[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - January 1, 2002 Edition]
[From the U.S. Government Printing Office]



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          29
          Part 0 to 99
          Revised as of July 1, 2001

          Labor





          Containing a codification of documents 
          of general applicability and future effect

          As of July 1, 2001

          With Ancillaries

          Published by
          Office of the Federal Register
          National Archives and Records
          Administration


          A Special Edition of the Federal Register



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                     U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2001



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                            Table of Contents



                                                                    Page
  Explanation.................................................       v

  Title 29:
          Subtitle A--Office of the Secretary of Labor               3
  Finding Aids:
      Table of CFR Titles and Chapters........................     593
      Alphabetical List of Agencies Appearing in the CFR......     611
      List of CFR Sections Affected...........................     621



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                     ----------------------------

                     Cite this Code:  CFR
                     To cite the regulations in 
                       this volume use title, 
                       part and section number. 
                       Thus, 29 CFR 0.735-1 
                       refers to title 29, part 
                       0, section 735-1.

                     ----------------------------

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                               EXPLANATION

    The Code of Federal Regulations is a codification of the general and 
permanent rules published in the Federal Register by the Executive 
departments and agencies of the Federal Government. The Code is divided 
into 50 titles which represent broad areas subject to Federal 
regulation. Each title is divided into chapters which usually bear the 
name of the issuing agency. Each chapter is further subdivided into 
parts covering specific regulatory areas.
    Each volume of the Code is revised at least once each calendar year 
and issued on a quarterly basis approximately as follows:

Title 1 through Title 16.................................as of January 1
Title 17 through Title 27..................................as of April 1
Title 28 through Title 41...................................as of July 1
Title 42 through Title 50................................as of October 1

    The appropriate revision date is printed on the cover of each 
volume.

LEGAL STATUS

    The contents of the Federal Register are required to be judicially 
noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie 
evidence of the text of the original documents (44 U.S.C. 1510).

HOW TO USE THE CODE OF FEDERAL REGULATIONS

    The Code of Federal Regulations is kept up to date by the individual 
issues of the Federal Register. These two publications must be used 
together to determine the latest version of any given rule.
    To determine whether a Code volume has been amended since its 
revision date (in this case, July 1, 2001, consult the ``List of CFR 
Sections Affected (LSA),'' which is issued monthly, and the ``Cumulative 
List of Parts Affected,'' which appears in the Reader Aids section of 
the daily Federal Register. These two lists will identify the Federal 
Register page number of the latest amendment of any given rule.

EFFECTIVE AND EXPIRATION DATES

    Each volume of the Code contains amendments published in the Federal 
Register since the last revision of that volume of the Code. Source 
citations for the regulations are referred to by volume number and page 
number of the Federal Register and date of publication. Publication 
dates and effective dates are usually not the same and care must be 
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instances where the effective date is beyond the cut-off date for the 
Code a note has been inserted to reflect the future effective date. In 
those instances where a regulation published in the Federal Register 
states a date certain for expiration, an appropriate note will be 
inserted following the text.

OMB CONTROL NUMBERS

    The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires 
Federal agencies to display an OMB control number with their information 
collection request.

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Many agencies have begun publishing numerous OMB control numbers as 
amendments to existing regulations in the CFR. These OMB numbers are 
placed as close as possible to the applicable recordkeeping or reporting 
requirements.

OBSOLETE PROVISIONS

    Provisions that become obsolete before the revision date stated on 
the cover of each volume are not carried. Code users may find the text 
of provisions in effect on a given date in the past by using the 
appropriate numerical list of sections affected. For the period before 
January 1, 1986, consult either the List of CFR Sections Affected, 1949-
1963, 1964-1972, or 1973-1985, published in seven separate volumes. For 
the period beginning January 1, 1986, a ``List of CFR Sections 
Affected'' is published at the end of each CFR volume.

CFR INDEXES AND TABULAR GUIDES

    A subject index to the Code of Federal Regulations is contained in a 
separate volume, revised annually as of January 1, entitled CFR Index 
and Finding Aids. This volume contains the Parallel Table of Statutory 
Authorities and Agency Rules (Table I). A list of CFR titles, chapters, 
and parts and an alphabetical list of agencies publishing in the CFR are 
also included in this volume.
    An index to the text of ``Title 3--The President'' is carried within 
that volume.
    The Federal Register Index is issued monthly in cumulative form. 
This index is based on a consolidation of the ``Contents'' entries in 
the daily Federal Register.
    A List of CFR Sections Affected (LSA) is published monthly, keyed to 
the revision dates of the 50 CFR titles.

REPUBLICATION OF MATERIAL

    There are no restrictions on the republication of material appearing 
in the Code of Federal Regulations.

INQUIRIES

    For a legal interpretation or explanation of any regulation in this 
volume, contact the issuing agency. The issuing agency's name appears at 
the top of odd-numbered pages.
    For inquiries concerning CFR reference assistance, call 202-523-5227 
or write to the Director, Office of the Federal Register, National 
Archives and Records Administration, Washington, DC 20408 or e-mail 
info@fedreg.nara.gov.

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ELECTRONIC SERVICES

    The full text of the Code of Federal Regulations, the LSA (List of 
CFR Sections Affected), The United States Government Manual, the Federal 
Register, Public Laws, Public Papers, Weekly Compilation of Presidential 
Documents and the Privacy Act Compilation are available in electronic 
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free). E-mail, gpoaccess@gpo.gov.

[[Page vii]]

    The Office of the Federal Register also offers a free service on the 
National Archives and Records Administration's (NARA) World Wide Web 
site for public law numbers, Federal Register finding aids, and related 
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site also contains links to GPO Access.

                              Raymond A. Mosley,
                                    Director,
                          Office of the Federal Register.

July 1, 2001.



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                               THIS TITLE

    Title 29--Labor is composed of nine volumes. The parts in these 
volumes are arranged in the following order: parts 0-99, parts 100-499, 
parts 500-899, parts 900-1899, parts 1900-1910, part 1910.1000-End, 
parts 1911-1925, part 1926, and part 1927 to end. The contents of these 
volumes represent all current regulations codified under this title as 
of July 1, 2001.

    Subject indexes appear following the occupational safety and health 
standards (part 1910), and following the safety and health regulations 
for: Longshoring (part 1918), Gear Certification (part 1919), and 
Construction (part 1926).

    Redesignation tables appear in the Finding Aids section of the 
eighth volume.

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                             TITLE 29--LABOR




                   (This book contains parts 0 to 99)

  --------------------------------------------------------------------
                                                                    Part

SUBTITLE A--Office of the Secretary of Labor................           0


Cross References: Railroad Retirement Board: See Employees' Benefits, 20 
  CFR chapter II.

  Social Security Administration, Department of Health and Human 
Services: See Employees' Benefits, 20 CFR chapter III.

  Editorial Note: Other regulations issued by the Department of Labor 
appear in 20 CFR chapters I, IV, V, VI, VII, and IX; 30 CFR chapter I; 
41 CFR chapters 50, 60, and 61. For Standards for a Merit System of 
Personnel Administration: See 5 CFR part 900, subpart F.

[[Page 3]]

              Subtitle A--Office of the Secretary of Labor

  --------------------------------------------------------------------

Part                                                                Page
0               Ethics and conduct of Department of Labor 
                    employees...............................           7
1               Procedures for predetermination of wage 
                    rates...................................           9
2               General regulations.........................          18
3               Contractors and subcontractors on public 
                    building or public work financed in 
                    whole or in part by loans or grants from 
                    the United States.......................          23
4               Labor standards for Federal Service 
                    Contracts...............................          27
5               Labor standards provisions applicable to 
                    contracts covering federally financed 
                    and assisted construction (also labor 
                    standards provisions applicable to 
                    nonconstruction contracts subject to the 
                    Contract Work Hours and Safety Standards 
                    Act)....................................         106
6               Rules of practice for administrative 
                    proceedings enforcing labor standards in 
                    Federal and federally assisted 
                    construction contracts and Federal 
                    service contracts.......................         132
7               Practice before the Administrative Review 
                    Board with regard to Federal and 
                    federally assisted construction 
                    contracts...............................         143
8               Practice before the Administrative Review 
                    Board with regard to Federal service 
                    contracts...............................         147
11              Department of Labor National Environmental 
                    Policy Act (NEPA) compliance procedures.         152
12              Uniform relocation assistance and real 
                    property acquisition for Federal and 
                    federally assisted programs.............         159
14              Security regulations........................         159
15              Administrative claims under the Federal Tort 
                    Claims Act and related statutes.........         163
16              Equal Access to Justice Act.................         173

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17              Intergovernmental review of Department of 
                    Labor programs and activities...........         179
18              Rules of practice and procedure for 
                    administrative hearings before the 
                    Office of Administrative Law Judges.....         183
19              Right to Financial Privacy Act..............         231
20              Federal claims collection...................         232
22              Program Fraud Civil Remedies Act of 1986....         255
24              Procedures for the handling of 
                    discrimination complaints under Federal 
                    employee protection statutes............         271
25              Rules for the nomination of arbitrators 
                    under section 11 of Executive Order 
                    10988...................................         278
29              Labor standards for the registration of 
                    apprenticeship programs.................         282
30              Equal employment opportunity in 
                    apprenticeship and training.............         293
31              Nondiscrimination in federally assisted 
                    programs of the Department of Labor--
                    effectuation of Title VI of the Civil 
                    Rights Act of 1964......................         306
32              Nondiscrimination on the basis of handicap 
                    in programs and activities receiving or 
                    benefiting from Federal financial 
                    assistance..............................         315
33              Enforcement of nondiscrimination on the 
                    basis of handicap in programs or 
                    activities conducted by the Department 
                    of Labor................................         331
34              Implementation of the Nondiscrimination and 
                    Equal Opportunity Requirements of the 
                    Job Training Partnership Act of 1982, as 
                    amended (JTPA)..........................         339
36              Nondiscrimination on the basis of sex in 
                    education programs or activities 
                    receiving federal financial assistance..         365
37              Implementation of the Nondiscrimination and 
                    Equal Opportunity Provisions of the 
                    Workforce Protection Act of 1998 (WIA)..         381
42              Coordinated enforcement.....................         422
44              Process for electing state employment 
                    statistics agency representatives for 
                    consultations with Department of Labor..         427
70              Production or disclosure of information or 
                    materials...............................         429
71              Protection of individual privacy and access 
                    to records under the Privacy Act of 1974         448

