Service
Contract Act
Title 29, Code of Federal Regulations,
Part 4
Labor Standards for Federal Service Contracts
29 CFR 4.6 - Labor standards
clauses for Federal service contracts exceeding $2,500.
The clauses set forth in
the following paragraphs shall be included
in full by the contracting agency in every contract entered into by
the
United States or the District of Columbia, in excess of $2,500, or in
an
indefinite amount, the principal purpose of which is to furnish services
through the use of service employees: (a) Service Contract Act of 1965,
as amended: This contract is subject to the Service Contract Act of
1965, as amended (41 U.S.C. 351 et seq.) and is subject to the following
provisions and to all other applicable provisions of the Act and regulations
of the Secretary of Labor issued thereunder (29 CFR part 4).
(b)(1) Each service employee
employed in the performance of this
contract by the contractor or any subcontractor shall be paid not less
than the minimum monetary wages and shall be furnished fringe benefits
in accordance with the wages and fringe benefits determined by the Secretary
of Labor or authorized representative, as specified in any wage determination
attached to this contract.
(2)(i) If there is such a
wage determination attached to this
contract, the contracting officer shall require that any class of
service employee which is not listed therein and which is to be employed
under the contract (i.e., the work to be performed is not performed
by any classification listed in the wage determination), be classified
by the contractor so as to provide a reasonable relationship (i.e.,
appropriate level of skill comparison) between such unlisted
classifications and the classifications listed in the wage
determination. Such conformed class of employees shall be paid the
monetary wages and furnished the fringe benefits as are determined
pursuant to the procedures in this section.
(ii) Such conforming procedure
shall be initiated by the contractor prior to the performance of contract
work by such unlisted class of employee. A written report of the proposed
conforming action, including information regarding the agreement or
disagreement of the authorized representative of the employees involved
or, where there is no authorized representative, the employees themselves,
shall be submitted by the contractor to the contracting officer no later
than 30 days after such unlisted class of employees performs any contract
work. The contracting officer shall review the proposed action and promptly
submit a report of the action, together with the agency's recommendation
and all pertinent information including the position of the contractor
and the employees, to the Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, for review. The Wage and Hour
Division will approve, modify, or disapprove the action or render a
final determination in the event of disagreement within 30 days of receipt
or will notify the contracting officer within 30 days of receipt that
additional time is necessary.
(iii) The final determination
of the conformance action by the Wage
and Hour Division shall be transmitted to the contracting officer who
shall promptly notify the contractor of the action taken. Each affected
employee shall be furnished by the contractor with a written copy of
such determination or it shall be posted as a part of the wage
determination.
(iv)(A) The process of establishing
wage and fringe benefit rates
that bear a reasonable relationship to those listed in a wage
determination cannot be reduced to any single formula. The approach
used may vary from wage determination to wage determination depending
on the circumstances. Standard wage and salary administration practices
which rank various job classifications by pay grade pursuant to point
schemes or other job factors may, for example, be relied upon. Guidance
may also be obtained from the way different jobs are rated under Federal
pay systems (Federal Wage Board Pay System and the General Schedule)
or from other wage determinations issued in the same locality. Basic
to the establishment of any conformable wage rate(s) is the concept
that a pay relationship should be maintained between job classifications
based on the skill required and the duties performed.
(B) In the case of a contract
modification, an exercise of an option or extension of an existing contract,
or in any other case where a
contractor succeeds a contract under which the classification in
question was previously conformed pursuant to this section, a new
conformed wage rate and fringe benefits may be assigned to such
conformed classification by indexing (i.e., adjusting) the previous
conformed rate and fringe benefits by an amount equal to the average
(mean) percentage increase (or decrease, where appropriate) between
the wages and fringe benefits specified for all classifications to be
used on the contract which are listedin the current wage determination,
and those specified for the corresponding classifications in the previously
applicable wage determination. Where conforming actions are accomplished
in accordance with this paragraph prior to the performance of contract
work by the
unlisted class of employees, the contractor shall advise the contracting
officer of the action taken but the other procedures in paragraph
(b)(2)(ii) of this section need not be followed.
