• The McNamara-O’Hara Service Contract Act covers contractors who provide federal and District of Columbia agencies with the work of service employees.
• The SCA provides covered service workers the right to receive at least the locally prevailing wage rate and fringe benefits, as determined by the Department of Labor, for the type of work performed.

The McNamara-O’Hara Service Contract Act (SCA) covers contracts entered into by federal and District of Columbia agencies where the principal purpose is to furnish services in the U.S. through the use of “service employees.” The definition of “service employee” includes any employee engaged in performing services on a covered contract other than a bona fide executive, administrative, or professional employee who meets the exemption criteria in 29 CFR Part 541.

This Act applies only to contracts awarded by the federal or District of Columbia governments. It does not apply to certain types of contractual services. These statutory exemptions include:

• Contracts for construction, alteration, and/or repair of public buildings or public works, including painting and decorating (those covered by the Davis-Bacon Act).
• Work required under the provisions of the Walsh-Healey Public Contracts Act.
• Contracts for transporting freight or personnel where published tariff rates are in effect.
• Contracts for furnishing services by radio, telephone, telegraph, or cable companies subject to the Communications Act of 1934.
• Contracts for public utility services.
• Employment contracts providing for direct services to a federal agency by an individual or individuals.
• Contracts for operating postal contract stations for the U.S. Postal Service.
• Services performed outside the U.S. (except in territories administered by the U.S., as defined in the Act).
• Contracts administratively exempted by the Secretary of Labor in special circumstances because of the public interest or to avoid impairment of government business.

The SCA provides covered service workers on federal service contracts the right to receive at least the locally prevailing wage rate and fringe benefits, as determined by the Department of Labor, for the type of work performed. The Wage and Hour Division accepts complaints of alleged SCA wage violations.

Every covered contract in excess of $2,500 contains a provision specifying the fringe benefits to be furnished to service employees and must be paid in addition to the minimum wage. The fringe benefit amount is listed in the wage determination. SCA makes no distinction, with respect to its compensation provisions, between temporary, part-time, and full-time employees. However, temporary and part-time employees are only entitled to an amount of the fringe benefits specified in an applicable determination which is proportionate to the amount of time spent in covered work.

Unless otherwise specified on the applicable wage determination, health and welfare payments are due for all hours, including paid vacation, sick leave, and holiday hours, up to a maximum of 40 hours per week and 2,080 hours per year on each contract.

Contractors may pay employees their fringe benefits in cash instead of furnishing the required fringe benefits. Fringe benefit obligations may be discharged by paying to the employee on his regular payday, in addition to the monetary wage required, a cash amount per hour in lieu of the specified fringe benefits, provided such amount is equivalent to the cost of the fringe benefits required. Records are kept separately showing the amounts to be paid for fringe benefits.

In addition, no part of the contract work may be performed in buildings, surroundings, or under working conditions that are unsanitary, hazardous, or dangerous to the safety and health of employees. Finally, employers must notify employees working in connection with the contract of the compensation due them under the wage and fringe benefits provisions of the contract.