Field Operations Handbook — Chapter 14

Chapter 14
THE McNAMARA-O’HARA SERVICE CONTRACT ACT
Source: FOH Modernization revision 683, published 03/31/2016. Substantive revisions made after
03/31/2016 are noted at the end of affected provisions below. Historical information on revisions
published prior to 03/31/2016 can be found at
https://www.dol.gov/agencies/whd/field-operations-
handbook/.

Table of Contents
14a INTRODUCTION
14a00 Purpose and use of FOH chapter 14.
14a01 McNamara-O’Hara Service Contract Act (SCA or Act).
14a02 Fair Labor Standards Act (FLSA).
14a03 Contract Work Hours and Safety Standards Act (CWHSSA).
14a04 WDOL.gov website.
14b GENERAL AND STATUTORY PROVISIONS: SCA
14b00 Statutory provisions of the SCA.
14b01 Coverage: general.
14b02 Agency of the United States (U.S.) or District of Columbia (DC).
14b03 Contract to furnish services.
14b04 Geographical scope.
14b05 “Service employee.”
14b06 Contract clauses.
14b07 Child labor.
14c EXEMPTIONS AND EXCLUSIONS
14c00 Statutory exemptions.
14c01 Other exemptions.
14c02 Maintenance and repair of certain automatic data processing, scientific, medical,
office, and business equipment.
14c03 Carpet installation.
14c04 Overhaul and modification of aircraft and other equipment.
14c05 Storage and local drayage of household goods.
14c06 Shipbuilding, alteration, and repair, as distinguished from maintenance and/or
cleaning.
14c07 Contracts which have as their principal purpose the procurement of a type of
service where service employees will not be used.
14d COVERED SCA CONTRACTS
14d00 Beneficiary of contract services: concessionaires, etc.
14d01 Vending machine concession agreements.
14d02 Exploratory drilling.

14d03 Gathering and processing of geophysical and seismic data.
14d04 Surveying and mapping services.
14d05 Contracts with hotels, motels, and restaurants for lodging and meals.
14d06 Management of repossessed properties.
14d07 Contracts with states and political subdivisions.
14d08 Demolition, dismantling, and removal of government property.
14d09 Contracts for disaster relief.
14d10 Contracts for scheduled or routine maintenance of building systems.
14d11 Contracts for intermittent labor services.
14d12 Furnishing services involving more than the use of labor.
14d13 Services and other items to be furnished under a single contract.
14e CONTRACTS NOT SUBJECT TO SCA PROVISIONS
14e00 Government-owned-contractor-operated prime contracts.
14e01 Federally-assisted contracts for services.
14e02 Medical and related services.
14e03 (Reserved.)
14e04 Job Training Partnership Act contracts.
14e05 Contracts with the National Guard.
14e06 Contracts between a federal or DC agency and another such agency.
14e07 Government contracts whose principal purposes are something other than
services.
14e08 Federal timber sales contracts.
14e09 Storage and/or sale of surplus farm commodities.
14f APPLICATION OF THE SCA TO TYPES OF EMPLOYEES
14f00 Airplane and rotorcraft pilots and co-pilots.
14f01 Employees performing grooming services under concessionaire contracts.
14f02 Flight instructors: contracts for flight training.
14f03 Air traffic control instructors.
14f04 Computer-related occupations.
14g SPECIAL RULINGS AND INTERPRETATIONS
14g00 Segregation under SCA: covered and non-covered work.
14g01 Segregation: employees performing work in more than one classification.
14g02 Security guard services: compensability of training time.
14g03 Mail haul contracts.
14g04 Cost of furnishing and maintaining uniforms.
14g05 Military base installation contracts.
14g06 Military housing privatization.
14h SCA WAGE DETERMINATION/CONFORMANCE PROCESSES
14h00 SCA wage determination.
14h01 Obtaining SCA wage determinations.

14h02 Conformability of classifications and wage rates.
14i WAGE PAYMENT REQUIREMENTS

14i00 Wage payments to employees: general.
14i01 Tipped employees.
14i02 SCA contractors and FLSA exemptions.
14j FRINGE BENEFIT PAYMENT REQUIREMENTS
14j00 General provisions.
14j01 Bona fide fringe benefit plans.
14j02 Crediting of fringe benefit payments.
14j03 Vacation pay.
14j04 Holiday pay.
14j05 Temporary and part-time employees.
14j06 Health and welfare, and pension payments.
14k OVERTIME COMPENSATION
14k00 General provisions.
14k01 Laborers and mechanics under CWHSSA.
14L PAYROLL AND RECORDKEEPING REQUIREMENTS
14L00 Payroll and recordkeeping requirements.
14a INTRODUCTION
14a00 Purpose and use of FOH chapter 14.
This chapter supplements 29 CFR 4, which contains the United States (U.S.) Department of
Labor (DOL)’s regulations and interpretations with respect to the McNamara-O’Hara Service
Contract Act of 1965 (SCA or Act), as amended.
14a01 The McNamara-O’Hara Service Contract Act (SCA or Act).
The SCA (41 USC 351, et seq.) applies to every contract entered into by the U.S. or the
District of Columbia (DC), the principal purpose of which is to furnish services in the U.S.
through the use of service employees. Contractors performing on such federal service
contracts in excess of $2,500.00 must observe minimum monetary wage and safety and health
standards, and maintain certain records. Service employees on covered contracts in excess of
$2,500.00 must be paid not less than the monetary wages and fringe benefits contained in
wage determinations issued by the DOL for the contract work. Such wage and fringe benefit
determinations may reflect what has been determined to be prevailing in the locality, or may
reflect the wage rates and fringe benefits contained in the predecessor contractor’s collective
bargaining agreement (CBA), if any, pursuant to section 4(c) of the SCA. See 29 CFR 4.
14a02 The Fair Labor Standards Act (FLSA).
The FLSA (29 USC 201, et seq.) prescribes standards for the basic minimum wage and
overtime pay that may affect SCA-covered contracts. The FLSA interacts with the SCA in
three key ways:

(a) Section 2(b)(1) of the SCA provides that no contractor or subcontractor shall pay any
employee engaged in performing work on a covered contract less that the minimum wage
specified under section 6(a)(1) of the FLSA. See 29 CFR 4.159.
(b) Section 8(b) of the SCA defines the term “service employee” as any person engaged in the
performance of a contract or that portion of a contract subject to the SCA except those
employees in bona fide executive, administrative, or professional capacities as those terms
are defined in the FLSA regulations found at 29 CFR 541. See 41 USC 357(b) and 29 CFR
4.113.
(c) Section 6 of the SCA recognizes that other federal laws, such as the FLSA, may require
overtime compensation to be paid to service employees working on or in connection with
contracts subject to the SCA. See 41 USC 355, 29 CFR 4.180 -4.182, and 29 CFR 778.
14a03 The Contract Work Hours and Safety Standards Act (CWHSSA).
The SCA recognizes that other federal laws, such as the Contract Work Hours and Safety
Standards Act (CWHSSA), may require overtime compensation to be paid to service
employees working on or in connection with contracts subject to the SCA. The CWHSSA is
more limited in scope than the FLSA and generally applies to government contracts in excess
of $100,000 that require or involve the employment of laborers or mechanics, including
guards and watchmen. See 29 CFR 4.180 -4.182 and 29 CFR 5.5(b).
14a04 WDOL.gov website.
WDOL.gov (http://www.wdol.gov) provides a single website for access to federal contract
labor standards information and wage determinations issued under the SCA and the Davis-
Bacon Act (DBA). See 29 CFR 4.4(c).
14b GENERAL AND STATUTORY PROVISIONS: SCA
14b00 Statutory provisions of the SCA.
(a) Absent an exemption under sections 4(b) or 7 of the Act, section 2(a) mandates that every
contract entered into by any agency or instrumentality of the U.S. or DC in excess of $2,500,
the principal purpose of which is to furnish services in the U.S. through the use of service of
employees, must contain:
(1) specified minimum monetary wages and fringe benefits determined by the Secretary
of Labor (Secretary) that are based upon wage rates and fringe benefits prevailing in
the locality (or, in certain circumstances, the wage rates and fringe benefits contained
in a CBA, if any, applicable to employees who performed on a predecessor contract)
to be paid to the various classes of service employees employed by the contractor or
any subcontractor in performance of the contract or subcontract;
(2) a requirement that working conditions provided by or under the control of the
contractor or subcontractor meet safety and health standards;
(3) a requirement that notice be given to service employees on the day they commence
work of the compensation due them under the minimum monetary wage and fringe

benefit provisions of the contract (or that such notice be posted in a prominent place
at the worksite); and
(4) a statement of the wage rates and fringe benefits that would be paid by the
contracting agency to the various classes of service employees if such employees
were hired directly by the agency to perform the contract work. This statement is
included in contracts for informational purposes only.
(b) The remaining sections of the SCA direct DOL to administer and enforce the Act, and give
no authority to contracting agencies to issue final coverage determinations. DOL must
ultimately decide any issue concerning coverage under the SCA. See 41 USC 351, et seq.; 29
CFR 4.101(b); and 29 CFR 4.102.
14b01 Coverage: general.
(a) The SCA applies to contracts entered into by the U.S. or DC, the principal purpose of which
is to furnish services in the U.S. through the use of service employees. See 29 CFR 4.107 -
4.114
(b) Specifications for services in a contract which is not as a whole principally for services are
not subject to the SCA. See 29 CFR 4.111(a).
(c) Contracts for services which are performed essentially by employees that qualify for
exemption as bona fide executive, administrative, or professional employees under the FLSA
and involve only a minor or incidental use of service employees would not require
application of the SCA. See 29 CFR 4.113(a)(3) and 29 CFR 541.
(d) The term “contractor” as used in the contract clauses required by the SCA also applies to any
subcontractors. When a contractor undertakes a contract subject to the SCA, the contractor
agrees to assume the obligations that the labor standards will be observed in furnishing the
required services. These obligations may not be relieved by shifting all or part of the work to
another, and the prime contractor is jointly and severally liable with any subcontractor for any
underpayments that constitute a violation of the prime contract. See 29 CFR 4.114.
14b02 Agency of the United States or District of Columbia.
(a) Section 2(a) of the SCA covers contracts (and any bid specification therefor) “entered into by
the United States or the District of Columbia,” and section 2(b) applies to contracts entered
into “with the Federal Government.” Within the meaning of these provisions, contracts
entered into by the U.S. and contracts with the federal government include all contracts to
which any agency or instrumentality of the U.S. government becomes a party. See 29 CFR
4.107.
(b) Contracts of DC include all contracts of all agencies and instrumentalities of DC which
procure services for, or on behalf of, DC or under the authority of DC. See 29 CFR 4.108.
14b03 Contracts to furnish services.
(a) Based on the language of the SCA, if a contract is “entered into” by or with the government,
and if its principal purpose is “to furnish services in the United States through the use of
service employees,” it is subject to the SCA. See 41 USC 351(a).

