S e r v i c e C o n t r a c t L a b o r S t a n d a r d s
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A G E N D A • Coverage • Employee Exemptions • Wage Determinations • Fringe Benefits • Specific Issues • Questions and Answers
C o v e ra g e
C O V E R A G E Sta tuto ry T e xt • Applies to any contract or bid specification for a contract that: (1) Is made by the Federal Government or the District of Columbia; (2) Involves an amount exceeding $2,500; and (3) Has as its principle purpose the furnishing of services in the United States through the use of service employees 41 U.S.C. § 6702(a)
C O V E R A G E Introduction to Service Contract Labor Standards Look to FAR Definitions FAR 37.101 defines “service” contract as a contract that directly engages the time and effort of a contractor whose primary purpose is to perform an identifiable task rather than to furnish an end item of supply
C O V E R A G E Introduction to Service Contract Labor Standards • Who is a “Service Employee”? o Directly engaged in contract work and non-exempt under the FLSA o Look to Wage Determination or SOW for job classifications • Do not rely on job titles or employee’s classification
C O V E R A G E Introduction to Service Contract Labor Standards What are SCA Covered Employees Entitled To?
C O V E R A G E Introduction to Service Contract Labor Standards • Wages • Fringe Benefits • Health and Safety Protections • Required Notifications to Employees
E m p l o y e e E xe m p t i o n s
E x e m p t i o n s • Overview • Salary Basis Test • Exempt Duties: o Professional o Administrative o Executives • Computer-Related Jobs • Highly Compensated Employees
E m p l o y e e E x e m p t i o n s Salary Basis Test Y es Employee is exempt Is the employee compensated on salary basis at a rate not less than S t op inquiry; $455 per week? employee is not No exempt (well, almost st op inquiry)
C h a n g e m a y b e o n t h e w a y ! ! • New regulations enjoined in late 2016 • Key provisions of rule: o Minimum salary $913 per week ($47,476 annually) o Highly compensated = $134,004 annually o Automatic, annual adjustment to salary and HCE standards • DOL has issued new RFI to OPM; new rule-making anticipated
Wa g e D e t e r m i n a t i o n s
W a g e D e t e r m i n a t i o n s ( W D s ) • WD represents the minimum wage for classification of various jobs performed • WD also contains the minimum fringe benefit • New WDs should be incorporated at certain times by the contracting officer
T y p e s o f W a g e D e t e r m i n a t i o n s • Standard • Non-Standard • Collective Bargaining Agreement Specific (CBA-WD) • Contract Specific – Sole Source
F r i n g e B e n e f i t s
D e t e r m i n i n g t h e H e a l t h a n d W e l f a r e B e n e f i t s Odd-numbered WDs • Per person rate Even-numbered WDs • Averaging H&W Rate
D e t e r m i n i n g t h e H e a l t h a n d W e l f a r e B e n e f i t s • Listed on the Wage Determination Document • Must be paid in full , without Productivity Requirements • The H&W rate is updated on an annual basis • If CBA exists, check required benefits
H e a l t h a n d W e l f a r e B e n e f i t s I s s u e s • Part-Time Workers • Changing Job Classifications • “Break in Services”
Va c a t i o n U n d e r t h e S C L S • Cliff vesting – i.e., employees "earn" all vacation in a lump sum as of their anniversary date o Typical “accrual” policy does not comply • Must be paid out upon employee termination, contract conclusion or at the next anniversary date • Part-time or temporary employees entitled to proportional benefits
S p e c i f i c I s s u e s
S p e c i f i c I s s u e s • The Fair Labor Standards Act (FLSA) and the Service Contract Labor Standards • Hours Worked – What is Compensable Work o Meals and Breaks o Waiting Time o On-Call Time o Lectures, Meetings and Training Programs • Overtime o Requirements o Night Work & Shift Work • Non-Displacement of Qualified Workers • Sub/Prime Issues
S C L S , C B A s a n d P r i c e A d j u s t m e n t s What about increased costs in the base year after the contract has already been executed?
S C L S , C B A s a n d P r i c e A d j u s t m e n t s • Akin to modifications to WDs o Effective on anniversary date (multi-year contracts) and option exercise • Price adjustment clause o Revisions limited to wages, fringe benefits, social security and employment taxes, and workers’ compensation insurance • “Changes” clause o May be entitled to recovery beyond price adjustment clause
R e s t a n d M e a l P e r i o d s • Rest periods of short duration (i.e., 20 minutes or less) are customarily paid for as working time • Unauthorized extensions of authorized work breaks need not be counted as hours worked if contrary to express policy • Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time o Employee must be completely relieved from duty for the purpose of eating regular meals
W a i t i n g T i m e • Very fact dependent • Engaged to wait = working time • Waiting to be engaged = not working time • Secretary who reads a book while waiting for dictation or a fireman who plays checkers while waiting for an alarm is working during such periods of inactivity
O n - C a l l T i m e • If required to remain on premises while “on call”, clearly working time • An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases)
L e c t u r e s , M e e t i n g s , a n d T r a i n i n g Compensable Time or Not?
T r a v e l T i m e Standard commuting = not working time
N o n - d i s p l a c e m e n t o f Q u a l i f i e d W o r k e r s • Right of first refusal where follow-on contract is awarded for same or similar services • Anniversary list of all incumbents to be provided to CO and to success contractor • May choose to employ fewer employees than predecessor and determine which employees will first be offered right of refusal o Obligation continues to apply for 90 days after commencement of contract • Must make “bona fide offer of employment” o Lower pay may be bona fide if business reasons for offer are valid
S u b c o n t r a c t o r C o m p l i a n c e • SCLS provides that prime contractor cannot avoid requirements of the SCLS by passing work to subcontractor or third party vendor • Prime is always potentially at risk for compliance issues • 29 C.F.R. § 4.114 “[t]he appropriate enforcement sanctions provided under the Act may be invoked against both the prime contractor and the subcontractor in the event of a failure to comply with any of the Act’s requirements.”
M a n a g i n g t h e P r i m e / S u b R e l a t i o n s h i p • Flow down required SCLS provisions • Ensure the subcontractor understands implication of SCLS coverage and its obligations under same • Include rep/warrant regarding SCLS coverage and obligation to report if compliance issue or audit/investigation is identified • Consider rep/warrant regarding timekeeping systems and practices • Indemnification provision
M a n a g i n g t h e P r i m e / S u b R e l a t i o n s h i p To audit or not to audit?
G S A S c h e d u l e s a n d t h e S C L S
M A S S c h e d u l e s • SCLS Incorporated in all Schedules • Schedule IT 70 • The Professional Services Schedule • TAPS and The Professional & Allied Healthcare (VA)
M a p p i n g L a b o r C a t e g o r i e s • Schedule Contractor maps the Labor Category to the DOL Directory of Occupations • GSA does not review or approve the mapping o The contractor is liable for understanding and properly classifying the categories
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