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75              Department of Labor review and certification 
                    procedures for rural industrialization 
                    loan and grant programs under the 
                    Consolidated Farm and Rural Development 
                    Act of 1972.............................         468
90              Certification of eligibility to apply for 
                    worker adjustment assistance............         471
93              New restrictions on lobbying................         480
95              Grants and agreements with institutions of 
                    higher education, hospitals, and other 
                    non-profit organizations, and with 
                    commercial organizations, foreign 
                    governments, organizations under the 
                    jurisdiction of foreign governments, and 
                    international organizations.............         492
96              Audit requirements for grants, contracts and 
                    other agreements........................         518
97              Uniform administrative requirements for 
                    grants and cooperative agreements to 
                    state and local governments.............         522
98              Governmentwide debarment and suspension 
                    (nonprocurement) and governmentwide 
                    requirements for drug-free workplace 
                    (grants)................................         549
99              Audits of states, local governments, and 
                    nonprofit organizations.................         567

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PART 0--ETHICS AND CONDUCT OF DEPARTMENT OF LABOR EMPLOYEES--Table of Contents




    Subpart A--Standards of Conduct for Current Department of Labor 
                                Employees

Sec.
0.735-1  Cross-references to employee ethical conduct standards, 
          financial disclosure regulations and other ethics regulations.

             Subpart B--Post Employment Conflict of Interest

0.737-1  Applicability.
0.737-2  Appointment of alternate officials.
0.737-3  Initiation of administrative disciplinary hearing.
0.737-4  Request for a hearing.
0.737-5  Appointment of Examiner.
0.737-6  Time, date and place of hearing.
0.737-7  Hearing rights.
0.737-8  Hearing decision and exceptions.
0.737-9  Decision on exceptions.
0.737-10  Administrative sanctions.
0.737-11  Judicial review.

    Authority: 5 U.S.C. 301; 18 U.S.C. 207 (1988); E.O. 12674, 54 FR 
15159, 3 CFR, 1989 Comp., p. 215, as modified by E.O. 12731, 55 FR 
42547, 3 CFR, 1990 Comp., p. 306; 5 CFR part 2634, part 2635, part 2640.

    Source: 33 FR 10432, July 20, 1968, unless otherwise noted.



    Subpart A--Standards of Conduct for Current Department of Labor 
                                Employees



Sec. 0.735-1  Cross-references to employee ethical conduct standards, financial disclosure regulations and other ethics regulations.

    Employees of the Department of Labor (Department) are subject to the 
executive branch-wide standards of ethical conduct at 5 CFR part 2635, 
the Department's regulations at 5 CFR part 5201 which supplement the 
executive branch-wide standards, the executive branch financial 
disclosure regulations at 5 CFR part 2634, the conflicts of interest 
regulations at 5 CFR part 2640, and the post employment regulations at 5 
CFR part 2641.

[64 FR 73853, Dec. 30, 1999]



             Subpart B--Post Employment Conflict of Interest

    Source: 48 FR 11944, Mar. 22, 1983, unless otherwise noted. 
Redesignated at 61 FR 57287, Nov. 6, 1996.



Sec. 0.737-1  Applicability.

    This subpart is applicable to any former employee of the Department 
of Labor leaving Government service on or after July 1, 1979 and prior 
to January 1, 1991.

[64 FR 73853, Dec. 30, 1999]



Sec. 0.737-2  Appointment of alternate officials.

    Notwithstanding any other provision of this subpart, the Secretary 
of Labor is authorized to perform any of the functions otherwise 
assigned in this subpart to the Under Secretary in any proceeding. The 
Secretary is also authorized to appoint as an alternate official any 
other officer or employee of the Department of Labor to perform 
functions otherwise assigned in this subpart to the Under Secretary or 
the Solicitor of Labor in any proceeding; except that:
    (a) The functions otherwise assigned in this subpart to the Under 
Secretary and the Solicitor shall not both be performed by the same 
alternate official in the same proceeding, and
    (b) The same individual shall not be appointed as both an Examiner 
under Sec. 0.737-5 and an alternate official under this section in the 
same proceeding.



Sec. 0.737-3  Initiation of administrative disciplinary hearing.

    (a) Any person may, in writing, report an apparent violation of 18 
U.S.C. 207(a), (b) or (c) or the regulations of the Office of Personnel 
Management at 5 CFR part 737 by a former employee described in 
Sec. 0.737-1 to the Solicitor of Labor.
    (b) On receipt of information regarding a possible violation of 18 
U.S.C. 207, and after determining that such information appears to be 
substantiated, the Solicitor shall expeditiously provide such 
information, along with any comments or agency regulations, to the 
Office of the Inspector General, the

[[Page 8]]

Director of the Office of Government Ethics and to the Criminal 
Division, Department of Justice.
    (c) Whenever the Solicitor has determined after appropriate review 
that there is reasonable cause to believe that a former employee 
described in Sec. 0.737-1 has violated 18 U.S.C. 207(a), (b) or (c) or 
the regulations of the Office of Personnel Management at 5 CFR part 737, 
the Solicitor may initiate an administrative disciplinary proceeding by 
providing the former employee with a notice of alleged violation.
    (d) The notice of alleged violation shall include:
    (1) A statement of allegations (and the basis thereof) sufficiently 
detailed to enable the former employee to prepare an adequate defense;
    (2) Notification of the right to a hearing; and
    (3) An explanation of the method by which a hearing may be 
requested.



Sec. 0.737-4  Request for a hearing.

    (a) Any former employee who is the subject of a notice of alleged 
violation issued by the Solicitor under Sec. 0.737-3 may within 15 days 
from the date of such notice request a hearing by writing to: The Office 
of the Under Secretary, U.S. Department of Labor, 200 Constitution 
Avenue, Washington, DC 20210.
    (b) If the former employee fails to request a hearing in accordance 
with paragraph (a), the Under Secretary may then render a final 
administrative decision in the matter and, if appropriate, impose the 
sanctions specified in Sec. 0.737-10.



Sec. 0.737-5  Appointment of Examiner.

    Whenever a notice of alleged violation has been issued and a hearing 
requested, the Under Secretary shall provide for the selection of a 
Department of Labor Administrative Law Judge, appointed in accordance 
with 5 U.S.C. 3105, to act as the Examiner with respect to the matter.



Sec. 0.737-6  Time, date and place of hearing.

    (a) Any hearing shall be conducted at a reasonable time, date and 
place as determined by the Examiner.
    (b) In setting a hearing date the Examiner shall give due regard to 
the former employee's need for:
    (1) Adequate time to prepare a defense properly, and
    (2) An expeditious resolution of allegations that may be damaging to 
his or her reputation.



Sec. 0.737-7  Hearing rights.

    (a) The following rights shall be afforded at a hearing conducted 
before the Examiner:
    (1) To represent oneself or to be represented by counsel,
    (2) To introduce and examine witnesses and to submit physical 
evidence,
    (3) To confront and cross-examine adverse witnesses,
    (4) To present oral argument; and
    (5) To obtain a transcript or recording of proceedings, on request.
    (b) In a hearing under this subpart, the Federal Rules of Civil 
Procedure and Evidence do not apply. However, the Examiner may make 
orders and determinations regarding discovery, admissability of 
evidence, conduct of examination and cross-examination, and similar 
matters as the Examiner deems necessary or appropriate to ensure 
orderliness of the proceedings and fundamental fairness to the parties.
    (c) In any proceeding under this subpart, the Department must 
establish any violation by a preponderance of the evidence.



Sec. 0.737-8  Hearing decision and exceptions.

    The Examiner shall make a determination exclusively on matters of 
record in the proceeding, and shall set forth in the hearing decision 
all findings of fact and conclusions of law relevant to the matters at 
issue. The hearing decision of the Examiner shall be considered final 
agency administrative action unless either party files exceptions in 
writing to the Under Secretary, U.S. Department of Labor, 200 
Constitution Avenue, Washington, DC 20210 within 30 days from the date 
of such hearing decision.



Sec. 0.737-9  Decision on exceptions.

    (a) Upon receipt of exceptions, the Under Secretary may afford both 
parties an opportunity to submit briefs or

[[Page 9]]

other appropriate statements in support of their respective positions.
    (b) The Under Secretary shall issue a decision based solely on the 
record of the proceedings or those portions thereof cited by the parties 
to limit the issues.
    (c) If the Under Secretary modifies or reverses the initial hearing 
decision of the Examiner, he or she shall specify such findings of fact 
and conclusions of law as are different from those of the Examiner.



Sec. 0.737-10  Administrative sanctions.

    The Examiner (or the Under Secretary in any matter in which 
exceptions are filed or which is decided in accordance with Sec. 0.737-
4(b)) may take appropriate action in the case of any individual found in 
violation of 18 U.S.C. 207(a), (b) or (c) or of the regulations at 5 CFR 
part 737 upon final administrative decisions by:
    (a) Prohibiting the individual from making, on behalf of any other 
person (except the United States), any formal or informal appearance 
before, or, with the intent to influence, any oral or written 
communication to the Department of Labor on any matter of business for a 
period not to exceed five years, which may be accomplished by directing 
agency employees to refuse to participate in any such appearance or to 
accept any such communications; or
    (b) Taking other appropriate disciplinary action.



Sec. 0.737-11  Judicial review.

    Any person found to have participated in a violation of 18 U.S.C. 
207(a), (b), or (c) or the regulations at 5 CFR part 737 may seek 
judicial review of the administrative determination in an appropriate 
United States district court.



PART 1--PROCEDURES FOR PREDETERMINATION OF WAGE RATES--Table of Contents




Sec.
1.1  Purpose and scope.
1.2  Definitions.
1.3  Obtaining and compiling wage rate information.
1.4  Outline of agency construction programs.
1.5  Procedure for requesting wage determinations.
1.6  Use and effectiveness of wage determinations.
1.7  Scope of consideration.
1.8  Reconsideration by the Administrator.
1.9  Review by Administrative Review Board.