(C) No employee engaged in
performing work on this contract shall in
any event be paid less than the currently applicable minimum wage
specified under section 6(a)(1) of the Fair Labor Standards Act of 1938,
as amended. (v) The wage rate and fringe benefits finally determined
pursuant to paragraphs (b)(2)(i) and (ii) of this section shall be paid
to all employees performing in the classification from the first day
on which contract work is performed by them in the classification. Failure
to pay such unlisted employees the compensation agreed upon by the interested
parties and/or finally determined by the Wage and Hour Division retroactive
to the date such class of employees commenced contract work shall be
a violation of the Act and this contract. (vi) Upon discovery of failure
to comply with paragraphs (b)(2)(i) through (v) of this section, the
Wage and Hour Division shall make a final determination of conformed
classification, wage rate, and/or fringe benefits which shall be retroactive
to the date such class of employees commenced contract work. (3) If,
as authorized pursuant to section 4(d) of the Service Contract Act of
1965 as amended, the term of this contract is more than 1 year, the
minimum monetary wages and fringe benefits required to be paid or furnished
thereunder to service employees shall be subject to adjustment after
1 year and not less often than once every 2 years, pursuant to wage
determinations to be issued by the Wage and Hour Division, Employment
Standards Administration of the Department of Labor as provided in such
Act.
(c) The contractor or subcontractor may discharge the obligation to
furnish fringe benefits specified in the attachment or determined
conformably thereto by furnishing any equivalent combinations of bona
fide fringe benefits, or by making equivalent or differential payments
in cash in accordance with the applicable rules set forth in subpart
D
of 29 CFR part 4, and not otherwise. (d)(1) In the absence of a minimum
wage attachment for this contract, neither the contractor nor any subcontractor
under this contract shall pay any person performing work under the contract
(regardless of whether they are service employees) less than the minimum
wage specified by section 6(a)(1) of the Fair Labor Standards Act of
1938. Nothing in this provision shall relieve the contractor or any
subcontractor of any other obligation under law or contract for the
payment of a higher wage to any employee.
(2) If this contract succeeds a contract, subject to the Service
Contract Act of 1965 as amended, under which substantially the same
services were furnished in the same locality and service employees were
paid wages and fringe benefits provided for in a collective bargaining
agreement, in the absence of the minimum wage attachment for this contract
setting forth such collectively bargained wage rates and fringe benefits,
neither the contractor nor any subcontractor under this contract shall
pay any service employee performing any of the contract work (regardless
of whether or not such employee was employed under the predecessor contract),
less than the wages and fringe benefits provided for in such collective
bargaining agreements, to which such employee would have been entitled
if employed under the predecessor contract, including accrued wages
and fringe benefits and any prospective increases in wages and fringe
benefits provided for under such agreement. No contractor or subcontractor
under this contract may be relieved of the foregoing obligation unless
the limitations of Sec. 4.1b(b) of 29 CFR part 4 apply or unless the
Secretary of Labor or his authorized representative finds, after a hearing
as provided in Sec. 4.10 of 29 CFR part 4 that the wages and/or fringe
benefits provided for in such agreement are substantially at variance
with those which prevail for services of a character similar in the
locality, or determines, as provided in Sec. 4.11 of 29 CFR part 4,
that the collective bargaining agreement applicable to service employees
employed under the predecessor contract was not entered into as a result
of arm's-length negotiations. Where it is found in accordance with the
review procedures provided in 29 CFR 4.10 and/or 4.11 and parts 6 and
8 that some or all of the wages and/or fringe benefits contained in
a predecessor contractor's collective bargaining agreement are substantially
at variance with those which prevail for services of a character similar
in the locality, and/or that the collective bargaining agreement applicable
to service employees employed under the predecessor contract was not
entered into as a result of arm's-length negotiations, the Department
will issue a new or revised wage determination setting forth the applicable
wage rates and fringe benefits. Such determination shall be made part
of the contract or subcontract, in accordance with the decision of the
Administrator, the Administrative Law Judge, or the Administrative Review
Board, as the case may be, irrespective of whether such issuance occurs
prior to or after the award of a contract or subcontract. 53 Comp. Gen.