(b) The SCA is intended to be applied to a wide variety of service contracts. To illustrate this
point the SCA regulations provide a listing of examples of contracts that have been found to
come within its coverage. See 29 CFR 4.130(a).
(c) The nomenclature, type, or particular form of contract used is not determinative of SCA
coverage. Contracts can be in writing, the result of competitive bidding, awarded on a cost
plus basis to a single source (“sole” source), a purchase order, or a telephone call to a
contractor. See 29 CFR 4.111(a).
(d) Contracts do not have to involve direct services to the government or an agency, nor do they
require the expenditure of funds by an agency. Concessionaire contracts in which the
contractor provides a service to individual personnel or the general public, for which he or
she charges a fee to the user and then remits a portion of sale receipts to the government, are
contracts for purposes of the SCA unless exempted. See 29 CFR 4.133 and FOH 14d00.
14b04 Geographical scope.
(a) Currently, the SCA applies to the 50 states, DC, Puerto Rico, the Virgin Islands, Outer
Continental Shelf lands as defined in the Outer Continental Shelf Lands Act, American
Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island, Canton
Island, and the Northern Marianas. See 41 USC 357(d) and 29 CFR 4.112(a).
(b) The term “United States” excludes any U.S. base or possession within a foreign country. See
29 CFR 4.112(a).
(c) For contracts in which any part of the services will be performed within the geographic limits
of the U.S., the SCA and appropriate wage determinations must be incorporated in the bid
documents and contract, and the service employees must be paid the proper SCA rates for all
hours worked within these geographic limits. Work performed outside the geographic limits
of the U.S., even if pursuant to a contract for services that is performed in part in the U.S., is
not subject to the requirements of the SCA. See 29 CFR 4.112(b).
14b05 “Service employee.”
(a) Section 8(b) of the Act defines “service employee” as any person engaged in the performance
of a covered contract except those persons who individually qualify for an FLSA exemption
as bona fide executive, administrative, or professional employees as defined in 29 CFR 541.
See 41 USC 357(b), 29 CFR 4.113, 29 CFR 4.156, and FOH 14c07.
(b) The SCA applies to all persons who actually perform the service work called for by a covered
contract, “regardless of any contractual relationship that may be alleged to exist between a
contractor or subcontractor and such person,” except those persons expressly exempted from
the definition of service employee. If a person is engaged in performing any service work
called for under a covered contract, such person must be paid the wage and fringe benefits
provided under the Act, irrespective of any alleged independent contractor or non-
employment relationship. See 29 CFR 4.155.
(c) Employees who do not perform the services required by a contract in excess of $2,500.00
principally for services, but whose duties are necessary to the performance thereof, as, for
example, clerical employees who handle paper work in connection with the contract (such as
billing or payrolls), must be paid not less than the minimum wage specified under section

6(a)(1) of the FLSA assuming such minimum wage obligations apply. See 41 USC
351(b)(1)and 29 CFR 4.153.
(d) Most occupational titles for service employees listed on SCA area-wide prevailing wage
determinations are defined in the SCA Directory of Occupations, which can be accessed via
the WDOL.gov website (http://www.wdol.gov).
(e) Occupational titles contained in SCA wage determinations based on CBA provisions will be
defined by the terms of the CBA. See 29 CFR 4.163(j).
14b06 Contract clauses.
(a) The amount of the contract is not determinative of the Act’s coverage although the statutory
requirements and the contract clauses are different for contracts in excess of $2,500.00 and
for contracts of a lesser amount. See 29 CFR 4.159.
(b) Contracts exceeding $2,500.00
In every covered contract in excess of $2,500.00 or with no definite amount, the agency is
required to include the SCA labor standards contract clauses set forth in 29 CFR 4.6. In
addition to other matters, such as recordkeeping requirements and a summary of liabilities
and penalties for violations, these clauses contain the basic provisions of sections 2(a)(1)
through (4) of the Act relating to: payment of prevailing minimum monetary wage rates,
furnishing of fringe benefits, observance of safety and health standards, and notice of
compensation to employees (posting). In the absence of a wage determination attached to the
contract specifying the prevailing rate or rates to be paid and the fringe benefits to be
furnished, the clauses also provide that neither the prime contractor nor any subcontractor
shall pay any employees performing work on the contract less than the minimum wage
required by section 6(a)(1) of the FLSA. See 29 CFR 4.6, 29 CFR 4.150, and 29 CFR 4.159.
(c) The labor standards contract clauses included in the prime contract are by their terms required
to be included as well in any subcontract or any lower tier subcontract made thereunder. See
29 CFR 4.114 and 29 CFR 4.151.
(d) Contracts not exceeding $2,500.00
The only clause required in federal service contracts of $2,500.00 or less is the clause
reflecting the basic provisions of section 2(b)(1) of the SCA relating to the payment of the
minimum wage required by section 6(a)(1) of the FLSA to employees engaged in performing
work on the contract. However, pursuant to section 18 of the FLSA, no provision of the
FLSA shall excuse noncompliance with any federal, state or local law establishing a
minimum monetary wage higher than the FLSA minimum wage. DOL Wage and Hour
Division (WHD or WH) staff will not interpret or enforce any law other than those
administered by the WHD, and states cannot interpret or enforce the SCA or FLSA. See 41
USC 351(b)(1), 29 CFR 4.150, and FOH 32j01.
(e) Determining contract amount
The value of the contract is determined by either the amount to be paid for the service or the
amount which the contractor receives for providing the service. For example, concession

contracts are considered to be contracts in excess of $2,500.00 if the contractor's gross
receipts under the contract may exceed $2,500.00. See 29 CFR 4.141.
(f) CWHSSA contract clauses
Any federal contract in excess of $100,000.00 that requires or involves the employment of
laborers and mechanics, including watchmen and guards, is subject to the overtime provisions
of CWHSSA. Such contracts, which may include SCA-covered contracts that employ many
classes of service employees that fall within the terms laborers and mechanics, should include
CWHSSA’s contract clauses set forth in 29 CFR 5.5(b). However, failure to incorporate the
CWHSSA contract clauses into a contract does not preclude CWHSSA coverage. See 29
CFR 4.181(b), 29 CFR 5.5(b), and FOH 15g02.
14b07 Child labor.
The SCA contains no child labor requirements. However, if the employer is covered under
the FLSA, the FLSA child labor provisions are applicable. See 29 CFR 570, 29 CFR 579,
and FOH 33.
14c EXEMPTIONS AND EXCLUSIONS
14c00 Statutory exemptions.
Section 7 of the Act specifically exempts from coverage seven types of contracts (or work)
which might otherwise be subject to the SCA. See 41 USC 356(1) -(7) and 29 CFR 4.115 -
.122.
(a) Any contract covered by the DBA for construction, alteration and/or repair, including
painting and decorating of public buildings or public works. See 41 USC 356(1) and 29 CFR
4.116.
(b) Any work required to be done in accordance with the provisions of the Walsh-Healey Public
Contracts Act (PCA). See 41 USC 356(2); 29 CFR 4.117; 41 USC 35, et seq.; and 41 CFR
50-201.
(c) Any 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. See 41 USC
356(3) and 29 CFR 4.118.
(1) This exemption applies only to contracts for carriage by a common carrier. A
transportation service contract is exempt only if the service is actually governed by
published tariff rates in effect pursuant to state or federal law. The contracts between
the government and the carrier would be evidenced by a government bill of lading
citing published tariff rates. See AAM No. 185.
(2) This exemption typically does not apply to contracts for ambulance or taxicab
services as they are usually not deemed common carriers or governed by published
tariff rates.
(3) Mail haul contracts are not exempt because mail is not considered to be freight under
federal law.

(4) Contracts principally for packing, crating, and warehousing of household goods are
also not exempt (even if performed by a common carrier) as the primary purpose of
the contract is the warehousing (i.e., storage) of household goods, while the local
hauling is a minor, incidental purpose of the contract. See FOH 14c05.
(d) Any contract for the furnishing of services by radio, telephone, telegraph, or cable companies
subject to the Communications Act of 1934, 47 USC 151, et seq. See 41 USC 356(4) and 29
CFR 4.119.
(1) This exemption does not apply to any contracts where such companies are furnishing
other kinds of services through the use of service employees.
(2) The Communications Act of 1934, has been amended by the Telecommunications
Act of 1996. See Pub. L. No. 104-104, 47 USC 151, et seq. (1996).
(e) Any contract for public utility services, including electric light and power, water, steam, and
gas. See 41 USC 356(5) and 29 CFR 4.120.
(1) This exemption is applicable to contracts for such services with companies whose
rates are regulated under federal, state, or local law governing operations of public
utility enterprises.
(2) Contracts covered by this exemption include those between federal electric power
marketing agencies and investor-owned electric utilities, Rural Electrification
Administration cooperatives, municipalities, and state agencies engaged in
transmission and sale of electric power and energy.
(3) Contracts entered into with public utility companies to furnish services through the
use of service employees, other than those subject to rate regulation, are not exempt
from the SCA.
(f) Any employment contract providing for direct services to a federal agency by an individual
or individuals. See 41 USC 356(6) and 29 CFR 4.121.
(g) Any contract with the U.S. Postal Service (USPS), the principal purpose of which is the
operation of postal contract stations. See 41 USC356(7) and 29 CFR 4.122.
14c01 Other exemptions.
Section 4(b) of the SCA as amended in 1972 authorizes the Secretary (delegated to the
Administrator of the Wage and Hour Division (Administrator)) to provide such reasonable
limitations and to “make such rules and regulations allowing reasonable variation, tolerances,
and exemptions to and from any or all provisions of this [Act (other than Section 10)], but
only in special circumstances where [it is determined that] such limitation, variation,
tolerance, or exemption is necessary and proper in the public interest or to avoid the serious
impairment of government business, and is in accord with the remedial purpose of this [Act]
to protect prevailing labor standards.” See 41 USC 353(b) and 29 CFR 4.123.
(a) The following types of contracts have been exempted from all of the provisions of the SCA
pursuant to section 4(b):

(1) USPS contracts entered into with common carriers for the carriage of mail by rail, air
(except air star routes), bus, and ocean vessel on regularly scheduled runs where the
revenue received for the carriage of the mail is insubstantial. See 29 CFR
4.123(d)(1).
(2) USPS contracts entered into with individual owner-operators of vehicles for
transportation of mail where it is not contemplated at the time the contract is made
that the owner-operator will hire any service employee except for brief periods of
time such as vacation, or for unexpected contingencies or emergency situations such
as illness or accident. Application of this exemption depends on conditions existing
at the time the contract is made. If the criteria for the exemption have been met, then
SCA wage determination requirements would not apply to anyone subsequently
engaged in the performance of the contract services during the term of the contract
for reasons within the limitations described in 29 CFR 4.123(d)(2). The term owner-
operator refers to an individual, not a partnership, two closely related individuals
(mom and pop operations), or a corporation.
(3) Contracts for the carriage of freight or personnel where such carriage is subject to
rates covered by section 10721 of the Interstate Commerce Act. See 29 CFR
4.123(d)(3).
(4) Prime contracts and subcontracts for the seven types of commercial services
identified immediately below where an employee’s work on a government service
contract represents a small portion of time when compared to the balance of time
spent on commercial work and where additional specific criteria for exclusion from
SCA coverage are satisfied. This exemption does not apply to solicitations and
contracts for any of the seven services listed below that are: (1) entered into under the
Javits-Wagner-O’Day Act, 41 USC 47; (2) for the operation of a government facility
or portion thereof (government-owned-contractor-operated) (but may apply to
subcontracts); or (3) subject to section 4(c) of the SCA, as well as options or
extensions under contracts subject to section 4(c) provisions. See 29 CFR
4.123(e)(2). The seven commercial services are:
a. Automotive (fleet of automobiles) or other vehicle (e.g., aircraft) normal
maintenance services (other than contracts to operate a government motor
pool) (see 29 CFR 4.123(e)(2)(i)(A))
b. Financial services involving the issuance and servicing of cards (including
credit cards, debit cards, purchase cards, smart cards, and similar card
services) for use by traveling federal employees or to make small purchases
of commercial items to meet the day-to-day needs of a federal agency (see 29
CFR 4.123(e)(2)(i)(B)
c. Contracts with hotels/motels for conferences of limited duration (e.g., 1 to 5
days) that may include lodging, meals, and space (e.g., conference rooms) as
part of the contract (this exemption does not cover contracts for lodging on
an as needed or continuing basis (e.g., lodging for military recruits or for
employees attending training at a training center over a longer period of
time)) (see 29 CFR 4.123(e)(2)(i)(C))

d. Maintenance, calibration, repair, and/or installation (not subject to the DBA,
as provided in 29 CFR 4.116(c)(2) for all types of equipment where the
services are obtained from the manufacturer or supplier under a contract
awarded on a sole source basis) (see 29 CFR 4.123(e)(2)(i)(D)
e. Transportation by common carrier of persons by air, motor vehicle, rail, or
marine vessel on regularly scheduled routes or via standard commercial
services (e.g., City Pairs contracts) (does not include charter services) (see 29
CFR 4.123(e)(2)(i)(E))
f. Real estate services, including real property appraisal services related to
housing federal agencies or disposing of real property owned by the federal
government (see 29 CFR 4.123(e)(2)(i)(F))
g. Relocation services, including services of real estate brokers and appraisers,
to assist federal employees or military personnel in buying and selling homes
(which shall not include actual moving or storage of household goods and
related services) (see 29 CFR 4.123(e)(2)(i)(G))
(b) The following categories of service employees have a variation to the prevailing wage
requirements pursuant to section 4(b):
(1) Workers with disabilities
The SCA, like the FLSA, allows an employer to pay apprentices, student-learners,
workers with disabilities in competitive employment, and workers with disabilities in
rehabilitation facilities at subminimum monetary wages that are less than the
prevailing wages required by the wage determination. 29 CFR 4.6(o) instructs the
employer to follow the same conditions and procedures required for the employment
of such workers as are set forth in section 14 of the FLSA. This regulatory exception
is from the prevailing wage only. Employers are still required to pay the full fringe
benefit, or equivalent cash payment in lieu of providing fringe benefits, to service
employees with disabilities for the work performed. See 29 CFR 4.6(o)(1) and 29
CFR 4.152(c)(2). A subminimum monetary wage or commensurate wage will be
based upon the prevailing wage listed in the applicable SCA wage determination for
the classification of work to be performed on the contract. It will be determined by
the individual productivity of the workers with disabilities in proportion to the
productivity of experienced workers without disabilities who perform essentially the
same type, quality, and quantity of work. See SCA 29 CFR 4.6(o)(1) and 29 CFR
525.
(2) Apprentices
Apprentices will be permitted to work at less than the SCA 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 that is
recognized by DOL, or, if no such recognized agency exists in a state, under a
program registered with the Office of Apprenticeship, Employment & Training
Administration (ETA), DOL. The terms and conditions of the approved program will
be followed in the employment of apprentices. Wage rates paid apprentices must not
be less than the wage rate for their level of progress set forth in the registered