Appendix A to Part 1
Appendix B to Part 1
Appendix C to Part 1

    Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization 
Plan No. 14 of 1950, 5 U.S.C. appendix; 29 U.S.C. 259; 40 U.S.C. 276a--
276a-7; 40 U.S.C. 276c; and the laws listed in appendix A of this part.

    Source: 48 FR 19533, Apr. 29, 1983, unless otherwise noted.

    Editorial Note: Nomenclature changes to Part 1 appear at 61 FR 
19984, May 3, 1996.



Sec. 1.1  Purpose and scope.

    (a) The procedural rules in this part apply under the Davis-Bacon 
Act (946 Stat. 1494, as amended; 40 U.S.C. 276a--276a-7) and other 
statutes listed in appendix A to this part which provide for the payment 
of minimum wages, including fringe benefits, to laborers and mechanics 
engaged in construction activity under contracts entered into or 
financed by or with the assistance of agencies of the United States or 
the District of Columbia, based on determinations by the Secretary of 
Labor of the wage rates and fringe benefits prevailing for the 
corresponding classes of laborers and mechanics employed on projects 
similar to the contract work in the local areas where such work is to be 
performed. Functions of the Secretary of Labor under these statutes and 
under Reorganization Plan No. 14 of 1950 (64 Stat. 1267, 5 U.S.C. 
appendix), except those assigned to the Administrative Review Board (see 
29 CFR part 7), have been delegated to the Deputy Under Secretary of 
Labor for Employment Standards who in turn has delegated the functions 
to the Administrator of the Wage and Hour Division, and authorized 
representatives.
    (b) The regulations in this part set forth the procedures for making 
and applying such determinations of prevailing wage rates and fringe 
benefits pursuant to the Davis-Bacon Act, each of the other statutes 
listed in appendix A, and any other Federal statute providing for 
determinations of such

[[Page 10]]

wages by the Secretary of Labor in accordance with the provisions of the 
Davis-Bacon Act.
    (c) Procedures set forth in this part are applicable, unless 
otherwise indicated, both to general wage determinations for contracts 
in specified localities, and to project wage determinations for use on 
contract work to be performed on a specific project.

[48 FR 19533, Apr. 29, 1983, as amended at 50 FR 49823, Dec. 4, 1985]



Sec. 1.2  Definitions. \1\
---------------------------------------------------------------------------

    \1 \These definitions are not intended to restrict the meaning of 
the terms as used in the applicable statutes.
---------------------------------------------------------------------------

    (a)(1) The prevailing wage shall be the wage paid to the majority 
(more than 50 percent) of the laborers or mechanics in the 
classification on similar projects in the area during the period in 
question. If the same wage is not paid to a majority of those employed 
in the classification, the prevailing wage shall be the average of the 
wages paid, weighted by the total employed in the classification.
    (2) In determining the prevailing wages at the time of issuance of a 
wage determination, the Administrator will be guided by paragraph (a)(1) 
of this section and will consider the types of information listed in 
Sec. 1.3 of this part.
    (b) The term area in determining wage rates under the Davis-Bacon 
Act and the prevailing wage provisions of the other statutes listed in 
appendix A shall mean the city, town, village, county or other civil 
subdivision of the State in which the work is to be performed.
    (c) The term Administrator shall mean the Administrator of the Wage 
and Hour Division, Employment Standards Administration, U.S. Department 
of Labor, or authorized representative.
    (d) The term agency shall mean the Federal agency, State highway 
department under 23 U.S.C. 113, or recipient State or local government 
under title 1 of the State and Local Fiscal Assistance Act of 1972.

[48 FR 19533, Apr. 29, 1983, as amended at 48 FR 503l3, Nov. 1, 1983]



Sec. 1.3  Obtaining and compiling wage rate information.

    For the purpose of making wage determinations, the Administrator 
will conduct a continuing program for the obtaining and compiling of 
wage rate information.
    (a) The Administrator will encourage the voluntary submission of 
wage rate data by contractors, contractors' associations, labor 
organizations, public officials and other interested parties, reflecting 
wage rates paid to laborers and mechanics on various types of 
construction in the area. The Administrator may also obtain data from 
agencies on wage rates paid on construction projects under their 
jurisdiction. The information submitted should reflect not only the wage 
rates paid a particular classification in an area, but also the type or 
types of construction on which such rate or rates are paid, and whether 
or not such rates were paid on Federal or federally assisted projects 
subject to Davis-Bacon prevailing wage requirements.
    (b) The following types of information may be considered in making 
wage rate determinations:
    (1) Statements showing wage rates paid on projects. Such statements 
should include the names and addresses of contractors, including 
subcontractors, the locations, approximate costs, dates of construction 
and types of projects, whether or not the projects are Federal or 
federally assisted projects subject to Davis-Bacon prevailing wage 
requirements, the number of workers employed in each classification on 
each project, and the respective wage rates paid such workers.
    (2) Signed collective bargaining agreements. The Administrator may 
request the parties to an agreement to submit statements certifying to 
its scope and application.
    (3) Wage rates determined for public construction by State and local 
officials pursuant to State and local prevailing wage legislation.
    (4) In making wage rate determinations pursuant to 23 U.S.C. 113, 
the highway department of the State in which a project in the Federal-
Aid highway system is to be performed shall be consulted. Before making 
a determination of wage rates for such a

[[Page 11]]

project the Administrator shall give due regard to the information thus 
obtained.
    (5) Wage rate data submitted to the Department of Labor by 
contracting agencies pursuant to 29 CFR 5.5(a)(1)(ii).
    (6) Any other information pertinent to the determination of 
prevailing wage rates.
    (c) The Administrator may initially obtain or supplement such 
information obtained on a voluntary basis by such means, including the 
holding of hearings, and from any sources determined to be necessary. 
All information of the types described in Sec. 1.3(b) of this part, 
pertinent to the determination of the wages prevailing at the time of 
issuance of the wage determination, will be evaluated in the light of 
Sec. 1.2(a) of this part.
    (d) In compiling wage rate data for building and residential wage 
determinations, the Administrator will not use data from Federal or 
federally assisted projects subject to Davis-Bacon prevailing wage 
requirements unless it is determined that there is insufficient wage 
data to determine the prevailing wages in the absence of such data. Data 
from Federal or federally assisted projects will be used in compiling 
wage rate data for heavy and highway wage determinations.

[48 FR 19533, Apr. 29, 1983, as amended at 50 FR 4506, Jan. 31, 1985]



Sec. 1.4  Outline of agency construction programs.

    To the extent practicable, at the beginning of each fiscal year each 
agency using wage determinations under any of the various statutes 
listed in appendix A will furnish the Administrator with a general 
outline of its proposed construction programs for the coming year 
indicating the estimated number of projects for which wage 
determinations will be required, the anticipated types of construction, 
and the locations of construction. During the fiscal year, each agency 
will notify the Administrator of any significant changes in its proposed 
construction programs, as outlined at the beginning of the fiscal year. 
This report has been cleared in accordance with FPMR 101-11.11 and 
assigned interagency report control number 1671-DOL-AN.



Sec. 1.5  Procedure for requesting wage determinations.

    (a)(1) Except as provided in paragraph (b) of this section, the 
Federal agency shall initially request a wage determination under the 
Davis-Bacon Act or any of its related prevailing wage statutes by 
submitting Standard Form 308 to the Department of Labor at this address:

    U.S. Department of Labor, Employment Standards Administration, Wage 
and Hour Division, Branch of Construction Contract Wage Determination, 
Washington, DC 20210.


The agency shall check only those classifications on the applicable form 
which will be needed in the performance of the work. Inserting a note 
such as ``entire schedule'' or ``all applicable classifications'' is not 
sufficient. Additional classifications needed which are not on the form 
may be typed in the blank spaces or on a separate list and attached to 
the form.
    (2) In completing SF-308, the agency shall furnish:
    (i) A sufficiently detailed description of the work to indicate the 
type of construction involved. Additional description or separate 
attachment, if necessary for identification of type of project, shall be 
furnished.
    (ii) The county (or other civil subdivision) and State in which the 
proposed project is located.
    (3) Such request for a wage determination shall be accompanied by 
any pertinent wage payment information which may be available. When the 
requesting agency is a State highway department under the Federal-Aid 
Highway Acts as codified in 23 U.S.C. 113, such agency shall also 
include its recommendations as to the wages which are prevailing for 
each classification of laborers and mechanics on similar construction in 
the area.
    (b) Whenever the wage patterns in a particular area for a particular 
type of construction are well settled and whenever it may be reasonably 
anticipated that there will be a large volume of procurement in that 
area for such a type of construction, the Administrator, upon the 
request of a Federal

[[Page 12]]

agency or in his/her discretion, may furnish notice of a general wage 
determination in the Federal Register when, after consideration of the 
facts and circumstances involved, the Administrator finds that the 
applicable statutory standards and those of this part will be met. If 
there is a general wage determination applicable to the project, the 
agency may use it without notifying the Department of Labor, Provided, 
That questions concerning its use shall be referred to the Department of 
Labor in accordance with Sec. 1.6(b). General wage determinations are 
published in the Government Printing Office (GPO) document entitled 
``General Wage Determinations Issued Under The Davis-Bacon And Related 
Acts''. (See appendix C for publication details and information on how 
to obtain general wage determinations.)
    (c) The time required for processing requests for wage 
determinations varies according to the facts and circumstances in each 
case. An agency should anticipate that such processing in the Department 
of Labor will take at least 30 days.

[48 FR 19533, Apr. 29, 1983, as amended at 48 FR 503l3, Nov. 1, 1983; 50 
FR 49823, Dec. 4, 1985]



Sec. 1.6  Use and effectiveness of wage determinations.

