrued or prospective wage rates and fringe benefits) contained in a predecessor contractor’s collective bargaining agreement. The wage rates and fringe benefits required are specified in the SCA wage determination included in the contract. If no wage determination has been made applicable to the contract must be paid not less than the minimum wage provided in section 6(a)(1) of the Fair Labor Standards Act, currently $5.15 an hour.
Service contracts which do not exceed $2,500.00 are not subject to wage and fringe benefit determinations or to the safety and health requirements of the SCA.
Q. What is the Davis-Bacon and Related Acts (DBRA)?
A. The Davis-Bacon Act, as amended, requires that each contract over $2,000.00 to which the United States or the District of Columbia is a party for the construction, alteration, or repair of public buildings or public works shall contain a clause setting forth the minimum wages to be paid to various classes or laborers and mechanics employed under the contract. Under the provisions of the DBRA, government contractors or their subcontractors are to pay workers working on the government construction contract no less than the locally prevailing waged and fringe benefits paid on similar. The Secretary of Labor determines such local prevailing wage rates and publishes the wage rate in “wage determinations.”
A “wage determination” is the listing of wage rates and fringe benefit rates for each classification of laborers and mechanics which the Administrator of the Wage and Hour Division of the U.S. Department of Labor has determined to be prevailing in a given area for a particular type of construction (e.g., building, heavy, highway, or residential).
The Wage and Hour Division issues two types of wage determinations: general determinations, also known as area determinations, and project determinations. Regardless what labor rates are set in a contractor’s government contract, the contractor, not the government, is ultimately responsible for ensuring that employees working on a government contract are being paid in accordance with the prevailing wage rate for that job.
Q. What is the Walsh-Healy Public Contracts Act?
A. The Walsh-Healy Public Contracts Act applies to contracts which exceed or may exceed $10,000.00 entered into by any agency or instrumentally of the United States for the manufacture or furnishing of materials, supplies, articles, or equipment. The act requires the contractor to be qualified as a manufacturer or regular dealer, establishes minimum wage, maximum hours, and safety and health standards for work on such contracts, and prohibits the employment on contract work of convict labor (unless certain conditions are met) and children under 16 years of age. The employment of home workers on a covered contract is generally not permitted, although there are exceptions for some handicapped employees. The Act also requires the keeping of certain records concerning compliance.