program, usually expressed as a percentage of the journeyworker’s rate in the
applicable wage determination. The allowable ratio of apprentices to journeyworkers
employed on the contract work must not be greater than the ratio permitted to the
contractor under the registered program. Any employee who is not registered as an
apprentice in an approved program must be paid the wage rate and fringe benefits
contained in the applicable wage determination for the journeyworker classification
of work actually performed. See 29 CFR 4.6(p).
14c02 Maintenance and repair of certain automatic data processing, scientific, medical, office,
and business equipment.
(a) Pursuant to section 4(b) of the SCA, the Secretary has exempted from all provisions of the
Act contracts which are principally for the maintenance, calibration, and/or repair of:
(1) Automatic data processing equipment and office information/word processing
equipment
(2) Scientific equipment and medical apparatus or equipment where the application of
microelectronic circuitry or other technology of at least similar sophistication is an
essential element
(3) Office/business machines not otherwise exempt under (1) above, where such services
are performed by the manufacturer or supplier of the equipment
(b) This exemption is limited to the servicing of only the listed items of equipment furnished to
the government that are also furnished commercially to the general public. The contract
services must be furnished at catalog or market prices, and the contractor must utilize the
same compensation plan for service employees performing on government work as it uses for
its employees who service such equipment for commercial customers. The contractor must
certify to all of these conditions in the contract. In addition, the contracting officer is
required to make an affirmative determination that the conditions of the exemption have been
met prior to contract award. See 29 CFR 4.123(e)(1).
14c03 Carpet installation.
(a) Section 7(1) of the SCA exempts from coverage contracts for construction, alteration, and/or
repair, including painting or decorating, of public buildings or public works which are subject
to the DBA. See 29 CFR 4.116. Where carpet laying is performed as an integral part of, or
in conjunction with, new construction, alteration, or reconstruction of a public building or a
public work, as opposed to routine maintenance, the DBA would be applicable.
(b) Where the installation of carpeting is performed as a separate contract and is not an integral
part of either a construction project or incidental to a supply contract, the installation work
would be subject to the SCA.
14c04 Overhaul and modification of aircraft and other equipment.
(a) Section 7(2) of the SCA exempts from its provisions “any work required to be done in
accordance with the provisions the Walsh-Healey Public Contracts Act.” See 41 USC 356(2)
and FOH 14c00(b).

(b) The regulations provide detailed guidelines for delineating when contracts for major overhaul
of equipment would be considered remanufacturing subject to the PCA rather than the SCA.
Complete or substantial teardown and overhaul of heavy construction equipment, aircraft,
engines, etc., where the government receives a totally rebuilt end item with a new (or nearly
new) life expectancy resulting from processes similar to original manufacturing, will
normally be considered remanufacturing subject to the PCA so long as the work is performed
in a facility owned and operated by the contractor. Contracts for routine maintenance or
repair, inspection, etc., continue to be subject to the SCA. See 29 CFR 4.117.
(c) Contracting agencies are required to initially determine whether work to be performed under
a proposed contract would involve principally remanufacturing work or service work based
on the guidelines, and incorporate the appropriate PCA or SCA labor standards clauses into
the contract prior to soliciting bids. Application of the SCA or PCA to any type of contract
not discussed in the regulations will be decided on a case-by-case basis by the Administrator.
See 29 CFR 4.117(b)(4).
14c05 Storage and local drayage of household goods.
(a) Contracts for the carriage or transportation of goods or personnel must be actually governed
by published tariff rates for such carriage in order for the section 7(3) exemption to apply.
An administrative exemption has also been provided for certain contracts where such
carriageis subject to section 10721 of the Interstate Commerce Act. See 41 USC 356(3), 29
CFR 4.118, 29 CFR 4.123(d)(3), and FOH 14c00(c).
(b) The section 7(3) exemption does not apply where the principal purpose of the contract is
packing, crating, handling, loading, and/or storage of goods prior to, or following, line-haul
transportation to the ultimate destination. The fact that substantial local drayage to and from
the contractor’s establishment may also be required does not alter the fact that the principal
purpose of such a contract is other than the carriage of freight. However, if a firm has a
separate contract for transportation subject to a published tariff rate, the section 7(3)
exemption would apply to that contract. See 29 CFR 4.118 and FOH 14c00(c).
14c06 Shipbuilding, alteration and repair, as distinguished from maintenance and/or cleaning.
(a) The building, alteration, and repair of ships under government contract is work performed
upon public works and is within the section 7(1) exemption (i.e., such work is DBA-covered,
except as provided in (b) below). Thus, for example, the SCA will not apply to contracts for
the alteration and repair of merchant ships let by the Maritime Administration. See 41 USC
356(1).
(b) A contract for the construction, alteration, furnishing, or equipping of a naval vessel (e.g.,
U.S. Navy (including U.S. Coast Guard vessels)), is within the section 7(2) exemption for
work subject to the PCA. See 10 USC 7299 and 41 USC 356(2).
(c) A contract that calls principally for the maintenance and/or cleaning, rather than alteration or
repair, of a ship or naval vessel, is a service contract within the meaning of the SCA. See
15d11.
14c07 Contracts which have as their principal purpose the procurement of a type of service
where service employees will not be used.

(a) Coverage of the Act does not extend to contracts for services to be performed exclusively by
persons who are not service employees (i.e., persons who qualify as bona fide executive,
administrative, or professional personnel as defined in the FLSA regulations found at 29 CFR
541). For example, a contract for professional services performed essentially by bona fide
professional employees, with the use of service employees being only a minor factor in
contract performance, is not covered by the SCA. However, a contract for professional
services that requires the use of service employees to a significant or substantial extent (in
terms of number of employees or hours worked) is covered by the SCA, even though
professional employees may be used in the performance of the contract. See 41 USC 357(b),
29 CFR 4.113(a)(3), 29 CFR 4.156, and FOH 14b05.
(b) In practice, a 10 to 20 percent guideline has been used to determine whether there is more
than a minor use of service employees. See preamble at 48 FR 49736, 49743 -44 (October
27, 1983).
(c) Coverage of the Act will not extend to contracts where it is contemplated that the services
will be performed individually by the contractor, and the contracting officer knows when
advertising for bids or concluding negotiations that service employees will in no event be
used by the contractor in providing the contract services. See 29 CFR 4.113(a).
14d COVERED SCA CONTRACTS
The SCA applies to a wide variety of contracts. The SCA does not define or limit the types
of services that may be contracted for under a contract entered into by the U.S. or DC. See 41
USC 351(a) and 29 CFR 4.110.
14d00 Beneficiary of contract services: concessionaires, etc.
(a) Where the principal purpose of a government contract is to furnish services through the use of
service employees, the contract is subject to the SCA regardless of who is the direct
beneficiary of the services, or the source of the funds from which the contractor is paid for
the service, and irrespective of whether the contractor performs the work in its own
establishment, on a government installation, or elsewhere. The fact that the contract requires
or permits the contractor to provide the services directly to individual government personnel
as a concessionaire rather than through a contracting agency does not negate SCA coverage.
See 29 CFR 4.133(a).
(b) An administrative exemption is provided in 29 CFR 4.133(b) for certain concession contracts,
such as those entered into by the National Park Service, including National Forests and in the
National Wildlife Refuge System, which are principally for the furnishing of food, lodging,
automobile fuel, souvenirs, newspaper stands, and recreational equipment to the general
public, as opposed to furnishing such services to the U.S. government or its personnel. This
exemption does not affect a concession contractor’s obligation to comply with the labor
standards provisions of any other statutes such as the CWHSSA, DBA, and FLSA. See 29
CFR 4.133(b).
(c) Questions arise in distinguishing between a contract whose principal purpose is the furnishing
of services through the use of service employees (subject to the SCA) and a contract which is
not for the purpose of procuring services, but rather only sets forth general conditions under
which persons desiring to transact business with individuals on government installations may
enter and do so. Such agreements are not subject to the SCA.

(1) For example, where the concession contract provides for the use of government space
or equipment on the installation for the activity involved, or prescribes to a
significant extent conditions relating to prices, performance, and quality or type of
service, the contract would generally be considered to have as its principal purpose
the furnishing of services desired by the government for its personnel, and be subject
to the SCA. See 29 CFR 4.133(a).
(2) In contrast, SCA coverage would not be asserted on a concession contract or
agreement which merely requires a contractor to comply with general police
regulations designed to control traffic, maintain order, and suppress nuisances. SCA
coverage would not be asserted where the requirements imposed by the contract or
agreement on the contractor are limited to such matters as restricting solicitation or
pick-up practices to specified areas on the installation, restricting hours of operation,
requiring observance of speed limits, or other rules and regulations generally
applicable to those permitted to do business on a government installation. Also,
absent other evidence that the contract’s purpose is to secure services, SCA coverage
will not be asserted by reason of inclusion in the contract of requirements to ensure
the responsibility of the contractor such as bonding or licensing requirements.
14d01 Vending machine concession agreements.
(a) If a vending machine contractor is obligated to furnish, install, stock, and service the vending
machines; maintain such machines in efficient working order; make any necessary repairs;
and maintain them in a clean, attractive, orderly, and sanitary condition; the contract would
be subject to the SCA. Under such a contract, the contractor’s function is primarily that of
furnishing a service, rather than a mere sale of supplies since it contemplates a continuing use
of service employees to carry out the contract. The question of who owns the items available
from the machines at the time a purchase is made is immaterial to the application of the SCA.
(b) If a contractor has an agreement as described in (a) above where a continuing use of service
employees is involved, the delivery route personnel and any employees performing any
servicing of the machines would be covered by the SCA. Additionally, it is the position of
WH that the production employees’ work involves the performance of duties necessary to the
accomplishment of the contract and such employees must be paid not less than the minimum
monetary wage required by Section 2(b) of the Act. See 29 CFR 4.153.
(c) Where the government enters into either a leasing or rental/purchase agreement with regard to
vending machines under which the government agency stocks and services the machines with
the contractor merely delivering the goods to a designated storage area, such an agreement is
not subject to SCA.
14d02 Exploratory drilling.
Contracts for subsurface exploration, which have as their principal purpose the furnishing of
technical information, together with soil samples and rock cores, and/or a record to the
government of what was encountered during subsurface drilling, are subject to the SCA if
such drilling operations are not directly connected with the construction of a public work (in
which case they would be DBA covered). See FOH 15d05.
14d03 Gathering and processing of geophysical and seismic data.

