What Does SCA Mean in Labor Law?
The McNamara-O'Hara Service Contract Act, or the SCA, signed by President Lyndon Johnson in 1965, requires that employers subject to the SCA compensate employees according to wage determinations compiled by the U.S. Department of Labor. Service-provider companies that are prime contractors or subcontractors for the federal government must pay employees the prevailing wage, which often is higher than federal or state hourly minimum wage rates.
Scope of the SCA
When it comes to the SCA, employees need to understand that it applies to work performed on service-oriented federal government contracts worth more than $2,500, such as security guard protection in government office buildings or clerk-typist services on a management consulting contract for a federal agency. The SCA doesn't apply to contracts for construction projects, transportation, communications, utility services or contracted postal services. It applies to work performed in the United States and U.S. jurisdictions, such as American Samoa and the Virgin Islands. The SCA does not apply to service workers in foreign sites, such as employees on naval bases in Japan or U.S. Army installations in Germany.
SCA Pay 101
The SCA dovetails the Fair Labor Standards Act in that employers must pay minimum wage and overtime to employees who put in more than 40 hours of work in a week. According to the U.S. Department of Labor, this applies only to an SCA contract exceeding $2,500. For contracts less than this, employees must still be paid at least minimum wage.
The prevailing wage rates do not apply to employees who meet the criteria for the FLSA exemptions from overtime pay, such as administrative, executive and professional classifications. For example, SCA wages wouldn't apply to salaried exempt department managers; SCA wages apply only to hourly nonexempt workers.
Understanding the Prevailing Wage
The SCA requires that employers pay what is called the "prevailing wage." Prevailing wages for thousands of occupations and geographic areas are contained in the Labor Department's wage determination publication. The U.S. Bureau of Labor Statistics provides much of the data required for establishing prevailing wages for each occupation and area. Wages are based on the predominant local wage rate paid, as determined by survey data, and by mean and median values. The Labor Department reviews prevailing wages regularly to ensure competitive and fair pay for service-provider employees.
Fringe Benefit Requirements
Unlike the FLSA, which does not require employers to provide vacation, holidays or fringe benefits, employers subject to the SCA must provide fringe benefits that are comparable to those offered in the place where the contracted services are performed. The fringe benefits, available through the Labor Department's wage determination data, are applicable to full-time employment. According to the U.S. Department of Labor, employers can provide the fringe benefits as part of a package or pay employees the equivalent cash amount of the benefits.
Violations of the SCA
An employer who violates the SCA can be required to bring employees' pay up to the prevailing wage or risk losing payment for their services from the contracting agency. Contractors who violate the SCA may also be prohibited from receiving government contracts for up to three years. Employers also may be subject to fines and penalties for safety violations under the Occupational Safety and Health Act. Safety violations include SCA work performed under hazardous or unsafe working conditions that jeopardize employees' well-being.