401 (1973). In the case of a wage determnation issued solely as a result
of a finding of substantial variance, such determination shall be effective
as of the date of the final administrative decision. (e) The contractor
and any subcontractor under this contract shall notify each service
employee commencing work on this contract of the
minimum monetary wage and any fringe benefits required to be paid
pursuant to this contract, or shall post the wage determination attached
to this contract. The poster provided by the Department of Labor
(Publication WH 1313) shall be posted in a prominent and accessible
place at the worksite. Failure to comply with this requirement is a
violation of section 2(a)(4) of the Act and of this contract.
(f) The contractor or subcontractor shall not permit any part of the
services called for by this contract to be performed in buildings or
surroundings or under working conditions provided by or under the
control or supervision of the contractor or subcontractor which are
unsanitary or hazardous or dangerous to the health or safety of service
employees engaged to furnish these services, and the contractor or
subcontractor shall comply with the safety and health standards applied
under 29 CFR part 1925. (g)(1) The contractor and each subcontractor
performing work subject to the Act shall make and maintain for 3 years
from the completion of the work records containing the information specified
in paragraphs (g)(1) (i) through (vi) of this section for each employee
subject to the Act and shall make them available for inspection and
transcription by authorized representatives of the Wage and Hour Division,
Employment Standards Administration of the U.S. Department of Labor:
(i) Name and address and
social security number of each employee.
(ii) The correct work classification or classifications, rate or
rates of monetary wages paid and fringe benefits provided, rate or rates
of fringe benefit payments in lieu thereof, and total daily and weekly
compensation of each employee.
(iii) The number of daily and weekly hours so worked by each
employee.
(iv) Any deductions, rebates, or refunds from the total daily or
weekly compensation of each employee.
(v) A list of monetary wages and fringe benefits for those classes
of service employees not included in the wage determination attached
to this contract but for which such wage rates or fringe benefits have
been determined by the interested parties or by the Administrator or
authorized representative pursuant to the labor standards clause in
paragraph (b) of this section. A copy of the report required by the
clause in paragraph (b)(2)(ii) of this section shall be deemed to be
such a list.
(vi) Any list of the predecessor contractor's employees which had
been furnished to the contractor pursuant to Sec. 4.6(l)(2).
(2) The contractor shall also make available a copy of this contract
for inspection or transcription by authorized
representatives of the Wage and Hour Division.
(3) Failure to make and maintain or to make available such records
for inspection and transcription shall be a violation of the regulations
and this contract, and in the case of failure to produce such records,
the contracting officer, upon direction of the Department of Labor and
notification of the contractor, shall take action to cause suspension
of
any further payment or advance of funds until such violation ceases.
(4) The contractor shall permit authorized representatives of the
Wage and Hour Division to conduct interviews with employees at the
worksite during normal working hours. (h) The contractor shall unconditionally
pay to each employee subject to the Act all wages due free and clear
and without subsequent deduction (except as otherwise provided by law
or Regulations, 29 CFR part 4), rebate, or kickback on any account.
Such payments shall be made no 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 this Act may not be of any duration longer than semi-monthly.
(i) The contracting officer shall withhold or cause to be withheld from
the Government prime contractor under this or any other Government contract
with the prime contractor such sums as an appropriate official of the
Department of Labor requests or such sums as the contracting officer
decides may be necessary to pay underpaid employees employed by the
contractor or subcontractor. In the event of failure to pay any employees
subject to the Act all or part of the wages or fringe benefits due under
the Act, the agency may, after authorization or by direction of the
Department of Labor and written notification to the contractor, take
action to cause suspension of any further payment or advance of funds
until such violations have ceased. Additionally, any failure to comply
with the requirements of these clauses relating to the Service Contract
Act of 1965, may be grounds for termination of the right to proceed
with the contract work. In such event, the Government may enter
into other contracts or arrangements for completion of the work,
charging the contractor in default with any additional cost.