Where the principal purpose of a contract is to gather, compile, analyze, and report
geophysical and seismic data, such contracts are covered by the SCA even though certain
tangible end items (paper, maps, or manuscripts) may result from the intelligence,
information, and labor service. See 29 CFR 4.131(a) and (e). Thus, while professional
services may be involved and individual employees may be exempt under 29 CFR 541, the
principal purpose of such contracts is to provide services which could not be furnished
without a significant number of logistic support service workers to carry out the survey work.
See 29 CFR 4.130(a)(21) and FOH 14c07.
14d04 Surveying and mapping services.
Contracts for surveying and mapping services for transmission lines, highways, dams, etc.,
are subject to the SCA, even if they are preliminary to construction. Such contracts would
not be subject to the SCA if they are directly related to construction (instead, they would be
DBA covered). See 29 CFR 4.130(a)(46).
14d05 Contracts with hotels, motels, and restaurants for lodging and meals.
(a) A contract between the government and a hotel or restaurant for furnishing of lodging and/or
meals is a service contract within the meaning of the SCA.
(b) The various branches of the military issue chits to military personnel so that meals, lodging,
or transportation may be obtained. The name of the vendor is left blank and the chit may be
exchanged for overnight lodging, meals, or transportation. If there is no general contractual
agreement between the government and a particular establishment for the provision of these
services, SCA coverage will not be asserted.
(c) Under the commercial services exemption, food and lodging contracts at hotels and motels
for meetings and conferences of limited duration (1 to 5 days) are excluded from SCA
requirements if certain criteria are met. See 29 CFR 4.123(e)(2)(i)(C) and FOH
14c01(a)(4)(c).
14d06 Management of repossessed properties.
Federal Housing Administration (FHA), Department of Housing and Urban Development,
management contracts with real estate brokerage firms calling for the brokers to perform
services and to furnish materials and labor in connection with the management, operation,
repair, maintenance, and rental of properties repossessed by FHA, are subject to the SCA.
Typical broker contracts contain authorization to employ a variety of service employees,
including classifications such as rental clerk, maintenance supervisor, maintenance personnel,
janitor, security guard, and pool attendant.
14d07 Contracts with states and political subdivisions.
A state or political subdivision may obtain a federal service contract and undertake to
perform it with state or municipal employees; for example, police, fire, or trash removal
services. The SCA does not contain an exemption for contracts performed by state or
municipal employees. Thus, the SCA will apply to contracts with states or political
subdivisions in the same manner as to contracts with private contractors. See 29 CFR 4.110.
14d08 Demolition, dismantling, and removal of government property.

(a) Property demolition, dismantling, and removal contracts which involve demolition of
buildings or other structures are subject to the SCA when their principal purpose is the
furnishing of dismantling and removal services, and no further construction at the site is
contemplated (if further construction were contemplated, the contract would be subject to the
DBA), even though the contractor may receive salvaged materials. See 29 CFR 4.116(b), 29
CFR 4.131(f), and FOH 15d03.
(b) If the principal purpose of a demolition contract is the sale of material, and services provided
thereunder are incidental to the sale, the contract would not be covered by the SCA.
(c) Asbestos or paint removal performed as a prelude to or in conjunction with a contract for the
demolition of a public building or a public work would be subject to the SCA, if subsequent
construction on the site is not contemplated. See 29 CFR 4.131(f).
14d09 Contracts for disaster relief.
The SCA applies to cleanup, debris removal, or damage assessment contracts awarded by a
federal agency. The U.S. Army Corps of Engineers, on behalf of the Federal Emergency
Management Administration (FEMA), awards cleanup and assessment contracts in disaster
areas. FEMA, too, may award service contracts following a disaster or in an emergency
situation.
14d10 Contracts for scheduled or routine maintenance of building systems.
The SCA applies to contracts for scheduled or routine maintenance of building systems,
including such operations as filter changing, oiling and greasing, gas or fluid replacement or
loading, and cleaning. Such contracts are generally awarded on an annual basis calling for
scheduled maintenance or troubleshooting (inspection) checks throughout that year. See 29
CFR 4.117(b)(3).
14d11 Contracts for intermittent labor services.
The SCA applies to all contracts, purchase orders, or agreements, whether written or oral,
which have as their principal purpose the furnishing of services through the use of service
employees. See 29 CFR 4.110. An as needed agreement with a contractor, under which
arrangements are made for individual calls or orders for intermittent labor services,
constitutes a contract in an indefinite amount. The individual calls or orders under this
arrangement are subject to the wage determination provisions of section 2(a) of the Act. The
particular form of a contractual arrangement is immaterial, and contract amount is not
determined by the amount of any individual call. See 29 CFR 4.142(a) and (b).
14d12 Furnishing services involving more than use of labor.
(a) If the principal purpose of a contract is to furnish services through the use of service
employees, the SCA will apply even though the furnishing of non-labor items (such as
tangible items to be supplied to the government) may be an important element in the
furnishing of services called for in the contract. See 29 CFR 4.131(a).
(b) Examples of covered contracts to furnish services through the use of service employees
where the furnishing of non-labor items are an important element of the contract:

(1) Contracts for the maintenance and repair of typewriters that require the contractor to
furnish typewriter parts as the need arises in performing the contract services does
not change the principal purpose of the contract, which is to furnish maintenance and
repair services through the use of service employees. See 29 CFR 4.131(b).
(2) Contracts to supply a government agency with freshly laundered items on a rental
basis are covered as the principal purposes of these contracts are to launder and
deliver tangible items through the use of service employees who launder and deliver
such items. See 29 CFR 4.131(c).
(3) Contracts for the plowing and reseeding of a park area are covered service contracts
even though the contractor is required to rent and furnish equipment. In general
contracts under which the contractor agrees to provide the government with vehicles
or equipment on a rental basis with drivers or operators for the purpose of furnishing
services are covered by the SCA. See 29 CFR 4.131(d).
(4) Contracts for data collection, surveys, computer services, and the like are covered
contracts, even though the contractor may be required to furnish tangible items such
as written reports or computer printouts, as such items are considered to be of
secondary importance to the services procured under the contract. See 29 CFR
4.131(e).
(5) Contracts for property removal or property disposal where the contractor receives
tangible items in lieu of or in addition to monetary consideration are covered where
the facts show that the furnishing of such services is the principal purpose of the
contract. See 29 CFR 4.131(f) and FOH 14e08.
14d13 Services and other items to be furnished under a single contract.
The SCA applies only where a contract as a whole is principally for the furnishing of
services, as opposed to line items for specific work in a contract. The SCA reference to bid
specification refers to the advertised specifications in a solicitation for bids rather than a
separate line item or work requirement within a contract. See 29 CFR 4.132.
14e CONTRACTS NOT SUBJECT TO SCA PROVISIONS
14e00 Government-owned-contractor-operated prime contracts.
A federal agency may enter into a contract in which the prime contractor is delegated the
authority to act for and on behalf of the federal agency (i.e., as an agent of the U.S.
government). In such situations, if the principal purpose of the prime contract is not the
furnishing of services through the use of service employees (e.g., a contract to totally operate
or manage a federal installation or facility or a federal program), then the prime contract
would not be subject to the SCA. Such contracts are commonly referred to as GOCO
contracts. When such a prime contractor acting as an agent of the government pursuant to
delegated authority enters into a subcontract, which has services as its principal purpose, then
such subcontract would be covered by the SCA. See 29 CFR 4.107(b).
14e01 Federally-assisted contracts for services.

Service contracts entered into by state or local public bodies with contractors are not deemed
to be entered into by the U.S. merely because such services are paid for with funds received
from the federal government as a grant under a federal program. For example, contracts let
under the Medicaid program which are financed by federally-assisted grants to the states, and
contracts which provide for insurance benefits to a third party under the Medicare program,
are not subject to the SCA. See 29 CFR 4.107(b) and 29 CFR 4.134(a).
14e02 Medical and related services.
(a) Contracts with hospitals for patient care
The SCA is not applicable to contracts with hospitals for the care of patients. For example,
the SCA would not be applicable to agreements with the Social Security Administration
under which patient care services are furnished by hospitals participating in the Medicare
program. See 29 CFR 4.107(b).
(b) Contracts with nursing homes
The SCA does not apply to nursing homes solely by reason of their participation in the
Medicare or Medicaid programs. See FOH 14e02(a) above. Contracts between the U.S.
Department of Veterans Affairs (VA) and nursing homes, however, are covered.
(c) Contracts for ambulance services
Generally, the SCA is not applicable to ambulance services furnished pursuant to contracts
for Medicare or Medicaid. Federal contracts for the furnishing of ambulance services (e.g.,
VA hospitals), however, are covered by the SCA as the exemption provided by section 7(3)
of the Act does not apply. See 29 CFR 4.118.
14e03 (Reserved.)
[06/23/2022]
14e04 Job Training Partnership Act contracts.
(a) The SCA is not applicable to contracts which provide for the training and teaching of
vocational skills to the disadvantaged, such as those operated in connection with the Job
Training Partnership Act (which replaced the Comprehensive Employment and Training Act)
or other DOL, ETA programs.
(b) Where a contractor providing training under such a program also enters into a contract with a
government agency for the furnishing of services (e.g., janitorial) any trainees who are
performing the services called for in the service contract are subject to the SCA.
14e05 Contracts with the National Guard.
(a) Contracts for the operation and maintenance of state National Guard training and logistical
facilities are generally not subject to the SCA. While the National Guard Bureau provides
full or partial funding for these contracts, services are provided directly to the states and not
to the U.S. government. The states independently obtain services to support training and

logistical facilities for each state National Guard unit. Contracts are signed by state officials
and are administered by the individual states according to state contracting procedures.
(b) Contracts entered into between the National Guard Bureau, Department of Defense (DOD),
and state National Guard units that provide for the acquisition of services for the direct
benefit or use of the National Guard Bureau and signed by a U.S. Property and Fiscal Officer
would be subject to the SCA.
14e06 Contracts between a federal or DC agency and another such agency.
Prime contracts between a federal or DC agency and another such agency are not subject to
the SCA. Subcontracts awarded under prime contracts between the Small Business
Administration and another federal agency pursuant to various small business/minority set-
aside programs, such as the section 8(a) program, are covered by the SCA. See 29 CFR
4.110.
14e07 Government contracts whose principal purposes are something other than services.
(a) Contracts for lease of building space for government occupancy
Where the government contracts for a lease of building space for occupancy and the building
owner furnishes general janitorial and other building services on an incidental basis through
the use of service employees, the leasing of the space rather than the furnishing of building
services is the principal purpose of the contract, and the SCA would not apply. See 29 CFR
4.134(b).
(b) Contracts for the rental of parking space
This type of contract is outside the coverage of the SCA as the government agency is simply
given a lease or license to use the contractor’s real property. Such a contract can be
distinguished from contracts for storage of vehicles which are delivered into the possession or
custody of the contractor, who will provide the required services including the parking or
retrieval of the vehicles. See 29 CFR 4.134(b).
14e08 Federal timber sales contracts.
(a) Timber sales contracts generally are not subject to the SCA because the services normally
provided under such contracts are considered incidental to the principal purpose of the
contract (i.e., the sale of timber). See 29 CFR 4.131(f).
(b) The SCA would apply to service contracts that are principally for some purpose other than
the sale of timber (e.g., the clearing of land to open up the forest for public use, or the
removal of diseased or dead trees).
14e09 Storage and/or sale of surplus farm commodities.
Department of Agriculture contracts or agreements (usually designated as Uniform
(commodity name) Storage Agreement) awarded by or on behalf of the Commodity Credit
Corporation pursuant to various price support programs for the storage, handling, and/or sale
of surplus farm commodities, including grain, cotton, tobacco, seeds, naval stores, dairy
products, etc., by commercial warehouse establishments, are exempt from the PCA (See

section 12 of Rulings & Interpretations Number 3), and a CWHSSA exemption has been
granted for most of these contracts. See 29 CFR 5.15(b)(2). WH has taken no position on the
application of the SCA to such contracts.
14f APPLICATION OF THE SCA TO TYPES OF EMPLOYEES
14f00 Airplane and rotorcraft pilots and co-pilots.
Pilots and copilots are service employees within the meaning of the SCA and laborers and
mechanics within the meaning of the CWHSSA when they are performing in that capacity on
covered contracts. While the work of a pilot requires dexterity, coordination, a degree of
physical strength, and other physical and mental processes necessary to control an airplane or
rotorcraft in flight, such work does not meet the primary duty requirement for exemption as a
bona fide executive, administrative, or professional employee. See 29 CFR 5.15(d)(3) for the
variation from the CWHSSA overtime requirements for pilots and copilots performing on
contracts for firefighting or suppression and related services.
14f01 Employees performing grooming services under concessionaire contracts.
Employees performing work involving the grooming of people under concessionaire
contracts for such services entered into with unappropriated fund instrumentalities of the U.S.
are service employees under the SCA. This includes, among others, barbers, shoe-shiners,
beauticians, and manicurists. See FOH 14d00. (Such employees are also laborers and
mechanics for purposes of the CWHSSA.)
14f02 Flight instructors: contracts for flight training.
Flight instructors, who qualify for exemption as teachers under 29 CFR 541.303, are not
service employees for purposes of the SCA. See FOH 22.
14f03 Air traffic control instructors.
To be teachers and consequently exempt from coverage under the SCA pursuant to section
8(b) of the Act as a professionally exempt teacher under the FLSA, air traffic control
instructors must be Federal Aviation Administration ( FAA) “Certified Professional
Controllers” in accordance with Regulations 14 CFR Part 65, must successfully complete the
FAA Facility Instructor Training Course furnished by the FAA Academy, and must, as their
primary duty, deliver instruction by using FAA-certified curriculum in classes and
laboratories funded by the FAA. See 29 CFR 541.303, 29 CFR 4.113(a)(2) -(3), and WHD
Opinion Letter FLSA (June 2, 2004) to the FAA.
14f04 Computer-related occupations.
Computer systems analysts, computer programmers, software engineers, or other similarly
skilled workers in the computer field who qualify for exemption under 29 CFR 541.400
would not be service employees for purposes of the SCA. See 29 USC 213(a)(1) and (17),
and FOH 22.
14g SPECIAL RULINGS AND INTERPRETATIONS
14g00 Segregation under SCA: covered and non-covered work.