    (a)(1) Project wage determinations initially issued shall be 
effective for 180 calendar days from the date of such determinations. If 
such a wage determination is not used in the period of its effectiveness 
it is void. Accordingly, if it appears that a wage determination may 
expire between bid opening and contract award (or between initial 
endorsement under the National Housing Act or the execution of an 
agreement to enter into a housing assistance payments contract under 
section 8 of the U.S. Housing Act of 1937, and the start of 
construction) the agency shall request a new wage determination 
sufficiently in advance of the bid opening to assure receipt prior 
thereto. However, when due to unavoidable circumstances a determination 
expires before award but after bid opening (or before the start of 
construction, but after initial endorsement under the National Housing 
Act, or before the start of construction but after the execution of an 
agreement to enter into a housing assistance payments contract under 
section 8 of the U.S. Housing Act of 1937), the head of the agency or 
his or her designee may request the Administrator to extend the 
expiration date of the wage determination in the bid specifications 
instead of issuing a new wage determination. Such request shall be 
supported by a written finding, which shall include a brief statement of 
the factual support, that the extension of the expiration date of the 
determination is necessary and proper in the public interest to prevent 
injustice or undue hardship or to avoid serious impairment in the 
conduct of Government business. The Administrator will either grant or 
deny the request for an extension after consideration of all of the 
circumstances, including an examination to determine if the previously 
issued rates remain prevailing. If the request for extension is denied, 
the Administrator will proceed to issue a new wage determination for the 
project.
    (2) General wage determinations issued pursuant to Sec. 1.5(b), 
notice of which is published in the Federal Register, shall contain no 
expiration date.
    (b) Contracting agencies are responsible for insuring that only the 
appropriate wage determination(s) are incorporated in bid solicitations 
and contract specifications and for designating specifically the work to 
which such wage determinations will apply. Any question regarding 
application of wage rate schedules shall be referred to the 
Administrator, who shall give foremost consideration to area practice in 
resolving the question.
    (c)(1) Project and general wage determinations may be modified from 
time to time to keep them current. A modification may specify only the 
items being changed, or may be in the form of a supersedeas wage 
determination, which replaces the entire wage determination. Such 
actions are distinguished from a determination by the Administrator 
under paragraphs (d), (e) and (f) of this section that an erroneous wage 
determination has been issued or that the wrong wage determination or 
wage rate schedule has been utilized by the agency.

[[Page 13]]

    (2)(i) All actions modifying a project wage determination received 
by the agency before contract award (or the start of construction where 
there is no contract award) shall be effective except as follows:
    (A) In the case of contracts entered into pursuant to competitive 
bidding procedures, modifications received by the agency less than 10 
days before the opening of bids shall be effective unless the agency 
finds that there is not a reasonable time still available before bid 
opening, to notify bidders of the modification and a report of the 
finding is inserted in the contract file. A copy of such report shall be 
made available to the Administrator upon request. No such report shall 
be required if the modification is received after bid opening.
    (B) In the case of projects assisted under the National Housing Act, 
modifications shall be effective if received prior to the beginning of 
construction or the date the mortgage is initially endorsed, whichever 
occurs first.
    (C) In the case of projects to receive housing assistance payments 
under section 8 of the U.S. Housing Act of 1937, modifications shall be 
effective if received prior to the beginning of construction or the date 
the agreement to enter into a housing assistance payments contract is 
executed, whichever occurs first.
    (ii) Modifications to project wage determinations and supersedeas 
wage determinations shall not be effective after contract award (or 
after the beginning of construction where there is no contract award).
    (iii) Actual written notice of a modification shall constitute 
receipt.
    (3) All actions modifying a general wage determination shall be 
effective with respect to any project to which the determination 
applies, if notice of such actions is published before contract award 
(or the start of construction where there is no contract award), except 
as follows:
    (i) In the case of contracts entered into pursuant to competitive 
bidding procedures, a modification, notice of which is published less 
than 10 days before the opening of bids, shall be effective unless the 
agency finds that there is not a reasonable time still available before 
bid opening to notify bidders of the modification and a report of the 
finding is inserted in the contract file. A copy of such report shall be 
made available to the Administrator upon request. No such report shall 
be required if notice of the modification is published after bid 
opening.
    (ii) In the case of projects assisted under the National Housing 
Act, a modification shall be effective if notice of such modification is 
published prior to the beginning of construction or the date the 
mortgage is initially endorsed, whichever occurs first.
    (iii) In the case of projects to receive housing assistance payments 
under section 8 of the U.S. Housing Act of 1937, a modification shall be 
effective if notice of such modification is published prior to the 
beginning of construction or the date the agreement to enter into a 
housing assistance payments contract is signed, whichever occurs first.
    (iv) If under paragraph (c)(3)(i) of this section the contract has 
not been awarded within 90 days after bid opening, or if under paragraph 
(c)(3)(ii) or (iii) of this section construction has not begun within 90 
days after initial endorsement or the signing of the agreement to enter 
into a housing assistance payments contract, any modification, notice of 
which is published in the Federal Register prior to award of the 
contract or the beginning of construction, as appropriate, shall be 
effective with respect to that contract unless the head of the agency or 
his or her designee requests and obtains an extension of the 90-day 
period from the Administrator. Such request shall be supported by a 
written finding, which shall include a brief statement of the factual 
support, that the extension is necessary and proper in the public 
interest to prevent injustice or undue hardship or to avoid serious 
impairment in the conduct of Government business. The Administrator will 
either grant or deny the request for an extension after consideration of 
all the circumstances.
    (v) A modification to a general wage determination is ``published'' 
within the meaning of this section on the date of publication of notice 
of such modification in the Federal Register, or

[[Page 14]]

on the date the agency receives actual written notice of the 
modification from the Department of Labor, whichever occurs first.
    (vi) A supersedeas wage determination or a modification to an 
applicable general wage determination, notice of which is published 
after contract award (or after the beginning of construction where there 
is no contract award) shall not be effective.
    (d) Upon his/her own initiative or at the request of an agency, the 
Administrator may correct any wage determination, without regard to 
paragraph (c) of this section, whenever the Administrator finds such a 
wage determination contains clerical errors. Such corrections shall be 
included in any bid specifications containing the wage determination, or 
in any on-going contract containing the wage determination in question, 
retroactively to the start of construction.
    (e) Written notification by the Department of Labor prior to the 
award of a contract (or the start of construction under the National 
Housing Act, under section 8 of the U.S. Housing Act of 1937, or where 
there is no contract award) that: (1) There is included in the bidding 
documents or solicitation the wrong wage determination or the wrong 
schedule or that (2) a wage determination is withdrawn by the Department 
of Labor as a result of a decision by the Administrative Review Board, 
shall be effective immediately without regard to paragraph (c) of this 
section.
    (f) The Administrator may issue a wage determination after contract 
award or after the beginning of construction if the agency has failed to 
incorporate a wage determination in a contract required to contain 
prevailing wage rates determined in accordance with the Davis-Bacon Act, 
or has used a wage determination which by its terms or the provisions of 
this part clearly does not apply to the contract. Further, the 
Administrator may issue a wage determination which shall be applicable 
to a contract after contract award or after the beginning of 
construction when it is found that the wrong wage determination has been 
incorporated in the contract because of an inaccurate description of the 
project or its location in the agency's request for the wage 
determination. Under any of the above circumstances, the agency shall 
either terminate and resolicit the contract with the valid wage 
determination, or incorporate the valid wage determination retroactive 
to the beginning of construction through supplemental agreement or 
through change order, Provided That the contractor is compensated for 
any increases in wages resulting from such change. The method of 
incorporation of the valid wage determination, and adjustment in 
contract price, where appropriate, should be in accordance with 
applicable procurement law.
    (g) If Federal funding or assistance under a statute requiring 
payment of wages determined in accordance with the Davis-Bacon Act is 
not approved prior to contract award (or the beginning of construction 
where there is no contract award), the agency shall request a wage 
determination prior to approval of such funds. Such a wage determination 
shall be issued based upon the wages and fringe benefits found to be 
prevailing on the date of award or the beginning of construction (under 
the National Housing Act, under section 8 of the U.S. Housing Act of 
1937 or where there is no contract award), as appropriate, and shall be 
incorporated in the contract specifications retroactively to that date, 
Provided, That upon the request of the head of the agency in individual 
cases the Administrator may issue such a wage determination to be 
effective on the date of approval of Federal funds or assistance 
whenever the Administrator finds that it is necessary and proper in the 
public interest to prevent injustice or undue hardship, Provided further 
That the Administrator finds no evidence of intent to apply for Federal 
funding or assistance prior to contract award or the start of 
construction, as appropriate.

[48 FR 19533, Apr. 29, 1983, as amended at 50 FR 49823, Dec. 4, 1985]



Sec. 1.7  Scope of consideration.

    (a) In making a wage determination, the area will normally be the 
county unless sufficient current wage data (data on wages paid on 
current projects or, where necessary, projects under construction no 
more than one year

[[Page 15]]

prior to the beginning of the survey or the request for a wage 
determination, as appropriate) is unavailable to make a wage 
determination.
    (b) If there has not been sufficient similar construction within the 
area in the past year to make a wage determination, wages paid on 
similar construction in surrounding counties may be considered, Provided 
That projects in metropolitan counties may not be used as a source of 
data for a wage determination in a rural county, and projects in rural 
counties may not be used as a source of data for a wage determination 
for a metropolitan county.
    (c) If there has not been sufficient similar construction in 
surrounding counties or in the State in the past year, wages paid on 
projects completed more than one year prior to the beginning of the 
survey or the request for a wage determination, as appropriate, may be 
considered.
    (d) The use of helpers, apprentices and trainees is permitted in 
accordance with part 5 of this subtitle.

[48 FR 19533, Apr. 29, 1983, as amended at 50 FR 4507, Jan. 31, 1985; 55 
FR 50149, Dec. 4, 1990; 65 FR 69692, Nov. 20, 2000]



Sec. 1.8  Reconsideration by the Administrator.

    Any interested person may seek reconsideration of a wage 
determination issued under this part or of a decision of the 
Administrator regarding application of a wage determination. Such a 
request for reconsideration shall be in writing accompanied by a full 
statement of the interested person's views and any supporting wage data 
or other pertinent information. The Administrator will respond within 30 
days of receipt thereof, or will notify the requestor within the 30-day 
period that additional time is necessary.



Sec. 1.9  Review by Administrative Review Board.

