Slotting vs. Conformance – The Door Into Summer

“…While still a kitten, all fluff and buzzes, Pete had worked out a simple philosophy. I was in charge of quarters, rations, and weather; he was in charge of everything else. But he held me especially responsible for weather. Connecticut winters are good only for Christmas cards; regularly that winter Pete would check his own door, refuse to go out it because of that unpleasant white stuff beyond it (he was no fool), then badger me to open a people door. He had a fixed conviction that at least one of them must lead into summer weather.”

--Robert Heinlein, The Door Into Summer

When I first started out team teaching seminars in the wage & hour field back in the 1980’s, my mentor Gilbert Ginsburg used to tell attendees that they should avoid conformances,  if possible, and just slot jobs into existing categories in the wage determination found in their contracts. Slotting verses Conformances – like Godzilla verses King Kong.

A conformance is a formal process under either the Davis-Bacon Act (“DBA”) or the Service Contract Act (“SCA”) of determining a wage rate for a so-called missing job position – i.e., one not found on the wage determination (“WD”) It involves a submission of an SF-1444 form to the contracting officer  who reviews it and forwards the package with a recommendation to the Nation Office of the US Department of Labor (“DOL”) for a final decision on appropriate prevailing wage and fringe benefit requirements  under the government contract.

DOL gets the final say on both conformances and slotting ( the latter if they decide to investigate it). And DOL has considerable discretion in setting the wages. And as I like to say, they are the department of labor not business. So, they like to set conformances at a high rate of pay. The requirement is that a contractor propose a conformance which bears a “reasonable relationship” to the skill level and compensation of the missing job position. But one-time DOL came back and told one of my clients to pay one cent more per hour compensation. You would think if you got that close you were reasonable. Alternatively, if the contractor  just proposes a too high conformance rate, DOL will simply approve the rate proposed by the errant contractor. Conformances are thus a “racket” of sort.

Slotting, by contrast, involves no submission to DOL. The contractor just finds a similar position on the WD which does some part of the missing job and then adopts that listed position’s wage rate and classification often by adding a parenthetical after its own job description name. Obviously, it is easier  to slot a job into an existing position and avoid the risking a slanted conformance process where DOL can set a higher wage rate for the missing job position and ordinarily (absent some special circumstance or change order) the contractor will be left with the cost burden (i.e., the bag holder) under principles of fixed price contracting. For this reason, contractors are incentivized  to  “slot” positions into the existing SCA or DBA classification scheme rather than proceed with a conformance.

Slotting is expressly encouraged by DOL guidance  when a job position does some of the work of a position on the WD, even if it has a different job title and does other duties not covered by the WD position. The instructions for slotting include the following:

Determine if a conformance is necessary. Determine if the work to be performed

by the classification(s) to be utilized is performed by any classification

listed on the wage determination. (29 CFR Section 4.6(bX2Xi))

Service Contract Act Conformance Resource Book at 5. The Resource Book further provides that “If yes, there is no need for a conformance. Id. at 2. In ERC/Teledyne Brown Eng’g, ARB No. 05-133 (Jan. 31, 2007), the Administrative Review Board (“ARB”)  reaffirmed the basic principle of “slotting” whereby “wage rates are derived for a classification based on a comparison of equivalent or similar job duty and skill characteristics between the classifications studied and those for which no survey data is available.”

DOL also has a FAQ which formally states:

How are wage rates determined for classes that are not surveyed?

Often, wage surveys result in insufficient data for job classifications. Establishing a prevailing wage rate for these classifications can be accomplished through a "slotting," procedure, utilizing the grading system for Federal employees. Under "slotting," wage rates are derived based on a comparison of equivalent or similar job duties and skills between the classifications which were surveyed and those for which no survey data is available. For example, a surveyed rate for the janitorial classification may be adopted for the food service worker (cafeteria worker) classification because job duties and skills, required for both classifications, are rated at the same grade level under the grading system for Federal employees.

https://www.dol.gov/agencies/whd/government-contracts/service-contracts/faq.

Thus, slotting and conformance are two distinct processes under the SCA and DBA used by both DOL and contractors to determine appropriate wage rates for employees when the provided WD does not explicitly list a specific job title. Slotting is the process of mapping a job to an existing, similar classification found in the WD based on comparable duties and skills. Conformance is a formal process used when no suitable classification exists in the WD, requiring the creation of a new, approved labor category and rate. As noted on the web in a perceptive blog by the Wiley Rein law firm, “Other times, contractors are on their own in mapping job duties to the closest of the existing labor categories found in the applicable wage determination, however ill-fitting.” Wiley Rein goes on to suggest  probably correctly that slotting has a better chance of success when the contractor is proposing to pay too much rather than too little. If your cutting corners by slotting, A DOL Investigator may demand that you do an after the fact conformance and you will end up eating any extra payroll expenses arising thereby.

But sometimes slotting is the best option. In certain service contract, like nontraditional healthcare related administrative work for services or environmental work for construction when  the DOL WDs are  inadequate to the task at hand leaving many if not most of the workers without any clear SCA job classification. And sometimes the contract has hundreds of WDs. Conformance in those complex cases is messy, expensive, burdensome and can be costly.

The problem here in a nutshell is that contractors have so many job positions required for their contracts which are not expressly called out in the WD. They must then pick their poison. Ideally, it would be better if DOL would sharpen its pencil, survey for, add more job classifications, and fix the gaps in the  issuance of these WDs . But in today’s world that is not going to happen. And so, it goes. Contractors must find their own exit door. I hope you “grok” what I mean.