If a contractor desires to segregate covered work from non-covered work under the SCA for
purposes of applying the SCA wage determination, the contractor must identify such covered
work accurately in the records or by other means. In this regard, an arbitrary assignment of
time on the basis of a formula, as between covered and non-covered work, is not sufficient.
However, if the contractor does not wish to keep detailed hour-by-hour records for
segregation purposes under the SCA, records can be segregated on the wider basis of
departments, work shifts, days, or weeks in which covered work was performed. For
example, if on a given day no government work was performed by a laundry under its
contract, this day can be segregated and shown in the records. Similarly, if on a given day
only noontime meals were provided by a restaurant under a covered contract to furnish meals
to military personnel, employment on the night shift could be segregated. See 29 CFR 4.169
and 29 CFR 4.179.
14g01 Segregation: employees performing work in more than one classification.
(a) If an employee performs work which can be clearly identified and segregated under more
than one job classification listed in the applicable wage determination (i.e., working in
different capacities in the performance of the contract), then the time spent by the employee
in work properly related to each classification should be segregated and paid according to the
wage rate specified for each classification. If the contractor cannot provide affirmative proof
(employer records) of the hours spent in each class of work, then the contractor must pay the
employee the highest of such rates for all hours worked in the workweek. See 29 CFR 4.169.
(b) Working in different capacities applies only to work in different job classifications (e.g.,
janitors and window cleaners as defined in the SCA Directory of Occupations), not to levels
within the same job classification (e.g., security guards I and II as defined in the SCA
Directory of Occupations). Thus, for example, segregating work performed by an employee
as security guard I and II would not be permitted. In such a situation the employee must be
paid the highest rate listed in the wage determination for security guards (i.e., security guard
II rate) for all hours worked in the workweek on the covered contract.
14g02 Security guard services: compensability of training time.
(a) Where a covered contract dictates that persons are required to complete certain training
before performing on the contract as security guards, such persons are considered employees
of the contractor while undergoing such training and time spent in training is compensable
hours worked as described below. Whether this training is of limited application or more
general in nature (e.g., state-mandated training courses), it cannot be considered voluntary
within the meaning of 29 CFR 785.27, since the contractor is obligated to provide employees
in order to meet the stipulations in the contract which require the training. Likewise, time
spent in training that is specifically required by a covered contract is compensable hours
worked even if the training is performed prior to formal contract award or the trainee
subsequently is not hired as a contract security guard. The training time for such employees
would be compensable work time, but not at the compensation level provided in the
applicable wage determination as the contract services for which wage rates and fringe
benefits are specified in the applicable wage determination are not being performed. The
contractor must pay wages for this training time at rates not less than the minimum wage
specified under section 6(a)(1) of the FLSA and section 2(b)(1) of the SCA, unless otherwise
specified in the applicable wage determination. See 29 CFR 4.146.

(b) Time spent in on-the-job training (i.e., after start of contract performance at the job site) must
be paid for at not less than the SCA minimum monetary wage/fringe benefit specified for the
guard classification listed in the wage determination included in the contract.
14g03 Mail haul contracts hours worked issues.
(a) The basic principles for determining hours worked by a truck driver on duty for 24 hours or
more as set forth in FOH 31b09 and FOH 31b12 are applicable to SCA mail haul truck
drivers.
(b) Time during which an employee is considered on or off duty by the Department of
Transportation (DOT) is not governed by the same principles as apply under the FLSA. The
DOT’s regulations are concerned primarily with the safe operation of the vehicle and not
compensable hours worked. Thus, the off-duty time required by DOT for safety purposes
may exceed the amount of sleep time or other non-working time that may be deducted
pursuant to FOH 31b09 or FOH 31b12.
(c) The principles set forth in 29 CFR 785.14 -.22 must be applied to determine whether layover
or breakdown time is hours worked. Where such time is compensable hours worked and
occurs on an SCA contract, it must be paid at a rate not less than the applicable SCA wage
determination rate for drivers since such time is intrinsically related to contract work. If a
contractor chooses to pay for layover and breakdown time, which would otherwise not be
considered hours worked under FLSA 29 CFR 785, for the purpose of not breaking a driver’s
continuous tour of duty on tours of 24 hours or more, then such time must also be paid at the
applicable SCA wage determination rate.
(d) The WHD considers the totality of the circumstances in determining whether layover or
breakdown time is hours worked. Small remote towns with few amenities often do not
provide an opportunity for an employee to use the time effectively for his own purposes. In
such cases, the layover or breakdown time would be considered hours worked and
compensation must be no less than the SCA wage determination rate.
(e) Overtime exemption applicable to mail haul contracts
Section 13(b)(1) of the FLSA provides an overtime exemption for employees who are within
the authority of the Secretary of Transportation to establish qualifications and maximum
hours of service pursuant to section 204 of the Motor Carrier Act of 1935. On June 14, 1972,
the DOT published a notice in the Federal Register (37 FR 11781) asserting its power to
establish qualifications and maximum hours of service for contract mail haulers who operate
in interstate or foreign commerce.
The FLSA’s section 13(b)(1) exemption may therefore apply to certain employees of contract
mail haulers, provided the tests for that exemption are met. See 29 CFR 782.8(b). Note:
however, that drivers, driver’s helpers, loaders, and mechanics, whose duties affect the safety
of operation of a vehicle engaged in transportation on public highways in interstate or foreign
commerce and who would otherwise satisfy the exemption, are nonetheless required to be
paid overtime compensation if the vehicle used for mail haul purposes weighs 10,000 pounds
or less. This is known as the small vehicle exception to the motor carrier exemption. The
small vehicle exception applies and overtime pay is due to an employee in any workweek
when the employee’s work, in whole or in part, affects the safety of operation of a small
vehicle. The phrase “in whole or in part” means an employee who performs such duties

involving small vehicles for the entire week or part of the week must receive overtime pay for
hours worked over 40 in that workweek.
Note: the small vehicle exception will not apply to certain vehicles A) designed or used to
transport more than 8 passengers (including driver) for compensation, B) designed or used to
transport more than 15 passengers (including driver) and not used to transport passengers for
compensation, or C) used in transporting hazardous material requiring placarding under
regulations prescribed by the Secretary of Transportation. See Fact Sheet #19 and FAB No.
2010-2.
(f) In addition, the CWHSSA exempts all federal contracts “for transportation by land, air or
water” from its provisions for overtime pay. The overtime provisions of this statute would
also not apply to employees working on USPS mail hauling contracts. See 40 USC
3701(b)(3), FOH 15i00(2), and FOH 15i01(c).
(g) Applicable wage rate
The wage rate applicable to mail haul truck drivers is based upon the point of origin of the
route required by the contract. This point of origin is commonly referred to as the head out
point. The head out rate is applicable to all drivers who work on the contract regardless of
where they may start their portion of the route.
14g04 Cost of furnishing and maintaining uniforms.
(a) Employees performing on most SCA food service, security guard service, nursing home
service, and janitorial service contracts are required by the employer, by the employer’s
government contract, by law, or by the nature of the work, to wear clean uniforms and/or
related apparel or equipment. In such situations the financial cost of furnishing and
maintaining (except in the case of wash and wear uniforms, see FOH 14g04(d) below) clean
uniforms or equipment is considered to be a business expense of the employer and may not
be imposed upon the employees if to do so would reduce their wages below the FLSA
minimum wage or SCA prevailing wage rate (or FLSA or CWHSSA overtime). Where the
minimum monetary wage (or overtime) is diminished below the required rate, the employer
must bear the cost of providing clean uniforms and equipment up to the amount of any such
deficiency. See 29 CFR 4.168(b).
(b) A determination of the cost of furnishing the uniforms (and related equipment) itself presents
no problem. If the employee is required to furnish the uniform, the actual cost incurred by
the employee shall be used to ascertain whether a minimum monetary wage or overtime
violation has occurred. The same is true where a commercial laundry or uniform rental
services is utilized. See 29 CFR 4.168(b) and FOH 30c12.
(c) Where uniform cleaning and maintenance is the responsibility of the employee, a contractor
may satisfy its wage obligation under the Act by reimbursing employees $3.35 per week or
$0.67 per day for such cleaning and maintenance. See 29 CFR 4.168(b)(1)(ii).
(d) There generally is no requirement that employees be reimbursed where the uniforms
furnished are made of wash and wear materials which may be routinely washed and dried
with other personal garments and require no special treatment such as daily washing, dry
cleaning, or commercial laundering. This limitation does not apply, however, where a
different provision has been set forth in the applicable wage determination. In the case of

wage determinations issued under section 4(c) of the Act for successor contracts, the amount
established by the parties to the predecessor CBA is deemed to be the cost of laundering
uniforms. See 29 CFR 4.168(b)(2).
14g05 Military base installation contracts.
Operations and maintenance contracts let by the military whose principal purpose is to
provide services may be subject to both the SCA and the DBA where there are substantial
and segregable amounts of construction. When it is unclear whether the work required is
SCA maintenance or DBA repair/painting, and where individual work orders have repair
work that requires less than 32 hours to complete or painting of less than 200 square feet, WH
will consider such work to be subject to the SCA. Work orders that exceed these amounts are
subject to the DBA.
14g06 Military housing privatization.
Maintenance services performed on military housing constructed or managed under the
Military Housing Privatization Initiative is not subject to the SCA as the contract is not
principally for services. See Administrator Letter dated December 20, 2006.
14h SCA WAGE DETERMINATION/CONFORMANCE PROCESSES
14h00 SCA wage determinations.
(a) The SCA wage determination sets forth the minimum monetary wages and fringe benefits
that contractors and their subcontractors must pay service employees working on covered
contracts. See 29 CFR 4.3(a).
(1) Wages are defined as monetary compensation provided to employees. They are
usually listed in the wage determination as hourly rates.
(2) The fringe benefits specified in the wage determination depend upon the type of
wage determination issued and the evaluation of source data used to develop the
wage determination.
(b) Most wage determinations are revised periodically, as new wage and benefit survey data
become available. If a wage determination is properly included in the contract at the time of
award, the contract does not need to be modified to include subsequent revisions to the wage
determination prior to completion of the first year of the contract. See 29 CFR 4.5(a)(2).
(c) Section 10 of the Act requires a wage determination to be made by WH for every covered
service contract in excess of $2,500 and employing six or more service employees. If five or
fewer service employees are employed under a contract, the contracting agency should obtain
a wage determination, and if one is available, incorporate it into the contract. WH is not
required by the Act to issue a wage determination for covered contracts that exceed $2,500
with five or fewer service employees, but the contracting agency should still seek to obtain
one. In instances where no wage determination has been issued for a service contract
involving five or fewer service employees, the contractor can pay no less than the minimum
wage required by section 6(a)(1) of the FLSA. See 29 CFR 4.2, 29 CFR 4.3(a), and 29 CFR
4.4(b)(1).

