The Service Contract Act (SCA) is a federal law that requires certain employers to pay their employees no less than the prevailing wage and fringe benefits for their particular job classification on contracts to provide services to the U.S. government. The SCA applies to government contractors and subcontractors that provide services to federal agencies, including the Department of Defense, Department of Energy, and Department of Transportation, among others.
The SCA requires all contracts and subcontracts in excess of $2,500 that involve services to the U.S. government to include a clause known as the Service Contract Act Far Clause (SCA Far Clause). This clause requires employers to pay their employees a minimum wage and fringe benefit rate determined by the U.S. Department of Labor (DOL) for their job classification and to maintain accurate records of their employees` hours, wages, and benefits.
The SCA Far Clause also requires employers to provide certain employee benefits, which include health and welfare benefits, such as medical, dental, and vision coverage, and retirement benefits, such as a 401(k) plan or pension. Employers must provide these benefits to employees who work on government service contracts for more than 30 days or 1,500 hours per year.
To comply with the SCA Far Clause, employers must maintain accurate records of their employees` hours, wages, and benefits for the duration of the contract or subcontract. The DOL may conduct investigations or audits to ensure compliance with the SCA and can assess penalties for violations of the law.
Employers that fail to comply with the SCA Far Clause may be subject to legal action, including the loss of their government contract or subcontract and financial penalties. However, employers that comply with the SCA Far Clause may benefit from a competitive advantage in bidding for government contracts and may also improve their relationships with their employees.
In conclusion, the Service Contract Act Far Clause is a crucial part of any government contract or subcontract involving services to the U.S. government. Employers must comply with the wage and benefit requirements and maintain accurate records to avoid penalties and legal consequences. By complying with the SCA Far Clause, employers can also improve their relationships with their employees and potentially win more government contracts and subcontracts through competitive bidding.