(j) The contractor agrees to insert these clauses in this section
relating to the Service Contract Act of 1965 in all subcontracts subject
to the Act. The term contractor as used in these clauses in any
subcontract, shall be deemed to refer to the subcontractor, except in
the term Government prime contractor.
(k)(1) As used in these clauses, the term service employee means any
person engaged in the performance of this contract other than any person
employed in a bona fide executive, administrative, or professional capacity,
as those terms are defined in part 541 of title 29, Code of Federal
Regulations, as of July 30, 1976, and any subsequent revision of those
regulations. The term service employee includes all such persons regardless
of any contractual relationship that may be alleged to exist between
a contractor or subcontractor and such persons. (2) The following statement
is included in contracts pursuant to section 2(a)(5) of the Act and
is for informational purposes only:
The following classes of service employees expected to be employed
under the contract with the Government would be subject, if employed
by the contracting agency, to the provisions of 5 U.S.C. 5341 or 5 U.S.C.
5332 and would, if so employed, be paid not less than the following
rates of wages and fringe benefits:
------------------------------------------------------------------------
Monetary
Employee class wage-fringe
benefits
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...........
...........
...........
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(l)(1) If wages to be paid
or fringe benefits to be furnished any
service employees employed by the Government prime contractor or any
subcontractor under the contract are provided for in a collective
bargaining agreement which is or will be effective during any period
in
which the contract is being performed, the Government prime contractor
shall report such fact to the contracting officer, together with full
information as to the application and accrual of such wages
and fringe benefits, including any prospective increases, to service
employees engaged in work on the contract, and a copy of the collective
bargaining agreement. Such report shall be made upon commencing performance
of the contract, in the case of collective bargaining agreements effective
at such time, and in the case of such agreements or provisions or amendments
thereof effective at a later time during the period of contract performance,
such agreements shall be reported promptly after negotiation thereof.
(2) Not less than 10 days prior to completion of any contract being
performed at a Federal facility where service employees may be retained
in the performance of the succeeding contract and subject to a wage
determination which contains vacation or other benefit provisions based
upon length of service with a contractor (predecessor) or successor
(Sec. 4.173 of Regulations, 29 CFR part 4), the incumbent prime contractor
shall furnish to the contracting officer a certified list of
the names of all service employees on the contractor's or
subcontractor's payroll during the last month of contract performance.
Such list shall also contain
anniversary dates of employment on the
contract either with the current or predecessor contractors of each
such
service employee. The contracting officer shall turn over such list
to
the successor contractor at the commencement of the succeeding contract.(m)
Rulings and interpretations of the Service Contract Act of 1965, as
amended, are contained in Regulations, 29 CFR part 4.
(n)(1) By entering into this contract, the contractor (and officials
thereof) certifies that neither it (nor he or she) nor any person or
firm who has a substantial interest in the contractor's firm is a person
or firm ineligible to be awarded Government contracts by virtue of the
sanctions imposed pursuant to section 5 of the Act.
(2) No part of this contract shall be subcontracted to any person or
firm ineligible for award of a Government contract pursuant to section
5
of the Act.
(3) The penalty for making false statements is prescribed in the
U.S. Criminal Code, 18 U.S.C. 1001.
(o) Notwithstanding any of the clauses in paragraphs (b) through (m)
of this section relating to the Service Contract Act of 1965, the
following employees may be employed in accordance with the following
variations, tolerances, and exemptions, which the Secretary of Labor,
pursuant to section 4(b) of the Act prior to its amendment by Public
Law 92-473, found to be necessary and proper in the public interest
or to avoid serious impairment of the conduct of Government business:
(1) Apprentices, student-learners, and workers whose earning
capacity is impaired by age, physical, or mental deficiency or injury
may be employed at wages lower than the minimum wages otherwise required
by section 2(a)(1) or 2(b)(1) of the Service Contract Act without diminishing
any fringe benefits or cash payments in lieu thereof
required under section 2(a)(2) of that Act, in accordance with the
conditions and procedures prescribed for the employment of apprentices,
student-learners, handicapped persons, and handicapped clients of sheltered
workshops under section 14 of the Fair Labor Standards Act of 1938,
in the regulations issued by the Administrator (29 CFR parts 520, 521,
524, and 525).