(d) Two bases on which SCA wage determinations are issued:
(1) Prevailing in the locality wage determinations set forth minimum monetary wages
and fringe benefits determined to be prevailing for various classes of service
employees in the locality of the service contract after giving due consideration to the
rates applicable to such service employees if directly hired by the government. See
29 CFR 4.51.
h. Rates are usually based on data collected by the Bureau of Labor Statistics
(BLS) under the National Compensation and Occupational Employment
Statistics Surveys.
i. Or, rates may be based on union dominance where a single rate is paid to a
majority (50 percent or more) of workers in a class of service employees
engaged in similar work in a particular locality. See 29 CFR 4.51(b).
(2) Section 4(c), or successorship, wage determinations set forth the wages and benefits,
including accrued and prospective increases, contained in CBAs reached as a result
of arm’s-length negotiations that were applicable to service employees employed on
predecessor contracts in the same locality. See 29 CFR 4.163.
a. For section 4(c) to be applicable, the predecessor contract must involve
substantially the same services being provided in the same locality. See 29
CFR 4.163(i).
b. The successor contractor is obligated to pay its service employees the CBA
rates whether or not the employees of the predecessor contractor are hired by
the successor contractor. See 29 CFR 4.163(a).
c. The provisions of section 4(c) are self-executing and failure to include the
CBA rates in the wage determination issued for the successor contract does
not relieve a successor contractor of the statutory requirements to comply
with the CBA rates. See 29 CFR 4.163(b).
d. Any interpretation of the wage and fringe benefit provisions of the CBA
where its provisions are unclear must be based on the intent of the parties to
the CBA provided that such interpretation is not violative of law. See 29
CFR 4.163(j).
e. The obligation of the successor contractor is limited to the wage and benefit
requirements of the predecessor contractor’s CBA and does not extend to
other items such as seniority, grievance procedures, work rules, overtime,
etc. See 29 CFR 4.163(a).
f. The successor contractor may satisfy the fringe benefit provisions of the
CBA by furnishing any equivalent combination of benefits or by making
equivalent or differential payments in cash in accordance with 29 CFR 4.177.
See 29 CFR 4.163(j).

g. Application of section 4(c) is not negated because the contracting authority
may change and the successor contract is awarded by a different contracting
agency. See 29 CFR 4.163(g).
h. The successorship provisions of section 4(c) apply to full term successor
contracts. Bridge or short-term interim contracts due to bid protest, default
by the predecessor contractor, temporary closing of facility, etc., are not
predecessor contracts for section 4(c) purposes and do not negate the
application of section 4(c)’s successorship provisions to the full term contract
awarded after the temporary interruption or hiatus. Contractors are required
to pay the predecessor contractor’s CBA rates during short-term interim
contracts. See 29 CFR 4.163(h).
i. Under section 4(c), the predecessor contractor’s existing CBA provides the
basis for the wage determination applicable to the successor contract. If the
CBA is no longer binding on the parties (e.g., as a result of union
decertification or a legitimate impasse recognized by the National Labor
Relations Act), the successorship requirements of section 4(c) would be
broken. The CBA rates would not apply to the successor contract, but would
continue to apply throughout the contract period during which the
decertification or impasse was reached.
j. Pursuant to section 4(b) of the SCA, a variation limits the self-executing
application of section 4(c) for new and changed CBAs entered into by the
incumbent contractor such that a new or changed CBA is not effective for
successorship purposes if:
1. in the case of a successor contract for which bids have been invited
by formal advertising, notice of the terms of the new or changed
CBA is received by the contracting agency less than 10 days before
the date set for bid opening (provided that the contracting agency
finds that there is not reasonable time still available to notify bidders)
or
2. for awards of successor contracts to be entered into pursuant to
negotiations or resulting from execution of a renewal option or
extension, notice of the terms of the new or changed CBA is received
by the contracting agency after the award of the successor contract,
and the start of contract performance is within 30 days of the award,
renewal option, or extension (however, if the contract does not
specify a start of performance date within 30 days from the award,
and/or performance of such procurement does not begin within this
30-day period, any notice of the terms of the new or changed CBA
received by the contracting agency not less than 10 days before
commencement of the contract will be effective for purposes of the
successor contract under section 4(c))
This variation will apply only if the contracting agency has given both the
incumbent contractor and its employees’ collective bargaining representative
written notification at least 30 days in advance of applicable estimated
procurement dates. Estimated procurement dates include bid solicitation, bid

opening, date of award, commencement of negotiations, receipt of proposals,
or the commencement date of a contract resulting from a negotiation, option,
or extension, as the case may be. See 29 CFR 4.1b(b).
k. There are two types of appeals that can be made concerning collectively
bargained rates where section 4(c) applies – based on substantial variance
issues, or based on issues concerning arm’s-length negotiations. Both types
of appeals are resolved based on administrative proceedings handled by an
Administrative Law Judge pursuant to 29 CFR 6, and/or the Administrative
Review Board pursuant to 29 CFR 8. See 29 CFR 4.10, 4.11, 4.163(c).
14h01 Obtaining SCA wage determinations.
Wage determinations can be obtained from the wdol.gov website (http://www.wdol.gov) by
the agency in two different ways. The agency has total discretion as to the method it will
follow.
(a) “e98” process (see 29 CFR 4.4(b)
(1) The e98 is an electronic application on the WDOL.gov website that contracting
agencies may use to request wage determinations directly from DOL WH. The
submission of an e98 requires the same general information as required by the SF 98.
(2) After a wage determination is sent to the agency, the e98 system continues to monitor
the request and if the applicable wage determination is revised in time to affect the
procurement, an amended response will be sent to the email address identified on the
e98.
(3) If the bid opening date for invitations for bid (IFB), or if contract commencement for
all other contract actions, is delayed by more than 60 days the contracting agency
must submit a revised e98.
(b) WDOL process (see 29 CFR 4.4(c)
(1) Agencies may use the WDOL website to select the proper wage determination for the
procurement. The WDOL website provides assistance to the contracting agency in
the selection of the correct wage determination. The contracting agency is fully
responsible for selecting the correct wage determination.
(2) Where the incumbent contractor furnishes services through the use of service
employees whose wages and benefits are the subject of one or more CBAs, the
contracting agency may prepare a wage determination referencing and incorporating
a complete copy of the CBA into the successor contract action.
(3) The contracting agency shall monitor the WDOL website to determine whether the
applicable wage determination has been revised. Revisions published on the WDOL
site or otherwise communicated to the contracting officer are applicable and to be
included in the contract if published or communicated within the following
timeframes:

a. For advertised procurement: 10 days or more before the date set for bid
opening
b. For negotiated procurement: before the award date if start of performance is
within 30 days of the award, or 10 or more days before commencement of
the contract if the contract does not specify a start of performance date within
30 days from the award and/or performance of such procurement does not
commence within this 30-day period (see 29 CFR 4.5(a)(2))
(4) If WH determines that the contracting agency failed to incorporate the SCA
stipulations and wage determination into the contract, or inserted an incorrect wage
determination to a specific contract, the contracting agency within 30 days of notice
from WH, will amend the contract to incorporate the SCA stipulations and/or correct
wage determination as determined by WH. See 29 CFR 4.5(c)(1).
(5) If a prevailing wage determination is not available on the WDOL website, the
contracting agency must submit an e98.
14h02 Conformability of classifications and wage rates.
(a) Conformance is the method used to establish wage rates for classes of service employees to
be employed on a covered service contract that are not listed on the wage determination
included in the contract (i.e., the work to be performed is not performed by any classification
listed in the wage determination). See 29 CFR 4.6(b)(2).
(1) Contractors should conform wage rates for any unlisted class of service employee
before such an employee performs any contract work and classify unlisted classes in
a manner that provides a reasonable relationship (i.e., appropriate level of skill
comparison) between the unlisted class and the classes listed in the wage
determination.
(2) Conformed wage rates must be paid to all employees in the affected class retroactive
to the date such employees commenced any contract work. Such rates are treated as
if the rates and classes had been included on the original wage determination issued
for the contract. See 29 CFR 4.6(b)(2)(v).
(3) Conformances may not be used to artificially subdivide classes already listed in the
wage determination. For example, a stock clerk as defined in the SCA Directory of
Occupations is the same job in terms of knowledge, skills, and duties as the shelf
stocker and store worker II. If a stock clerk was listed in the wage determination, a
conformance cannot be based on splitting the job into two jobs and establishing a
hybrid classification (e.g., shelf stocker and stock clerk II). See 29 CFR 4.152(c)(1).
(4) Where wage determinations list a series of levels within a job classification family
(e.g., engineering technicians I through VI), the lowest level listed for a job
classification family is considered to be the entry level and establishment of a lower
level through conformance is not permissible. A conformance cannot establish a job
level below the entry level listed in the wage determination. See 29 CFR 4.152(c)(1).
(5) Trainee classifications cannot be conformed. See 29 CFR 4.152(c)(1).

(6) Helper classifications in skilled maintenance trades (e.g., electricians, machinists,
automobile mechanics, etc.) cannot be conformed. Helper classifications in skilled
maintenance trades whose duties constitute separate and distinct jobs may be used if
listed in the wage determination. See 29 CFR 4.152(c)(1).
(b) Conformance procedures
(1) The contractor is required to provide a written report of a proposed conformance,
including information as to whether the employees involved or their authorized
representative agree or disagree with the conformed wage rates and fringe benefits, to
the contracting officer no later than 30 days after such unlisted class begins to
perform work on the contract. See 29 CFR 4.6(b)(2)(ii).
(2) The contracting officer, after reviewing the proposed conformance, is required to
submit a report that includes the agency’s recommendation to the National Office,
Division of Wage Determinations, Service Contracts Wage Determinations Branch
for review. See 29 CFR 4.6(b)(2)(ii).
(3) The branch will approve, modify, or disapprove the proposed conformance or render
a final determination within 30 days of receipt of the report or will notify the
contracting agency that additional time is necessary to review the report. See 29 CFR
4.6(b)(2)(ii).
(4) The branch will transmit the final determination to the contracting officer who is to
promptly notify the contractor of the action taken. The contractor is required to
furnish each affected employee with a copy of the conformance determination or post
it at the job site as part of the wage determination. See 29 CFR 4.6(b)(2)(iii).
(5) If the contracting agency does not agree to submit a conformance, the WHD may
initiate action pursuant to 29 CFR 4.6(b)(2)(vi) for a final determination of a proper
conformed classification, wage rate and/or fringe benefit.
(6) In the case of a contract modification, an exercise of an option or extension of an
existing contract, the conformance procedures provide an indexing procedure for
previously conformed classifications. A contractor can increase a previously
conformed rate by the average percentage increase between the rates listed in the
current wage determination for all classifications to be used on the contract and those
rates specified for the corresponding classifications in the previously applicable wage
determination without obtaining WH approval or agreement by the employees
involved, but must notify the contracting officer. See 29 CFR 4.6(b)(2)(iv)(B).
14i WAGE PAYMENT REQUIREMENTS
Subpart D of 29 CFR 4 (29 CFR 4.159- .186) contains the interpretations regarding minimum
monetary wages and fringe benefits under the SCA. FOH 14i and 14j supplement these
interpretations.
14i00 Wage payments to employees: general.
(a) Monetary wages specified under the SCA must be paid to employees promptly and in no
event later than one pay period following the end of the regular pay period in which such

wages were earned or accrued. A pay period under the SCA may not be of any duration
longer than semi-monthly. See 29 CFR 4.6(h) and 29 CFR 4.165(b).
(b) Wages due service employees must be paid free and clear and without subsequent rebate, or
kickback on any account, except deductions permitted by law. See 29 CFR 4.165 -.168.
(c) The Act makes no distinction, with respect to its compensation provisions, between
temporary, part-time, and full-time employees, and the wage determination minimum
monetary wages and fringe benefits apply, in the absence of an express limitation, equally to
such service employees engaged in work covered by the SCA. See 29 CFR 4.165(a)(2) and
29 CFR 4.176(a).
(d) If participation in a fringe benefit plan requires a contribution from the employee’s wages,
whether through payroll deduction or otherwise, the employee’s concurrence is necessary
before such payroll deduction can be made. See 29 CFR 4.168(a).
(e) A contractor cannot offset an amount of fringe benefits paid in excess of the fringe benefits
required under a wage determination in order to satisfy its minimum monetary wage
obligations, and vice versa. See 29 CFR 4.167, 29 CFR 4.170(a), and 29 CFR 4.177(a)(1).
14i01 Tipped employees.
(a) Tips may generally be included in wages of employees working on SCA contracts (such as at
military post barbershops, etc.) in accordance with section 3(m) of the FLSA and 29 CFR
531. See 29 CFR 4.6(q), 29 CFR 4.167, and FOH 30d.
(b) Although the current tip credit provided under the FLSA requires a cash payment of no less
than $2.13, the tip credit taken by an SCA contractor is limited to $1.34 per hour. In no event
shall the sum credited be in excess of the value of tips actually received by the employee.
The requirements for successor contractors under section 4(c) are different and are described
in (c) below. See 29 CFR 4.167.
(c) Where section 4(c) of the SCA applies, the use of FLSA section 3(m) tip credit must have
been permitted under the terms of the predecessor’s CBA in order for it to be utilized by the
successor in satisfying the SCA minimum monetary wage obligations. See 29 CFR 4.163(k).
14i02 SCA contractors and FLSA exemptions.
In some cases, a covered service contract may be awarded to an establishment whose
employees otherwise would be exempt from the minimum wage provisions of the FLSA
pursuant to section 13(a). The FLSA at section 6(e)(1) negates the exemption provisions of
FLSA section 13 (except sections 13(a)(1) and 13(f)) and requires payment of the FLSA
minimum wage to all of a service contractor’s employees whose pay is not governed by the
SCA or to whom FLSA section 13(a)(1) does not apply. See FOH 30e.
14j FRINGE BENEFITS PAYMENT REQUIREMENTS
14j00 General provisions.

