Service Contract Labor Standards (AKA SCA): Top 10 Things to Consider

by Susan Lavington

  • Government Contracting

The Service Contract Labor Standards (“SCLS”) governs how, and how much, government contractors must pay “covered” employees on “covered” contracts.  Here are the Top 10 things to keep in mind regarding Service Contract Labor Standards:

  1. It used to be called the “Service Contract Act,” and many people still call it that, or SCA. It is now, however, Service Contract Labor Standards.  In real life, either name will do.
  2. The contracting agency, and the Department of Labor (“DOL”) both enforce SCLS. And DOL has independent authority to debar contractors for violations.  And, violations may also trigger False Claims Act liability.
  3. SCLS mandates specific minimum wages and fringe benefits for covered employees. These are minimums.  The fringe benefit requirement may be met either by providing benefits or a minimum cash payment.
  4. There is no commercial contract exemption from the SCLS.
  5. “Bona fide” executive, management, or administrative employees are exempt from SCLS, even on a covered contract.
  6. SCLS applies to subcontractors and must be flowed down. The prime contractor is jointly and severally liable for violations.  SCLS compliance should be part of every contractor’s formal Government Contract Compliance Program.
  7. Keep detailed records. As a practical matter, contractors will have the burden to demonstrate their compliance.
  8. DOL maintains comprehensive lists of “Wage Determinations” (on SF98). These cover job descriptions and localities.  It is common for Wage Determinations to be unavailable for a particular job category and/or location, or to be provided late to a contractor, or to change or be updated during contract performance.  DOL and the FAR provide detailed procedures for dealing with each of these situations.
  9. SCLS compliance is a multi-department responsibility: HR, Accounting/Finance, Program Management, and Legal all have important roles and responsibilities.
  10. DOL conducts random (and not so random) SCLS audits and site visits. Be cooperative but be prepared.

Interested in learning more about Service Contract Labor Standards? Please sign-up for Centre’s Service Contract Labor Standards: A Practical Course to Avoid Common Mistakes