Update to Federal Service Contracts

The Department of Labor’s Wage and Hour Division has issued a final rule to implement Executive Order 13495, Nondisplacement of Qualified Workers Under Service Contracts. This final rule will be effective once the Federal Acquisition Regulatory Council (FARC) issues regulations for the inclusion of the nondisplacement contract clause in covered federal solicitations and contracts, as required by the Executive Order.

In our last newsletter we told you that this order and final rule requires contractors and subcontractors that are awarded a federal service contract to provide the same or similar services at the same location to, in most circumstances, offer employment to the predecessor contractor’s employees in positions for which they are qualified. Successor contractors are allowed to reduce the size of the workforce and to give first preference to their current employees.

You can follow all the other provisions of this rule under the Federal Register, 29 CFR Part 9. Hopefully this rule will become finalized before year end, as it has been discussed extensively for the past four years.

Questions regarding the order may be addressed to Timothy Helm, Chief, Branch of Government Contracts Enforcement, Wage and Hour Division, U.S. Department of Labor, Washington, DC 20210; telephone number (202) 693-0064.


Changes to the 2012 Service Contract Act Health and Welfare Fringe Benefit rates were disclosed on June 11, 2012. The new SCA health and welfare benefits were increased to $3.71 per hour and are posted on the Wage Determination Online (www.wdol.gov) and Wage and Hour Division (WHD) (www.dol.gov/whd) websites.

The HISTORY, Solicitation/Contracts Affected and Wage Determinations for the State of Hawaii on this memorandum are basically the same as the previous memorandums issued by the Department of Labor covering this subject.

Go to www.wdol.gov and click on the Library page for a copy of this memorandum.

Remember, as in the past, do not provide your Service Contract Act employees this change until it has been modified into your contract by the Contracting Activity, which is usually on the anniversary date of your contract.

Types of Wage Determinations

In addition to the basic four types of wage determinations (Area Standard, Nonstandard, Collective Bargaining Agreements, and Contract-Specific), there have been some questions pertaining to other types of wage determinations.

Nationwide wage determinations and hourly day rate (usually for captains of vessels) wage determinations do not specify the odd or even health and welfare rates. On these you should go to the section of the wage determinations that specifies what health and welfare benefit rates apply. Those are the rates to utilize.

Questions about this should be addressed to the Contracting Activity of the Department of Labor in Washington, DC.

Service Contract Act Training Courses

The Professional Services Council (PSC) is offering its two-day Service Contract Act training in Arlington, VA, on October 31–November 1, 2012, in conjunction with the DOL and DOD panels that will be present. If interested, go to www.pscouncil.org or call PSC at 703-875-8059.

At Cleary, we know how important a comprehensive benefits package can be to your continued success. Give us a call today at 617-723-0700 and we will work with you to create a plan that meets your fringe-benefit obligations and provides your employees with valuable benefits.