(a) The fringe benefits that an employer is required to furnish employees performing on a
covered contract will be specified in the applicable wage determination included in the
contract documents.
(1) Any administrative costs (e.g., recordkeeping costs associated with payroll
administration) incurred by a contractor directly in providing fringe benefit plans are
considered business expenses of the firm and not contributions made on behalf of the
employees. Such administrative costs cannot be credited toward meeting the fringe
benefit obligations of the applicable wage determination. See 29 CFR 4.172.
(2) The cost incurred by a government contractor’s insurance carrier (or third party trust
fund) in its administration and delivery of benefits to service employees can be
credited toward the contractor’s fringe benefit obligations under an SCA wage
determination.
(b) Fringe benefit obligations may be discharged by furnishing any equivalent combination of
cash or bona fide fringe benefits. See 29 CFR 4.170 and 29 CFR 4.177.
(c) The terms “equivalent fringe benefit” and “cash equivalent” mean equal in terms of monetary
cost to the contractor. See 29 CFR 4.177(a)(3).
(d) It is the contractor’s responsibility to satisfy the fringe benefit obligations set forth in an SCA
wage determination. The contractor may choose the fringe benefits to be provided, whether
an employee accepts or refuses the fringe benefits offered. If an employee desires cash
payments or benefits other than those chosen by the contractor, that would be a matter for
discussion and resolution between the employee and the employer. If the contractor
furnished a lesser amount of the fringe benefit called for by the applicable wage
determination, the contractor must furnish the employee with the difference between the
amount stated in the wage determination and the actual cost of the fringe benefit which the
contractor provided. As set forth in 29 CFR 4.175(a)(2), the contractor may make up the
difference in cash to the employee, or furnish equivalent benefits, or a combination thereof.
See 29 CFR 4.177.
(e) If participation in the fringe benefit plan requires a contribution from the employee’s wages,
whether through payroll deduction or otherwise, the employee’s concurrence is necessary.
No contribution toward fringe benefits made by employees, or deducted from their wages,
may be included or used by an employer in satisfying any part of any fringe benefit
obligation under the Act. See 29 CFR 4.168(a).
(f) Service employees employed by a single employer are entitled to fringe benefit payments
only up to a maximum of 40 hours per week, regardless of the number of contracts on which
they work, unless otherwise specified by the applicable wage determination. This position
only affects covered contracts subject to prevailing wage determinations with the fixed cost
per employee health and welfare, paid vacation and holiday benefits. Service employees who
work for a single employer on multiple contracts which may have other requirements, such as
a collectively bargained fringe benefits or an “average cost” health and welfare fringe benefit,
may be entitled to fringe benefit payments in excess of 40 hours per week. See Dantran, Inc.
v. U.S. DOL, 171 F.3d 58 (1st Cir. 1999).
(g) The fringe benefit requirements under successor contracts subject to SCA section 4(c) are
included in 29 CFR 4.163. Terms of the CBA will dictate eligibility requirements, and the

amount and extent of such fringe benefits. Since a successor contractor’s obligations are
governed by the terms of the CBA, any interpretation of the wage and fringe benefit
provisions of the CBA where they are unclear must be based on the intent of the parties,
provided that such interpretation does not violate the law. Some of the principles discussed
in the regulations regarding specific interpretations of the fringe benefit provisions of
prevailing wage determinations may not be applicable to wage determinations issued
pursuant to section 4(c). The provisions of section 4(c), however, do not supersede the
provision of section 2(a)(2) of the Act that allows a contractor to satisfy its fringe benefit
obligations by furnishing any equivalent combinations of fringe benefits or by making
equivalent or differential payments in cash. See 29 CFR 4.163(j) and 29 CFR 4.177.
14j01 Bona fide fringe benefit plans.
(a) To be considered bona fide for SCA purposes, a fringe benefit plan, fund, or program must
constitute a legally enforceable obligation which meets certain criteria. The plan, fund, or
program must be compliant with the Employment Retirement Income Security Act (ERISA),
laws and regulations enforced by the Internal Revenue Service (IRS), and state insurance
laws, and contributions must be made irrevocably to a trustee or third person pursuant to an
insurance agreement, trust, or other funded arrangement. See 29 CFR 4.171(a).
(b) The primary purpose of a fringe benefit plan under the SCA must be to provide
systematically for the payment of benefits to employees on account of death, disability,
advanced age, retirement, illness, medical expenses, hospitalization, supplemental
employment benefits, and the like. S ee 29 CFR 4.171(a)(2). While not specifically
enumerated in the regulations, supplemental unemployment plans and prepaid legal plans are
considered bona fide fringe benefits for purposes of the Act.
(c) Unfunded, self-insured fringe benefit plans under which a contractor allegedly makes out of
pocket payments to provide benefits for employees as costs are incurred, rather than making
irrevocable contributions to a trust or other funded arrangements, are not normally considered
bona fide plans or equivalent benefits except for plans to provide paid vacation and holiday
fringe benefits. S ee 29 CFR 4.171(b)(1).
(1) Under certain conditions, a contractor may request approval by the Administrator of
an unfunded self-insured plan in order to allow credit for payments under such a plan
in meeting the fringe benefit requirements of the Act. The purpose of seeking
advance approval is to avoid situations involving unfunded plans where monies
allegedly allocated by a contractor to provide fringe benefits are used for other
purposes or are recouped without actually furnishing any benefits. This procedure is
not intended to prohibit self-insured plans where irrevocable payments are made
pursuant to a trust or other funded arrangement and other conditions are met. See 29
CFR 4.171(b)(2).
(2) Stop loss insurance payments that provide coverage in the event that claims paid
from an unfunded self-insured plan exceed specified limits both in the individual and
the aggregate can be credited against the fringe benefit obligations of the applicable
wage determination.
(d) Contractors may not take credit for any benefit required by federal, state, or local law such as
workers’ compensation, unemployment compensation, and social security contributions. S ee
29 CFR 4.171(c).

(e) The furnishing of facilities which are primarily for the benefit or convenience of the
contractor or the cost of which is properly a business expense of the contractor is not the
furnishing of a bona fide fringe benefit or equivalent benefit or the payment of wages (e.g.,
items such as relocation expenses, travel, and transportation expenses incident to
employment, incentive, or suggestion awards, etc.). Also, a contractor cannot take credit
toward its minimum monetary wage and fringe benefit obligations for the cost of providing
social functions or parties for employees, flowers, cards, or gifts on employee birthdays,
anniversaries, etc.(i.e., sunshine funds), employee rest or recreation rooms, paid coffee
breaks, magazine subscriptions, and professional or club dues. See 29 CFR 4.171(d) -(f).
14j02 Crediting of fringe benefit payments.
The fringe benefits specified in the wage determination must be furnished separate from and
in addition to the specified minimum monetary wage to the employees engaged in the
performance of the contract. A contractor may not offset an amount of monetary wages paid
in excess of the minimum monetary wages required under the wage determination in order to
satisfy its fringe benefit obligations, and must keep appropriate records separately showing
amounts paid for wages or furnished for fringe benefits. See 29 CFR 4.167 and 29 CFR
4.170(a).
14j03 Vacation pay.
(a) General
Eligibility for vacation benefits specified in a prevailing wage determination is based on
completion of a standard period of past service. The principles to be followed in determining
an employee’s length of service for vacation eligibility are summarized below. See 29 CFR
4.173.
(b) Determining length of service
Most prevailing wage determinations require an employer to furnish employees a specified
amount of paid vacation upon completion of a specific length of service with a contractor or
successor (e.g., 1 week paid vacation after 1 year of service with a contractor or successor, or
1 week paid vacation after 1 year of service). Unless specified otherwise in an applicable
wage determination, the following two factors must be taken into consideration in
determining when an employee has completed the required length of service to be eligible for
vacation benefits:
(1) the total length of time spent by an employee in the continuous service of the
present(successor) contractor, including both the time spent performing commercial
work and the time spent performing on the government contract(s) itself (see 29 CFR
4.173(a)(1)(i))
(2) where applicable, the total length of time spent in any capacity as an employee in the
continuous service of any predecessor contractor(s) who carried out similar contract
functions at the same federal facility (see 29 CFR 4.173(a)(1)(ii))
However, prior service as a federal employee is not counted toward an employee’s eligibility
for vacation benefits under the applicable wage determination. See 29 CFR 4.173(a)(3).

(c) Eligibility requirement: continuous service
Under the principles set forth above, if an employee’s total length of service adds up to at
least 1 year, the employee is eligible for the specified amount of vacation with pay provided
in the wage determination. The term continuous service does not require the combination of
two entirely separate periods of employment where there has been a break in service.
Whether or not there is a break in the continuity of service so as to make an employee
ineligible for a vacation benefit is dependent upon all the facts in the particular case. See 29
CFR 4.173(b).
(d) Accrual or vesting and payment of vacation benefits
Where a prevailing wage determination specifies “ 1 week paid vacation after 1 year of
service with a contractor or successor,” an employee who renders the 1 year of service
continuously becomes eligible for the 1 week paid vacation (i.e., 40 hours of paid vacation,
unless otherwise specified in an applicable wage determination) upon his/her anniversary date
of employment and upon each succeeding anniversary date thereafter. There is no accrual or
vesting of vacation eligibility before the employee’s anniversary date of employment, and no
segment of time smaller than 1 year need be considered in computing the employer’s
vacation liability, unless otherwise specifically provided for in a particular wage
determination. The vacation benefits need not be provided by the employer on the date of
vesting. However, the required benefit must be furnished before the employee’s next
anniversary date, before the current contract is completed, or before the employee terminates
employment, whichever occurs first. See 29 CFR 4.173(c)(2).
(e) Contractor liability for vacation benefits
The liability for an employee’s vacation is not prorated among contractors unless specifically
provided for in a particular wage determination. The contractor by whom a person is
employed at the time the vacation right vests (i.e., on the employee’s anniversary date of
employment) must provide the full benefit required by the applicable wage determination on
that date before the employee’s next anniversary date, before the current contract is
completed, or before the employee terminates employment, whichever occurs first. Thus,
vacation benefits must be complied with in full on an annual basis. Any unused vacation
benefits may not be carried over from year to year. See 29 CFR 4.173(c) - (d).
(f) Certified listing of employee anniversary dates
In the case of a contract performed at a federal facility where employees may be retained by a
succeeding contractor, 29 CFR 4.6(1)(2) provides that the incumbent prime contractor must
furnish a certified list of all service employees on the contractor’s or subcontractor’s payroll
during the last month of the contract, together with the anniversary dates of employment
(with the incumbent as well as predecessor contractors) of each such employee, to the
contracting officer not less than 10 days before contract completion. A copy of this list is to
be provided to the successor contractor for determining employee eligibility for vacation
fringe benefits which are based on length of service with predecessor contractors (where such
benefit is required by an applicable wage determination). Failure to obtain such employment
data does not relieve a contractor from any obligation to provide vacation benefits. See 29
CFR 4.173(d)(2).
(g) Rate applicable to computation of vacation benefits