(2) The Administrator will issue certificates under the Service
Contract Act for the employment of apprentices, student-learners,
handicapped persons, or handicapped clients of sheltered workshops not
subject to the Fair Labor Standards Act of 1938, or subject to different
minimum rates of pay under the two acts, authorizing appropriate rates
of minimum wages (but without changing requirements concerning fringe
benefits or supplementary cash payments in lieu thereof), applying procedures
prescribed by the applicable regulations issued under the Fair Labor
Standards Act of 1938 (29 CFR parts 520, 521, 524, and 525).
(3) The Administrator will also withdraw, annul, or cancel such
certificates in accordance with the regulations in parts 525 and 528
of
title 29 of the Code of Federal Regulations. (p) Apprentices will be
permitted to work at less than the predetermined rate for the work they
perform when they are employed and individually registered in a bona
fide apprenticeship program registered with a State Apprenticeship Agency
which is recognized by the U.S. Department of Labor, or if no such recognized
agency exists in a State, under a program registered with the Bureau
of Apprenticeship and Training, Employment and Training Administration,
U.S. Department of Labor. Any employee who is not registered as an apprentice
in an approved program shall be paid the wage rate and fringe benefits
contained in the applicable wage determination for the journeyman classification
of work actually performed. The wage rates paid apprentices shall not
be less than the wage rate for their level of progress set forth in
the registered program, expressed as the appropriate percentage of the
journeyman's rate contained in the applicable wage determination. The
allowable ratio of apprentices to journeymen employed on the contract
work in any craft classification shall not be greater than the ratio
permitted to the contractor as to his entire work force under the registered
program.
(q) Where an employee engaged in an occupation in which he or she
customarily and regularly receives more than $30 a month in tips, the
amount of tips received by the employee may be credited by the employer
against the minimum wage required by Section 2(a)(1) or 2(b)(1) of the
Act to the extent permitted by section 3(m) of the Fair Labor Standards
Act and Regulations, 29 CFR Part 531. To utilize this proviso:
(1) The employer must inform tipped employees about this tip credit
allowance before the credit is utilized;
(2) The employees must be allowed to retain all tips (individually
or through a pooling arrangement and regardless of whether the employer
elects to take a credit for tips received);
(3) The employer must be able to show by records that the employee
receives at least the applicable Service Contract Act minimum wage
through the combination of direct wages and tip credit;
(4) The use of such tip credit must have been permitted under any
predecessor collective bargaining agreement applicable by virtue of
section 4(c) of the Act.
(r) Disputes concerning labor standards. Disputes arising out of the
labor standards provisions of this contract shall not be subject to
the
general disputes clause of this contract. Such disputes shall be
resolved in accordance with the procedures of the Department of Labor
set forth in 29 CFR parts 4, 6, and 8. Disputes within the meaning of
this clause include disputes between the contractor (or any of its subcontractors)
and the contracting agency, the U.S. Department of Labor, or the employees
or their representatives.
(The information collection,
recordkeeping, and reporting requirements
contained in this section have been approved by the Office of Management
and Budget under the following numbers:
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OMB control
Paragraph number
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(b)(2) (i)--(iv)........................................... 1215-0150
(e)........................................................ 1215-0150
(g)(1) (i)--(iv)........................................... 1215-0017
(g)(1) (v), (vi)........................................... 1215-0150
(l) (1), (2)............................................... 1215-0150
(q)(3)..................................................... 1215-0017
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[48 FR 49762, Oct. 27, 1983;
48 FR 50529, Nov. 2, 1983, as amended at 61
FR 68663, Dec. 30, 1996]