Ordinarily, a party that signs a CBA after bidding on a government service contract, cannot pay less than the minimum wages and benefits set forth in that CBA come the next option year. And the price adjustment they are entitled to is based not on any lower bid price, but instead on the actual increased or decreased cost between the base year pay and the new option year pay. For that reason, the ASBCA got to the right result in a recent case. Albeit, the ASBCA also oversimplified the actual workings of section 4(c) of the SCA and how new CBA becomes binding on successor contractors. If there is no new CBA negotiated, it is possible that the SCA prevailing wage rates may displace the CBA rates in the option year, a situation the ASBCA appears to have ruled out. The occurrence of this event, however, doesn’t mean the contractor will get an upward adjustment in price. Indeed, if the contractor lowers the wages, then the Government gets a downward adjustment. And if the contractor increases the wages, they don’t get an “as bid” adjustment. They just get the differential between the old and new rates actually paid.
Read MoreA recent decision issued by the Armed Services Board of Contract Appeals highlights how contractors might be forced to take a loss if they underbid their offers to perform service contracts.
Read MoreEmployers furnishing Service Contract Act (“SCA”) compliant plans are advised to fully pay for the benefits, rather than require employees to contribute part of the expense. That applies to medical plans and 401K plans. This is more likely to assure that the workers can be compelled to take the benefit plans and cannot demand cash out of the bona fide benefits. You can’t compel SCA covered workers to contribute their own money to the benefit plan, and if you do try to do so, you provide an opportunity for workers to opt out and demand cash fringe benefits, which will cost the employer possible additional FICA, Medicare, FUTA, SUTA, and worker’s comp. payroll taxes.
Read MoreThe $17.75 Contractor Minimum Wage Executive Order is rescinded. But the Obama-era $13.30 Contractor Minimum Wage Executive Order remains in place. That creates some confusion. It is my opinion that the workers formerly covered by the $17.75 an hour minimum wage are now covered by the $13.30 minimum wage, or any higher wage required by the prevailing wage laws or state or local government minimum wages.
Read MoreGoverning by decree using executive orders is a terrible way of regulating government procurement. Both political parties should call a truce, and stop issuing procurement related executive orders.
Read MorePresident Biden has issued an Executive Order closing federal agencies in honor of President Carter. Existing policies make it clear that federal employees will, for the most part, receive paid leave. However, federal contractors must exercise their judgment about furnishing leave.
Read MoreOne place for the Department of Government Efficiency to propose a reform is the overly restrictive commercial exemption to the Service Contract Act.
Read MoreTier 1 help desk work is generally considered to be nonexempt activity and covered by both the Fair Labor Standards Act (“FLSA”) and (where a federal government service contract is involved) by the Service Contract Act (“SCA”).
Read MoreThe SCA is a complex law. But here are some basic rules and issues you need to comply with.
Read MoreThere is an answer on how to conform a wage rate for team leaders under the Service Contract Act. You just how to know where to look. DOL suggests you pay them 110% of the journeyman rate.
Read MoreThe US Department of Labor (“DOL”) announced actions it is taking to combat what it calls “coercive ‘fine print’ provisions” in employment agreements. One such action led to an injunction that barred a company from using its employment agreement to shift the cost of a wage and hour suit onto the very truck drivers who brought the claim. So, be advised—DOL is reading your fine print.
Read MoreA service contractor loses a pension tail liability claim, which with a little planning and a small change to their collective bargaining agreement ("CBA") may have been avoidable.
Read MoreThe US Department of Labor has issued its announcement of federal contractor minimum wage rates for 2025. For most nonexempt federal contractor employees, the new rate will be $17.75 per hour. However, contractors must review their wage rates across the board to make sure they're in compliance with the multiple minimum wage rates that could apply.
Read MoreThe Government Accountability Office ("GAO") whiffed in its recent decision in the Maximus Federal Services bid protest. The contractual Labor Harmony Agreement ("LHA") clause violates the FAR neutrality mandates, and a long line of previous decisions says GAO could have stepped up and curbed this excess. It was a missed opportunity for GAO to do the right thing.
Read MoreGenerally , even small periods of time such as a few hours spent working directly on Service Contract Act ("SCA") covered contract, require payment of the prevailing wages and fringe benefits. The SCA adopts the FLSA definition of de miminis working time, which is commonly restricted by DOL to periods of time of less than 10 minutes.
Read MoreSome changes agencies make to US Government contracts may vary existing rules and thus constitute deviations to the Federal Acquisition Regulation (“FAR”). Deviations to the FAR require approval of the FAR Council. The contracting agency is not free to implement special contract terms which deviate from the FAR without securing that approval.
Read MoreThe Department of Labor announced last week that it recovered over $1 million for workers who had been underpaid by a federal contractor because it misclassified its workers who were covered by the Service Contract Act. Getting workers properly classifed is not easy, so here’s a brief overview of how one should approach the task.
Read MoreNew SCA H&W rate increases are finally here and they are up about 7.3%. As to when they become effective, please read the blog. It is complicated.
Read MoreThe 1-800-MEDICARE call center contractor is being punished unfairly. A dangerous example is being made of Maximus. Its contract is being terminated. A new solicitation is being issued. It will have a “labor harmony requirement“ which will force the winning offeror to essentially accede to the demands of the union. That is not how the procurement system is supposed to work.
Read MoreThe timing of when to add a new Service Contract Act (“SCA”) wage determination (“WD”) to a contract for remote workers can get rather complex. It depends on the facts. And the guidance is rather sparse. Here we try to parse the rules and offer some practical guidance.
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