The rate applicable to the computation of vacation benefits is the applicable wage
determination rate or employee’s regular rate of pay, whichever is higher, at the time the
vacation benefit is provided or a cash equivalent is paid. If an applicable wage determination
requires that the hourly wage rate be increased during the period of the contract, the rate
applicable to the computation of any required vacation benefits is the hourly rate in effect in
the workweek in which the actual paid vacation is provided or the equivalent is paid, as the
case may be, and would not be the average of two hourly rates. This rule would not apply to
situations where a wage determination specified a different method of computation and the
rate to be used. S ee 29 CFR 4.173(e)(1).
(h) Cash equivalent for vacation
Where an employer elects to pay an hourly cash equivalent in lieu of a paid vacation, which
is computed in accordance with 29 CFR 4.177(c)(5), such payments need commence only
after the employee has satisfied the “after 1 year of service” requirement (in cases where
there is such an eligibility requirement). However, should the employee terminate
employment for any reason before receiving the full amount of vested vacation benefits due,
the employee must be paid the full amount of any difference remaining as a final cash
payment. The rate applicable to the computation of cash equivalents for vacation benefits is
the hourly wage rate in effect at the time such equivalent payments are actually made. See 29
CFR 4.173(c)(1) and (e)(1).
14j04 Holiday pay.
(a) Most prevailing wage determinations list a specific number of named holidays for which
payment is required. A full-time employee who is eligible to receive payment for a named
holiday must receive a full day’s pay up to 8 hours unless a different standard is used in the
wage determination, such as one reflecting CBA benefit requirements. A full-time employee
who works on the day designated as a holiday must be paid, in addition to the amount he/she
ordinarily would be entitled to for that day’s work, the cash equivalent of a full-day’s pay up
to 8 hours, or be furnished another day off with pay. See 29 CFR 4.174(c)(1) -(2).
(b) An employee’s entitlement to holiday pay fully vests by working in the workweek in which
the named holiday occurs. Accordingly, any employee who is terminated before receiving
the full amount of holiday benefits due must be paid the holiday benefits as a final cash
payment. See 29 CFR 4.174(c)(4).
(c) If the applicable wage determination does not include a paid holiday provision for any day
declared by the U.S. president to be a holiday, or for any work day where the federal facility
is closed such as due to inclement weather, the contractor is not required to pay covered
service employees who take that day off. Any pay provided would be a matter of discretion
for the contractor, and contract payments for such time not worked would be a procurement
matter within the purview of the contracting agency.
14j05 Temporary and part-time employees.
(a) The SCA makes no distinction between temporary, part-time, and full-time employees. In
the absence of express limitations, the fringe benefits specified in the wage determination
apply to all temporary and part-time service employees engaged in covered work. However,
in general, temporary and part-time employees are only entitled to an amount of the fringe
benefits specified in the wage determination which is proportionate (i.e., a pro rata share) to

the amount of time spent in covered work. Unless otherwise specified in the wage
determination, vacation and holiday benefits are based upon a full-time schedule that consists
of 40 hours a week or 8 hours a day. See 29 CFR 4.165(a)(2), 29 CFR 4.176(a), and FOH
14i00(c).
(b) Holiday obligations to temporary and part-time employees who work an irregular schedule of
hours may be discharged by paying such employees a proportion of the holiday benefits due
full-time employees based on the number of hours the temporary and part-time employee
worked in the workweek prior to the workweek in which the holiday occurs. With respect to
vacation obligations, the number of hours such employee worked in the year preceding the
employee’s anniversary date of employment may be utilized to determine vacation benefits
due. See 29 CFR 4.176(a)(3).
14j06 Health and welfare, and pension payments.
(a) As set forth in AAM No. 188, a single prevailing nationwide health and welfare rate method
has been established for determining fringe benefit requirements to be incorporated in most
SCA wage determinations. The single rate is generally updated once a year based upon data
from the BLS Employment Cost Index summary of Employer Cost for Employee
Compensation. See 29 CFR 4.52(a) and 29 CFR 4.175.
(b) Fixed cost per employee health and welfare fringe benefits (see 29 CFR 4.175(a))
(1) Most prevailing wage determinations containing health and welfare and/or pension
requirements specify a fixed payment per hour on behalf of each service employee.
This fringe benefit is due each service employee on the basis of all hours paid for,
including paid vacations, holidays, and sick leave, up to a maximum of 40 hours per
week and 2,080 hours per year. Payments are specified on the wage determination in
hourly, weekly, and monthly amounts.
(2) If a wage determination specifies a fringe benefit that can be obtained for less than
the amount of contribution required on the wage determination, the employer must
make up the difference in cash to the employee, or furnish equivalent benefits, or a
combination thereof. The fringe benefits and cash equivalent payments under the
fixed cost per employee benefit requirement may be made in varying amounts to
employees, provided the total amount paid by the contractor for fringe benefits
and/or cash equivalents to each individual employee is at least the amount required
by the wage determination.
(c) Average cost health and welfare fringe benefits (see 29 CFR 4.175(b))
(1) Some wage determinations specifically provide for health& welfare and/or pension
benefits in terms of average cost. In such cases, a contractor’s contributions per
employee to a bona fide plan are permitted to vary, depending upon the individual
employee’s marital or employment status. It is also possible under the average cost
concept for some employees to not receive any fringe benefits.
(2) The contractor’s total contributions for all service employees enrolled in the plan
must average at least the wage determination requirements per hour per service
employee. In determining average cost, all hours worked, including overtime hours,
for all service employees that were employed on the contract during the payment

period must be counted. The term all hours worked does not include paid leave
hours, such as vacations, holidays, or sick leave. It also does not cover any unpaid
leave time.
(3) The contractor’s total contributions for all service employees enrolled in the fringe
benefit plan(s) must average at least the fringe benefit obligation stated in the wage
determination. The types and amounts of benefits (if any) provided, and the
eligibility requirements for service employees to participate in a fringe benefit plan,
are decided by the employer.
(4) If the contractor’s contributions average less than the amount required during a
payment period, the contractor must make up the deficiency by providing cash
equivalent payments or equivalent fringe benefit payments to all service employees
who worked on the contract during the payment period. However, cash equivalent
payments under the average cost fringe benefit requirements can only be made in an
amount determined to be deficient after payments have been made to the fringe
benefit plans, and then must be made equally to all service employees based upon
their hours worked. A contractor cannot make cash equivalent payments to some
employees and not to others, nor can a contractor pay different cash amounts to
employees under the same contract. A contractor must pay the same amount of cash
equivalent payments per hour worked to all employees. See 29 CFR 4.175(b).
(d) Some health and welfare and pension plans contain eligibility exclusions for certain
employees. Also, employees receiving benefits through participation in plans of an employer
other than the contractor or by a spouse’s employer may be prevented from receiving benefits
from the contractor’s plan because of prohibitions against double coverage. While such
exclusions do not invalidate an otherwise bona fide plan, the employees excluded from
participation in the plan must be furnished equivalent bona fide fringe benefits or be paid a
cash equivalent payment during the period they are not eligible, or choose not to participate
in the plan. An employee who desires to opt-out of the contractor’s health plan must
demonstrate that his or her other coverage specifically prohibits double coverage in writing.
See 29 CFR 4.175(c).
(e) It is not required that all employees participating in a fringe benefit plan be entitled to receive
payments from the plan at all times. For example, a contractor may be permitted to claim
credit for contributions made to fringe benefit plans on behalf of participating employees
during periods of time when they may not be entitled to receive benefits (e.g., a 30-day
waiting period under some insurance plans for newly hired employees). If no contributions
are made for such employees, then no credit may be taken toward the contractor’s fringe
benefit obligations. See 29 CFR 4.175(c)(2).
(f) Payments to a bona fide health and welfare or pension insurance plan or trust program may
be made on a periodic basis, but not less often than quarterly. If the plan requires that
contributions be made on a monthly basis, then to be in compliance the contractor must
reconcile the cost incurred by such contributions against its SCA fringe benefit obligations on
a monthly (or no less often than monthly) basis. See 29 CFR 4.175(d)(1).
(g) Where the wage determination specifies a fixed contribution on behalf of each employee, and
a contractor exercises the option to make hourly cash equivalent or differential payments,
such payments must be made promptly on the regular payday for wages. See 29 CFR
4.165(a)(1), 29 CFR 4.175(d)(1), and 29 CFR 4.177(c)(1).

(h) The only restriction the SCA places on pension plans, including 401(k) plans, is that they be
bona fide fringe benefit plans. Such plans are considered bona fide if they meet the
requirements of section 7(e)(4) of the FLSA. See 29 CFR 778.215, 29 CFR 4.170, and 29
CFR 4.171(a).
(1) Neither the SCA nor its implementing regulations address vesting requirements with
respect to retirement plans. However, bona fide plans are required to meet the
vesting requirements pursuant to ERISA. See 29 CFR 4.171(a)(5).
(2) Pension plans that define a year’s service for vesting purposes in terms of a minimum
number of hours worked by a participant and require certain number of years in
service for a participant to become fully vested would be in compliance with the SCA
so long as the plan’s vesting provisions meet ERISA’s requirements.
(3) Pension plans often provide that forfeitures of employees who do not vest under the
plan will be used to reduce the employer’s contribution in the following year. For
SCA purposes, an employer may not use forfeitures as a credit towards satisfying the
requirements of an applicable wage determination. To allow an employer to do so
would result in the employer’s taking double credit for the same contribution.
Forfeitures that are allocated to the accounts of remaining eligible participants would,
however, be creditable toward meeting fringe benefit obligations under the SCA.
14k OVERTIME COMPENSATION
14k00 General provisions.
(a) The SCA does not provide for compensation of covered employees at premium rates for
overtime hours of work. Section 6 of the Act recognizes that other federal laws, such as the
FLSA and CWHSSA may require such compensation to be paid to employees working on or
in connection with SCA-covered contracts. CWHSSA (40 USC 327 -332) is more limited in
scope than the FLSA (29 USC 201, et seq.) and generally applies to federal government
contracts in excess of $100,000 that require or involve the employment of laborers,
mechanics, guards, and watchmen. See 29 CFR 4.180 -.182, 29 CFR 5.1 -5.17; 29 CFR 778,
FOH 15g –k, and FOH 32.
(b) Overtime must be paid at one and one-half times the basic hourly rate (or the regular rate of
pay, whichever is higher). See SCA 29 CFR 4.180 -4.182, 29 CFR 5.5(b)(1), 29 CFR 778,
FOH 15k00 -09, and FOH 32.
(c) The SCA excludes the amounts paid by a contractor or subcontractor for fringe benefits in the
computation of overtime under the FLSA and CWHSSA whenever the overtime provisions of
either of those acts apply concurrently with the SCA’s wage provisions. See 29 CFR
4.177(e), 29 CFR 4.180, and 29 CFR 778.7.
(d) Neither the FLSA, nor the CWHSSA, preclude any state, territory, or municipality from
implementing its own labor standards with respect to minimum monetary wage and overtime
compensation. If federal and state laws have different requirements, a contractor would be
obligated to satisfy both sets of standards in order to ensure compliance. S ee 29 CFR 778.5.
(e) The CWHSSA requires that “liquidated damages shall be computed, with respect to each
individual employed as a laborer or mechanic in violation of any provision of this Act, in the

sum of $10 for each calendar day on which such individual was required or permitted to work
in excess of the standard workweek of 40 hours without payment of the overtime required by
this Act.” In addition, in all cases liquidated damages are also required to be computed in
sit uations where an employee is paid overtime at an incorrect basic hourly rate of pay. See 29
CFR 5.8 and FOH 15k10.
14k01 Laborers and mechanics under CWHSSA.
Service employees may also be laborers and mechanics for purposes of CWHSSA. The
terms laborers and mechanics include at least those employees whose duties are manual or
physical in nature as distinguished from mental or managerial. Generally, employees whose
duties are supervisory, professional, and clerical are not laborers or mechanics for purposes of
CWHSSA. Determinations as to whether individual employees are laborers or mechanics are
based on the duties actually performed under the contract rather than occupational titles or
job descriptions. A job that requires manual and mechanical dexterity and is primarily reliant
on the use of hands would be typical of mechanical or manual occupations that would fall
with the scope of a laborer or mechanic under CWHSSA. The CWHSSA also applies to
guards and watchmen employed on government contracts in excess of $100,000. See 29 CFR
4.181(b), 29 CFR 5.5(b), and FOH 15j.
14L PAYROLL AND RECORDKEEPING REQUIREMENTS
14L00 Payroll and recordkeeping requirements.
(a) Payrolls and basic records relating thereto, including a copy of the contract, must be
maintained and preserved for 3 years from the completion of the contract. See 29 CFR 4.6(g)
and 29 CFR 4.185.
(b) The failure of a contractor to make the required records available to a WHI may result in the
suspension of contract payments until such violations cease. Contractors must also permit the
WHI to conduct employee interviews at the worksite during normal working hours. See 29
CFR 4.6(g).