29 CFR 4.182 -4.183

Service Contract Act

Title 29, Code of Federal Regulations, Part 4
Labor Standards for Federal Service Contracts

(29 CFR 4.182-4.183)

29 CFR 4.182 - Overtime pay of service employees entitled to fringe benefits.

Reference is made in Sec. 4.180 to the rules prescribed by section 6
of the Act which permit exclusion of certain fringe benefits and
equivalents provided pursuant to section 2(a)(2) of the Act from the
regular or basic rate of pay when computing overtime compensation of a service employee under the provisions of any other Federal law. As
provided in Sec. 4.177, not only those fringe benefits excludable under
section 6 as benefits determined and specified under section 2(a)(2),
but also equivalent fringe benefits and cash payments furnished in lieu
of the specified benefits may be excluded from the regular or basic rate of such an employee. The application of this rule may be illustrated by the following examples:

(a) The A company pays a service employee $4.50 an hour in cash
under a wage determination which requires a monetary rate of not less
than $4 and a fringe benefit contribution of 50 cents which would
qualify for exclusion from the regular rate under section 7(e) of the
Fair Labor Standards Act. The contractor pays the 50 cents in cash
because he made no contributions for fringe benefits specified in the
determination and the contract. Overtime compensation in this case would be computed on a regular or basic rate of $4 an hour.

(b) The B company has for some time been paying $4.25 an hour to a
service employee as his basic cash wage plus 25 cents an hour as a
contribution to a welfare and pension plan, which contribution qualifies
for exclusion from the regular rate under the Fair Labor Standards Act.
For performance of work under a contract subject to the Act a monetary
rate of $4 and a fringe benefit contribution of 50 cents (also
qualifying for such exclusion) are specified because they are found to
be prevailing for such employees in the locality. The contractor may
credit the 25 cent welfare and pension contribution toward the discharge of his fringe benefit obligation under the contract but must also make an additional contribution of 25 cents for the specified or equivalent fringe benefits or pay the employee an additional 25 cents in cash. These contributions or equivalent payments may be excluded from the employee's regular rate which remains $4.25, the rate agreed upon as the basic cash wage.

(c) The C company has been paying $4 an hour as its basic cash wage
on which the firm has been computing overtime compensation. For performance of work on a contract subject to the Act the same rate of monetary wages and a fringe benefit contribution of 50 cents an hour (qualifying for exclusion from the regular rate under the Fair Labor Standards Act) are specified in accordance with a determination that these are the monetary wages and fringe benefits prevailing for such employees in the locality. The contractor is required to continue to pay at least $4 an hour in monetary wages and at least this amount must be included in the employee's regular or basic rate for overtime purposes under applicable Federal law. The fringe benefit obligation under the contract would be discharged if 50 cents of the contributions for fringe benefits were for the fringe benefits specified in the contract or equivalent benefits as defined in Sec. 4.177. The company may exclude such fringe benefit contributions from the regular or basic rate of pay of the service employee in computing overtime pay due.

29 CFR 4.183 - Employees must be notified of compensation required.

The Act, in section 2(a)(4), and the regulations thereunder in Sec. 4.6(e), require all contracts subject to the Act which are in excess of $2,500 to contain a clause requiring the contractor or subcontractor to notify each employee commencing work on a contract to which the Act applies of the compensation required to be paid such employee under section 2(a)(1) and the fringe benefits required to be furnished under section 2(a)(2). A notice form (WH Publication 1313 and any applicable wage determination) provided by the Wage and Hour Division is to be used for this purpose. It may be delivered to the employee or posted as stated in Sec. 4.184.