    Any interested person may appeal to the Administrative Review Board 
for a review of a wage determination or its application made under this 
part, after reconsideration by the Administrator has been sought 
pursuant to Sec. 1.8 and denied. Any such appeal may, in the discretion 
of the Administrative Review Board, be received, accepted, and decided 
in accordance with the provisions of 29 CFR part 7 and such other 
procedures as the Board may establish.

                          Appendix A to Part 1

 Statutes Related to the Davis-Bacon Act Requiring Payment of Wages at 
              Rates Predetermined by the Secretary of Labor

    1. The Davis-Bacon Act (secs. 1-7, 46 Stat. 1494, as amended; Pub. 
L. 74-403, 40 U.S.C. 276a-276a-7).
    2. National Housing Act (sec. 212 added to c. 847, 48 Stat. 1246, by 
sec. 14, 53 Stat. 807; 12 U.S.C. 1715c and repeatedly amended).
    3. Housing Act of 1950 (college Housing) (amended by Housing Act of 
1959 to add labor provisions, 73 Stat. 681; 12 U.S.C. 1749a(f)).
    4. Housing Act of 1959 (sec. 401(f) of the Housing Act of 1950 as 
amended by Pub. L. 86-372, 73 Stat. 681; 12 U.S.C. 1701q(c)(3)).
    5. Commercial Fisheries Research and Development Act of 1964 (sec. 
7, 78 Stat. 199; 16 U.S.C. 779e(b)).
    6. Library Services and Construction Act (sec. 7(a), 78 Stat. 13; 20 
U.S.C. 355c(a)(4), as amended).
    7. National Technical Institute for the Deaf Act (sec. 5(b)(5), 79 
Stat. 126; 20 U.S.C. 684(b)(5)).
    8. National Foundation on the Arts and Humanities Act of 1965 (sec. 
5(k), 79 Stat. 846 as amended; 20 U.S.C. 954(j)).
    9. Elementary and Secondary Education Act of 1965 as amended by 
Elementary and Secondary and other Education Amendments of 1969 (sec. 
423 as added by Pub. L. 91-230, title IV, sec. 401(a)(10), 84 Stat. 169, 
and renumbered sec. 433, by Pub. L. 92-318; title III, sec. 301(a)(1), 
86 Stat. 326; 20 U.S.C. 1232(b)). Under the amendment coverage is 
extended to all programs administered by the Commissioner of Education.
    10. The Federal-Aid Highway Acts (72 Stat. 895, as amended by 82 
Stat. 821; 23 U.S.C. 113, as amended by the Surface Transportation 
Assistance Act of 1982, Pub. L. 97-424).
    11. Indians Self-Determination and Education Assistance Act (sec. 7, 
88 Stat. 2205; 25 U.S.C. 450e).
    12. Indian Health Care Improvement Act (sec. 303(b), 90 Stat. 1407; 
25 U.S.C. 1633(b)).
    13. Rehabilitation Act of 1973 (sec. 306(b)(5), 87 Stat. 384, 29 
U.S.C. 776(b)(5)).
    14. Comprehensive Employment and Training Act of 1973 (sec. 606, 87 
Stat. 880, renumbered sec. 706 by 83 Stat. 1845; 29 U.S.C. 986; also 
sec. 604, 88 Stat. 1846; 29 U.S.C. 964(b)(3)).
    15. State and Local Fiscal Assistance Act of 1972 (sec. 123(a)(6), 
86 Stat. 933; 31 U.S.C. 1246(a)(6)).
    16. Federal Water Pollution Control Act (sec. 513 of sec. 2, 86 
Stat. 894; 33 U.S.C. 1372).
    17. Veterans Nursing Home Care Act of 1964 (78 Stat. 502, as 
amended; 38 U.S.C. 5035(a)(8)).

[[Page 16]]

    18. Postal Reorganization Act (sec. 410(b)(4)(C); 84 Stat. 726 as 
amended; 39 U.S.C. 410(b)(4)(C)).
    19. National Visitors Center Facilities Act of 1968 (sec. 110, 32 
Stat. 45; 40 U.S.C. 808).
    20. Appalachian Regional Development Act of 1965 (sec. 402, 79 Stat. 
21; 40 U.S.C. App. 402).
    21. Health Services Research, Health Statistics, and Medical 
Libraries Act of 1974 (sec. 107, see sec. 306(h)(2) thereof, 83 Stat. 
370, as amended by 90 Stat. 378; 42 U.S.C. 242m(h)(2)).
    22. Hospital Survey and Construction Act, as amended by the Hospital 
and Medical Facilities Amendments of 1964 (sec. 605(a)(5), 78 Stat. 453; 
42 U.S.C. 291e(a)(5)).
    23. Health Professions Education Assistance Act (sec. 303(b), 90 
Stat. 2254; 42 U.S.C. 293a(g)(1)(C); also sec. 308a, 90 Stat. 2256; 42 
U.S.C. 293a(c)(7)).
    24. Nurse Training Act of 1964 (sec. 941(a)(1)(C), 89 Stat. 364; 42 
U.S.C. 296a(b)(5)).
    25. Heart Disease, Cancer, and Stroke Amendments of 1965 (sec. 904, 
as added by sec. 2, 79 Stat. 928; 42 U.S.C. 299d(b)(4)).
    26. Safe Drinking Water Act (sec. 2(a), see sec. 1450e thereof, 88 
Stat. 1691; 42 U.S.C. 300j-9(e)).
    27. National Health Planning and Resources Act (sec. 4, see sec. 
1604(b)(1)(H), 88 Stat. 2261, 42 U.S.C. 300o-3(b)(1)(H)).
    28. U.S. Housing Act of 1937, as amended and recodified (88 Stat. 
667; 42 U.S.C. 1437j).
    29. Demonstration Cities and Metropolitan Development Act of 1966 
(secs. 110, 311, 503, 1003, 80 Stat. 1259, 1270, 1277, 1284; 42 U.S.C. 
3310; 12 U.S.C. 1715c; 42 U.S.C. 1437j).
    30. Slum clearance program: Housing Act of 1949 (sec. 109, 63 Stat. 
419, as amended; 42 U.S.C. 1459).
    31. Farm housing: Housing Act of 1964 (adds sec. 516(f) to Housing 
Act of 1949 by sec. 503, 78 Stat. 797; 42 U.S.C. 1486(f)).
    32. Housing Act of 1961 (sec. 707, added by sec. 907, 79 Stat. 496, 
as amended; 42 U.S.C. 1500c-3).
    33. Defense Housing and Community Facilities and Services Act of 
1951 (sec. 310, 65 Stat. 307; 42 U.S.C. 1592i).
    34. Special Health Revenue Sharing Act of 1975 (sec. 303, see sec. 
222(a)(5) thereof, 89 Stat. 324; 42 U.S.C. 2689j(a)(5)).
    35. Economic Opportunity Act of 1964 (sec. 607, 78 Stat. 532; 42 
U.S.C. 2947).
    36. Headstart, Economic Opportunity, and Community Partnership Act 
of 1974 (sec. 11, see sec. 811 thereof, 88 Stat. 2327; 42 U.S.C. 2992a).
    37. Housing and Urban Development Act of 1965 (sec. 707, 79 Stat. 
492 as amended; 42 U.S.C. 3107).
    38. Older Americans Act of 1965 (sec. 502, Pub. L. 89-73, as amended 
by sec. 501, Pub. L. 93-29; 87 Stat. 50; 42 U.S.C. 3041a(a)(4)).
    39. Public Works and Economic Development Act of 1965 (sec. 712, 79 
Stat. 575 as amended; 42 U.S.C. 3222).
    40. Juvenile Delinquency Prevention Act (sec. 1, 86 Stat. 536; 42 
U.S.C. 3884).
    41. New Communities Act of 1968 (sec. 410.82 Stat. 516; 42 U.S.C. 
3909).
    42. Urban Growth and New Community Development Act of 1970 (sec. 
727(f), 84 Stat. 1803; 42 U.S.C. 4529).
    43. Domestic Volunteer Service Act of 1973 (sec. 406, 87 Stat. 410; 
42 U.S.C. 5046).
    44. Housing and Community Development Act of 1974 (secs. 110, 
802(g), 83 Stat. 649, 724; 42 U.S.C. 5310, 1440(g)).
    45. Developmentally Disabled Assistance and Bill of Rights Act (sec. 
126(4), 89 Stat. 488; 42 U.S.C. 6042(4); title I, sec. 111, 89 Stat. 
491; 42 U.S.C. 6063(b)(19)).
    46. National Energy Conservation Policy Act (sec. 312, 92 Stat. 
3254; 42 U.S.C. 6371j).
    47. Public Works Employment Act of 1976 (sec. 109, 90 Stat. 1001; 42 
U.S.C. 6708; also sec. 208, 90 Stat. 1008; 42 U.S.C. 6728).
    48. Energy Conservation and Production Act (sec. 45(h), 90 Stat. 
1168; 42 U.S.C. 6881(h)).
    49. Solid Waste Disposal Act (sec. 2, 90 Stat. 2828; 42 U.S.C. 
6979).
    50. Rail Passenger Service Act of 1970 (sec. 405d, 84 Stat. 1337; 45 
U.S.C. 565(d)).
    51. Urban Mass Transportation Act of 1964 (sec. 10, 78 Stat. 307; 
renumbered sec. 13 by 88 Stat. 715; 49 U.S.C. 1609).
    52. Highway speed ground transportation study (sec. 6(b), 79 Stat. 
893; 49 U.S.C. 1636(b)).
    53. Airport and Airway Development Act of 1970 (sec. 22(b), 84 Stat. 
231; 49 U.S.C. 1722(b)).
    54. Federal Civil Defense Act of 1950 (50 U.S.C. App. 2281(i)).
    55. National Capital Transportation Act of 1965 (sec. 3(b)(4), 79 
Stat; 40 U.S.C. 682(b)(4)).
    Note: Repealed Dec. 9, 1969 and labor standards incorporated in sec. 
1-1431 of the District of Columbia Code.
    56. Model Secondary School for the Deaf Act (sec. 4, 80 Stat. 1027, 
Pub. L. 89-694, but not in the United States Code).
    57. Delaware River Basin Compact (sec. 15.1, 75 Stat. 714, Pub. L. 
87-328) (considered a statute for purposes of this part but not in the 
United States Code).
    58. Energy Security Act (sec. 175(c), Pub. L. 96-294, 94 Stat. 611; 
42 U.S.C. 8701 note).

[48 FR 19533, Apr. 29, 1983; 48 FR 20408, May 6, 1983]

                          Appendix B to Part 1

                              Boston Region

    For the States of Connecticut, Maine, Massachusetts, New Hampshire, 
Rhode Island, and Vermont:

[[Page 17]]

    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, JFK Federal Building, 
Government Center, room 1612C, Boston, Massachusetts 02203 (telephone: 
617-223-5565).

                             New York Region

    For the States of New Jersey and New York and for the Canal Zone, 
Puerto Rico, and the Virgin Islands:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, 1515 Broadway, room 3300, New 
York, New York 10036 (telephone: 212-399-5443).

                           Philadelphia Region

    For the States of Delaware, Maryland, Pennsylvania, Virginia, and 
West Virginia, and the District of Columbia:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, Gateway Building, room 15220, 
3535 Market Street, Philadelphia, Pennsylvania 19104 (telephone: 215-
596-1193).

                             Atlanta Region

    For the States of Alabama, Florida, Georgia, Kentucky, Mississippi, 
North Carolina, South Carolina, and Tennessee:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, 1371 Peachtree Street, NE., 
room 305, Atlanta, Georgia 30309 (telephone: 404-881-4801).

                             Chicago Region

    For the States of Illinois, Indiana, Michigan, Minnesota, Ohio, and 
Wisconsin:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, 230 South Dearborn Street, 8th 
Floor, Chicago, Illinois 60604 (telephone: 312-353-7249).

                              Dallas Region

    For the States of Arkansas, Louisiana, New Mexico, Oklahoma, and 
Texas:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, 555 Griffin Square Building, 
Young and Griffin Streets, Dallas, Texas 75202 (telephone: 214-767-
6891).

                           Kansas City Region

    For the States of Iowa, Kansas, Missouri, and Nebraska:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, Federal Office Building, room 
2000, 911 Walnut Street, Kansas City, Missouri 64106 (telephone: 816-
374-5386).

                              Denver Region

    For the States of Colorado, Montana, North Dakota, South Dakota, 
Utah, and Wyoming:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, Federal Office Building, room 
1440, 1961 Stout Street, Denver, Colorado 80294 (telephone: 304-837-
4613).

                          San Francisco Region

    For the States of Arizona, California, Hawaii, and Nevada:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, 450 Golden Gate Avenue, room 
10353, San Francisco, California 94102 (telephone: 415-556-3592).

                             Seattle Region

    For the States of Alaska, Idaho, Oregon, and Washington:
    Assistant Regional Administrator for Wage-Hour, Employment Standards 
Administration, U.S. Department of Labor, Federal Office Building, room 
4141, 909 First Avenue, Seattle, Washington 98174 (telephone: 206-442-
1916).

                          Appendix C to Part 1

    General Wage Determinations Issued Under The Davis-Bacon And Related 
Acts is published weekly by the Government Printing Office (GPO). This 
publication is available for examination at all 80 Regional Government 
Depository Libraries and many other of the 1,400 Government Depository 
Libraries across the country. Subscriptions may be obtained by 
contacting: Superintendent of Documents, U.S. Government Printing 
Office, Washington, DC 20402, (202) 783-3238.
    The publication is divided into three volumes--East, Central, and 
West--which may be ordered separately. The States covered by each volume 
are as follows: (Regional breakdowns of States are provided in appendix 
B.)

                             Volume I--East

Alabama
Connecticut
Delaware
Florida
Georgia
Kentucky
Maine
Maryland
Massachusetts
Mississippi
New Hampshire
New Jersey
New York
North Carolina
Pennsylvania
Rhode Island
South Carolina
Tennessee
Vermont
Virginia
West Virginia

[[Page 18]]


District of Col.
Canal Zone
Puerto Rico
Virgin Islands

                           Volume II--Central

Arkansas
Illinois
Indiana
Iowa
Kansas
Louisiana
Michigan
Minnesota
Missouri
Nebraska
New Mexico
Ohio
Oklahoma
Texas
Wisconsin

                            Volume III--West

Alaska
Arizona
California
Colorado
Hawaii
Idaho
Montana
Nevada
North Dakota
Oregon
South Dakota
Utah
Washington
Wyoming

    On or about January 1 of each year, an annual edition will be issued 
that includes all current general wage determinations for the States 
covered by each volume. Throughout the remainder of the year, regular 
weekly updates will be distributed providing any modifications or 
supersedeas wage determinations issued. Each volume's annual and weekly 
editions will be provided in loose-leaf format.

[50 FR 49823, Dec. 4, 1985]



PART 2--GENERAL REGULATIONS--Table of Contents




                           Subpart A--General

Sec.
2.1  Employees attached to regional offices.
2.2  Employees attached to Washington office.
2.3  Consent of the Secretary.
2.6  Claims collection.
2.7  Rulemaking.
2.8  Final agency decisions.

       Subpart B--Audiovisual Coverage of Administrative Hearings

2.10  Scope and purpose.
2.11  General principles.
2.12  Audiovisual coverage permitted.
2.13  Audiovisual coverage prohibited.
2.14  Proceedings in which the Department balances conflicting values.
2.15  Protection of witnesses.
2.16  Conduct of hearings.

               Subpart C--Employees Served With Subpoenas

2.20  Purpose, scope and definitions.
2.21  Procedure in the event of a demand for production or disclosure.
2.22  Production or disclosure prohibited unless approved by the 
          appropriate Deputy Solicitor of Labor.
2.23  Procedure where a decision concerning a demand is not made prior 
          to the time a response to the demand is required.
2.24  Procedure in the event of an adverse ruling.
2.25  Subpoenas served upon employees of the Office of the Inspector 
          General.

    Authority: 5 U.S.C. 301; Reorganization Plan No. 6 of 1950, 15 FR 
3174, 64 Stat. 1263; 5 U.S.C. 552-556; Section 2.3 also issued under 31 
U.S.C. 952.



                           Subpart A--General

    Source: 32 FR 11035, July 28, 1967, unless otherwise noted.



Sec. 2.1  Employees attached to regional offices.

    No person who has been an employee of the Department and attached to 
a Regional office of any bureau, board, division, or other agency 
thereof, shall be permitted to practice, appear, or act as attorney, 
agent, or representative before the Department or any branch or agent 
thereof in connection with any case or administrative proceeding which 
was pending before such Regional office during the time of his 
employment with the Department, unless he shall first obtain the written 
consent thereto of the Secretary of Labor or his duly authorized 
representative.



Sec. 2.2  Employees attached to Washington office.

    No person who has been an employee of the Department and attached to 
the Washington office of any bureau, board, division, or other agency 
thereof, shall be permitted to practice, appear, or act as attorney, 
agent, or representative before the Department or any branch or agent 
thereof, in connection with any case or administrative proceeding 
pending before such bureau, board, division, or other agency during the 
time of his employment with the Department, unless he shall first obtain 
the written consent thereto of the Secretary of Labor or his duly 
authorized representative.

[[Page 19]]



Sec. 2.3  Consent of the Secretary.

    The consent of the Secretary or his duly authorized representative 
may be obtained as follows:
    The applicant shall file an application in the form of an affidavit. 
Such application, directed to the Secretary should:
    (a) State the former connection of the applicant with the 
Department;
    (b) Identify the matter in which the applicant desires to appear, 
and
    (c) Contain a statement to the effect that the applicant gave no 
personal consideration to such matter while he was an employee of the 
Department.

The application will be denied if the statements contained therein are 
disproved by an examination of the files, records, and circumstances 
pertaining to the matter, or if, in the opinion of the Secretary or his 
duly authorized representative, the public interest so requires. If the 
Secretary or his duly authorized representative is satisfied that the 
applicant gave no personal consideration to the matter in question while 
employed by the Department, and if he is satisfied that it is lawful and 
consistent with the public interest to do so, he may grant his consent, 
in writing, to the request of the applicant, subject to such conditions, 
if any, as he deems necessary and desirable. Any function of the 
Secretary under this section may be performed by the Under Secretary of 
Labor.



Sec. 2.6  Claims collection.

    (a) Authority of Department; incorporation by reference. The 
regulations in this section are issued under section 3 of the Federal 
Claims Collection Act of 1966, 31 U.S.C. 952. They incorporate herein 
and supplement as necessary for Department operation all provisions of 
the Joint Regulations of the Attorney General and the Comptroller 
General set forth in 4 CFR, chap. II, which prescribe standards for 
administrative collection of civil claims by the Government for money or 
property, for the compromise, termination, or suspension of collection 
action, with respect to claims not exceeding $20,000, exclusive of 
interest, and for the referral of civil claims by the Government to the 
General Accounting Office, and to the Department of Justice for 
litigation.
    (b) Designation. The Assistant Secretary for Administration, and 
such heads of the Administrations and Offices of the Department of Labor 
as he may designate for such purpose, is authorized to perform all of 
the duties and exercise all of the authority of the Secretary under the 
Federal Claims Collection Act of 1966, the aforementioned Joint 
Regulations of the Attorney General and the Comptroller General, and the 
regulations in this section.

(Sec. 3, 80 Stat. 309; 31 U.S.C. 952)

[34 FR 9122, June 10, 1969]



Sec. 2.7  Rulemaking.

    It is the policy of the Secretary of Labor, that in applying the 
rulemaking provisions of the Administrative Procedure Act (5 U.S.C. 
553), the exemption therein for matters relating to public property, 
loans, grants, benefits or contracts shall not be relied upon as a 
reason for not complying with the notice and public participation 
requirements thereof except for all information-gathering procedures 
adopted by the Bureau of Labor Statistics.

[46 FR 35, Jan. 2, 1981]



Sec. 2.8  Final agency decisions.

    Final agency decision issued under the statutory authority of the 
U.S. Department of Labor may be issued by the Secretary of Labor, or by 
his or her designee under a written delegation of authority. The 
Administrative Review Board, an organizational entity within the Office 
of the Secretary, has been delegated authority to issue final agency 
decisions under the statutes, executive orders, and regulations as 
provided in Secretary's Order 2-96, published on May 3, 1996.

[61 FR 19984, May 3, 1996]



       Subpart B--Audiovisual Coverage of Administrative Hearings

    Source: 38 FR 5631, Mar. 2, 1973, unless otherwise noted.

[[Page 20]]



Sec. 2.10  Scope and purpose.

    This subpart defines the scope of audiovisual coverage of 
departmental administrative hearings. It describes the types of 
proceedings where such coverage is encouraged, defines areas where such 
coverage is prohibited (as in certain enforcement proceedings or where 
witnesses object) and areas where a decision concerning coverage is made 
after weighing the values involved in permitting coverage against the 
reasons for not permitting it.



Sec. 2.11  General principles.

    The following general principles will be observed in granting or 
denying requests for permission to cover hearings audiovisually:
    (a) Notice and comment and on-the-record rule making proceedings may 
involve administrative hearings. If such administrative hearings are 
held, we encourage their audiovisual coverage.
    (b) Audiovisual coverage shall be excluded in adjudicatory 
proceedings involving the rights or status of individuals (including 
those of small corporations likely to be indistinguishable in the public 
mind from one or a few individuals) in which an individual's past 
culpable conduct or other aspect of personal life is a primary subject 
of adjudication, and where the person in question objects to coverage.
    (c) Certain proceedings involve balancing of conflicting values in 
order to determine whether audiovisual coverage should be allowed. Where 
audiovisual coverage is restricted, the reasons for the restriction 
shall be stated in the record.



Sec. 2.12  Audiovisual coverage permitted.

    The following are the types of hearings where the Department 
encourages audiovisual coverage:
    (a) All hearings involving notice and comment and on-the-record rule 
making proceedings. The Administrative Procedure Act provides for notice 
of proposed rule making with provision for participation by interested 
parties through submission of written data, views, or arguments, with or 
without opportunity for oral presentation (5 U.S.C. 553). (In many cases 
the Department follows the above procedure in matters exempted from 
these requirements of 5 U.S.C. 553.) On-the-record rule making 
proceedings under 5 U.S.C. 556 and 557 are also hearings where 
audiovisual coverage of hearings is encouraged. Examples of hearings 
encompassed by this paragraph are:
    (1) Hearings to establish or amend safety or health standards under 
the Occupational Safety and Health Act of 1970, 29 U.S.C. 651.
    (2) Hearings to determine the adequacy of State laws under the 
Occupational Safety and Health Act of 1970.
    (b) Hearings to collect or review wage data upon which to base 
minimum wage rates determined under various laws, such as the Davis-
Bacon Act (40 U.S.C. 276a) and related statutes and the Service Contract 
Act of 1965 (41 U.S.C. 353, as amended by Pub. L. 92-473 approved 
October 9, 1972).
    (c) Hearings under section 4(c) of the Service Contract Act of 1965 
(41 U.S.C. 353, subsection (c) added by Pub. L. 92-473 approved October 
9, 1972) to determine if negotiated rates are substantially at variance 
with those which prevail in the locality for services of a character 
similar.
    (d) Hearings before the Administrative Review Board (parts 1, 3, 5, 
and 7 of this chapter).
    (e) Hearings held at the request of a Federal agency to resolve 
disputes under the Davis-Bacon and related Acts, involving prevailing 
wage rates or proper classification which involve significant sums of 
money, large groups of employees or novel or unusual situations.
    (f) Hearings of special industry committees held pursuant to the 
Fair Labor Standards Act, as amended (29 U.S.C. 201 et seq.) for the 
purpose of recommending minimum wage rates to be paid in Puerto Rico, 
the Virgin Islands, and American Samoa.
    (g) Hearings pursuant to section 13(a) of the Welfare and Pension 
Plans Disclosure Act (29 U.S.C. 308d) to determine whether a bond in 
excess of $500,000 may be prescribed.
    (h) Hearings where the Department is requesting information needed 
for its administrative use in determining what our position should be 
(e.g., our

[[Page 21]]

hearings on the 4-day, 40-hour workweek).

[38 FR 5631, Mar. 2, 1973, as amended at 61 FR 19984, May 3, 1996]



Sec. 2.13  Audiovisual coverage prohibited.

    The Department shall not permit audiovisual coverage of the 
following types of hearings if any party objects:
    (a) Hearings to determine whether applications for individual 
variances should be issued under the Occupational Safety and Health Act 
of 1970.
    (b) Hearings (both formal and informal) involving alleged violations 
of various laws such as the Davis-Bacon Act (40 U.S.C. 276a, et seq.) 
and related Acts, the Contract Work Hours and Safety Standards Act (40 
U.S.C. 327 et seq.), the Service Contract Act (41 U.S.C. 351 et seq.), 
the Walsh Healey Act (41 U.S.C. 35 et seq.), under section 41 of the 
Longshoremen's and Harbor Workers' Compensation Act (33 U.S.C. 941 et 
seq.), the Fair Labor Standards Act of 1938, as amended (29 U.S.C. 201 
et seq.), and any informal hearings or conferences under the 
Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et seq.) which 
are not within the jurisdiction of the Occupational Safety and Health 
Commission.
    (c) Adversary hearings under the Longshoremen's and Harbor Workers' 
Compensation Act (33 U.S.C. 901 et seq.) and related Acts, which 
determine an employee's right to compensation.
    (d) Hearings which determine an employee's right to compensation 
under the Federal Employees' Compensation Act (5 U.S.C. 8101 et seq.).



Sec. 2.14  Proceedings in which the Department balances conflicting values.

    In proceedings not covered by Secs. 2.12 and 2.13, the Department 
should determine whether the public's right to know outbalances the 
individual's right to privacy. When audiovisual coverage is restricted 
or excluded, the record shall state fully the reasons for such 
restriction or exclusion. For example, there would be included in this 
category hearings before the Board of Contract Appeals involving appeals 
from contracting officer decisions involving claims for extra costs for 
extra work, extra costs for delay in completion caused by the Government 
or for changes in the work, conformity hearings arising under State 
unemployment insurance laws, etc.



Sec. 2.15  Protection of witnesses.

    A witness has the right, prior to or during his testimony, to 
exclude audiovisual coverage of his testimony in any hearing being 
covered audiovisually.



Sec. 2.16  Conduct of hearings.

    The presiding officer at each hearing which is audiovisually covered 
is authorized to take any steps he deems necessary to preserve the 
dignity of the hearing or prevent its disruption by persons setting up 
or using equipment needed for its audiovisual coverage.



               Subpart C--Employees Served With Subpoenas

    Authority: 5 U.S.C. 301 and Reorganization Plan No. 6 of 1950, 15 FR 
3174, 64 Stat. 1263.

    Source: 46 FR 49543, Oct. 6, 1981, unless otherwise noted.



Sec. 2.20  Purpose, scope and definitions.

    (a) This subpart sets forth the procedures to be followed whenever a 
subpoena, order, or other demand (hereinafter referred to as a demand) 
of a court or other authority, in connection with a proceeding to which 
the U.S. Department of Labor is not a party, is issued for the 
production or disclosure of (1) any material contained in the files of 
the Department, (2) any information relating to material contained in 
the files of the Department, or (3) any information or material acquired 
by any person while such person was an employee of the Department as a 
part of the performance of his official duties or because of his 
official status.
    (b) For purposes of this subpart, the term employee of the 
Department includes all officers and employees of the United States 
Department of Labor appointed by, or subject to the supervision, 
jurisdiction, or control of the Secretary of Labor.
    (c)(1) For purposes of this subpart, the term appropriate Deputy 
Solicitor of Labor means the Deputy Solicitor of Labor for National 
Operations when

[[Page 22]]

the person served with a demand is either employed by the National 
Office of the Labor Department, or who is a former Labor Department 
employee and is served with a demand in Washington, DC. In all other 
cases, the term appropriate Deputy Solicitor of Labor means the Deputy 
Solicitor of Labor for Regional Operations.
    (2) For purposes of this subpart, the term appropriate Office of the 
Solicitor means that Office of the Associate Solicitor of Labor (in 
Washington, DC) serving as counsel to the program to which the demand 
relates, where the person served with a demand is employed by the 
National Office of the Labor Department, or who is a former Labor 
Department employee and is served with a demand in Washington, DC. In 
all other cases, the term appropriate Office of the Solicitor means that 
Regional Solicitor's Office or Associate Regional Solicitor's Office 
serving the locality in which the employee or former employee is served 
with a demand.
    (d) This subpart is intended to provide instructions regarding the 
internal operations of the Department of Labor, and is not intended, and 
does not, and may not, be relied upon to create any right or benefit, 
substantive or procedural, enforceable at law by a party against the 
Department of Labor.



Sec. 2.21  Procedure in the event of a demand for production or disclosure.

    Whenever an employee or former employee of the Department receives a 
demand for the production of material or the disclosure of information 
described in Sec. 2.20(a), he shall immediately notify the appropriate 
Office of the Solicitor. The appropriate Office of the Solicitor shall 
be furnished by the party causing the subpoena to be issued with a 
written summary of the information sought and its relevance to the 
proceeding in connection with which it was served. The Associate 
Solicitor, Regional Solicitor, or Associate Regional Solicitor, 
whichever is appropriate, may waive the requirement that a written 
summary be furnished where he or she deems it to be unnecessary. The 
election to waive the requirement of a written summary in no way 
constitutes a waiver of any other requirement set forth in this subpart.



Sec. 2.22  Production or disclosure prohibited unless approved by the appropriate Deputy Solicitor of Labor.

    In terms of instructing an employee or former employee of the manner 
in which to respond to a demand, the Associate Solicitor, Regional 
Solicitor, or Associate Regional Solicitor, whichever is applicable, 
shall follow the instructions of the appropriate Deputy Solicitor of 
Labor. No employee or former employee of the Department of Labor shall, 
in response to a demand of a court or other authority, produce any 
material contained in the files of the Department or disclose any 
information relating to material contained in the files of the 
Department, or disclose any information or produce any material acquired 
as part of the performance of his official duties or because of his 
official status without approval of the appropriate Deputy Solicitor of 
Labor.



Sec. 2.23  Procedure where a decision concerning a demand is not made prior to the time a response to the demand is required.

    If the response to the demand is required before the instructions 
from the appropriate Deputy Solicitor of Labor are received, a 
Department attorney or other government attorney designated for the 
purpose shall appear with the employee or former employee of the 
Department upon whom the demand has been made, and shall furnish the 
court or other authority with a copy of the regulations contained in 
this subpart and inform the court or other authority that the demand has 
been, or is being, as the case may be, referred for the prompt 
consideration of the appropriate Deputy Solicitor of Labor and shall 
respectfully request the court or other authority to stay the demand 
pending receipt of the requested instructions.



Sec. 2.24  Procedure in the event of an adverse ruling.

    If the court or other authority declines to stay the effect of the 
demand in response to a request made in accordance with Sec. 2.23 
pending receipt of instructions, or if the court or other

[[Page 23]]

authority rules that the demand must be complied with irrespective of 
instructions not to produce the material or disclose the information 
sought, the employee or former employee upon whom the demand has been 
made shall respectfully decline to comply with the demand, ``United 
States ex rel Touhy v. Ragen,'' 340 US. 462.



Sec. 2.25  Subpoenas served upon employees of the Office of the Inspector General.

    Notwithstanding the requirements set forth in Secs. 2.20 through 
2.24, this subpart is applicable to demands served on employees or 
former employees of the Office of the Inspector General (OIG), except 
that wherever in Secs. 2.21 through 2.24 there appear the phrases 
appropriate Office of the Solicitor, Associate Solicitor, Regional 
Solicitor, or Associate Regional Solicitor, and appropriate Deputy 
Solicitor of Labor, there shall be substituted in lieu thereof the 
Inspector General or Deputy Inspector General. In addition, the first 
sentence of Sec. 2.22 shall not be applicable to subpoenas served upon 
employees or former employees of the Office of the Inspector General.



PART 3--CONTRACTORS AND SUBCONTRACTORS ON PUBLIC BUILDING OR PUBLIC WORK FINANCED IN WHOLE OR IN PART BY LOANS OR GRANTS FROM THE UNITED STATES--Table of Contents




Sec.
3.1  Purpose and scope.
3.2  Definitions.
3.3  Weekly statement with respect to payment of wages.
3.4  Submission of weekly statements and the preservation and inspection 
          of weekly payroll records.
3.5  Payroll deductions permissible without application to or approval 
          of the Secretary of Labor.
3.6  Payroll deductions permissible with the approval of the Secretary 
          of Labor.
3.7  Applications for the approval of the Secretary of Labor.
3.8  Action by the Secretary of Labor upon applications.
3.9  Prohibited payroll deductions.
3.10  Methods of payment of wages.
3.11  Regulations part of contract.

    Authority: R.S. 161, sec. 2, 48 Stat. 848; Reorg. Plan No. 14, of 
1950, 64 Stat. 1267; 5 U.S.C. 301; 40 U.S.C. 276c.

    Source: 29 FR 97, Jan. 4, 1964, unless otherwise noted.



Sec. 3.1  Purpose and scope.

    This part prescribes ``anti-kickback'' regulations under section 2 
of the Act of June 13, 1934, as amended (40 U.S.C. 276c), popularly 
known as the Copeland Act. This part applies to any contract which is 
subject to Federal wage standards and which is for the construction, 
prosecution, completion, or repair of public buildings, public works or 
buildings or works financed in whole or in part by loans or grants from 
the United States. The part is intended to aid in the enforcement of the 
minimum wage provisions of the Davis-Bacon Act and the various statutes 
dealing with federally assisted construction that contain similar 
minimum wage provisions, including those provisions which are not 
subject to Reorganization Plan No. 14 (e.g., the College Housing Act of 
1950, the Federal Water Pollution Control Act, and the Housing Act of 
1959), and in the enforcement of the overtime provisions of the Contract 
Work Hours Standards Act whenever they are applicable to construction 
work. The part details the obligation of contractors and subcontractors 
relative to the weekly submission of statements regarding the wages paid 
on work covered thereby; sets forth the circumstances and procedures 
governing the making of payroll deductions from the wages of those 
employed on such work; and delineates the methods of payment permissible 
on such work.



Sec. 3.2  Definitions.

    As used in the regulations in this part:
    (a) The terms building or work generally include construction 
activity as distinguished from manufacturing, furnishing of materials, 
or servicing and maintenance work. The terms include, without 
limitation, buildings, structures, and improvements of all types,

[[Page 24]]

such as bridges, dams, plants, highways, parkways, streets, subways, 
tunnels, sewers, mains, powerlines, pumping stations, railways, 
airports, terminals, docks, piers, wharves, ways, lighthouses, buoys, 
jetties, breakwaters, levees, and canals; dredging, shoring, 
scaffolding, drilling, blasting, excavating, clearing, and landscaping. 
Unless conducted in connection with and at the site of such a building 
or work as is described in the foregoing sentence, the manufacture or 
furnishing of materials, articles, supplies, or equipment (whether or 
not a Federal or State agency acquires title to such materials, 
articles, supplies, or equipment during the course of the manufacture or 
furnishing, or owns the materials from which they are manufactured or 
furnished) is not a building or work within the meaning of the 
regulations in this part.
    (b) The terms construction, prosecution, completion, or repair mean 
all types of work done on a particular building or work at the site 
thereof, including, without limitation, altering, remodeling, painting 
and decorating, the transporting of materials and supplies to or from 
the building or work by the employees of the construction contractor or 
construction subcontractor, and the manufacturing or furnishing of 
materials, articles, supplies, or equipment on the site of the building 
or work, by persons employed at the site by the contractor or 
subcontractor.
    (c) The terms public building or public work include building or 
work for whose construction, prosecution, completion, or repair, as 
defined above, a Federal agency is a contracting party, regardless of 
whether title thereof is in a Federal agency.
    (d) The term building or work financed in whole or in part by loans 
or grants from the United States includes building or work for whose 
construction, prosecution, completion, or repair, as defined above, 
payment or part payment is made directly or indirectly from funds 
provided by loans or grants by a Federal agency. The term includes 
building or work for which the Federal assistance granted is in the form 
of loan guarantees or insurance.
    (e) Every person paid by a contractor or subcontractor in any manner 
for his labor in the construction, prosecution, completion, or repair of 
a public building or public work or building or work financed in whole 
or in part by loans or grants from the United States is employed and 
receiving wages, regardless of any contractual relationship alleged to 
exist between him and the real employer.
    (f) The term any affiliated person includes a spouse, child, parent, 
or other close relative of the contractor or subcontractor; a partner or 
officer of the contractor or subcontractor; a corporation closely 
connected with the contractor or subcontractor as parent, subsidiary, or 
otherwise, and an officer or agent of such corporation.
    (g) The term Federal agency means the United States, the District of 
Columbia, and all executive departments, independent establishments, 
administrative agencies, and instrumentalities of the United States and 
of the District of Columbia, including corporations, all or 
substantially all of the stock of which is beneficially owned by the 
United States, by the District of Columbia, or any of the foregoing 
departments, establishments, agencies, and instrumentalities.

[29 FR 97, Jan. 4, 1964, as amended at 38 FR 32575, Nov. 27, 1973]



Sec. 3.3  Weekly statement with respect to payment of wages.

    (a) As used in this section, the term employee shall not apply to 
persons in classifications higher than that of laborer or mechanic and 
those who are the immediate supervisors of such employees.
    (b) Each contractor or subcontractor engaged in the construction, 
prosecution, completion, or repair of any public building or public 
work, or building or work financed in whole or in part by loans or 
grants from the United States, shall furnish each week a statement with 
respect to the wages paid each of its employees engaged on work covered 
by this part 3 and part 5 of this chapter during the preceding weekly 
payroll period. This statement shall be executed by the contractor or 
subcontractor or by an authorized officer or

[[Page 25]]

employee of the contractor or subcontractor who supervises the payment 
of wages, and shall be on form WH 348, ``Statement of Compliance'', or 
on an identical form on the back of WH 347, ``Payroll (For Contractors 
Optional Use)'' or on any form with identical wording. Sample copies of 
WH 347 and WH 348 may be obtained from the Government contracting or 
sponsoring agency, and copies of these forms may be purchased at the 
Government Printing Office.
    (c) The requirements of this section shall not apply to any contract 
of $2,000 or less.
    (d) Upon a written finding by the head of a Federal agency, the 
Secretary of Labor may provide reasonable limitations, variations, 
tolerances, and exemptions from the requirements of this section subject 
to such conditions as the Secretary of Labor may specify.

[29 FR 97, Jan. 4, 1964, as amended at 33 FR 10186, July 17, 1968; 47 FR 
23679, May 28, 1982]



Sec. 3.4  Submission of weekly statements and the preservation and inspection of weekly payroll records.

    (a) Each weekly statement required under Sec. 3.3 shall be delivered 
by the contractor or subcontractor, within seven days after the regular 
payment date of the payroll period, to a representative of a Federal or 
State agency in charge at the site of the building or work, or, if there 
is no representative of a Federal or State agency at the site of the 
building or work, the statement shall be mailed by the contractor or 
subcontractor, within such time, to a Federal or State agency 
contracting for or financing the building or work. After such 
examination and check as may be made, such statement, or a copy thereof, 
shall be kept available, or shall be transmitted together with a report 
of any violation, in accordance with applicable procedures prescribed by 
the United States Department of Labor.
    (b) Each contractor or subcontractor shall preserve his weekly 
payroll records for a period of three years from date of completion of 
the contract. The payroll records shall set out accurately and 
completely the name and address of each laborer and mechanic, his 
correct classification, rate of pay, daily and weekly number of hours 
worked, deductions made, and actual wages paid. Such payroll records 
shall be made available at all times for inspection by the contracting 
officer or his authorized representative, and by authorized 
representatives of the Department of Labor.

(Reporting and recordkeeping requirements in paragraph (b) have been 
approved by the Office of Management and Budget under control number 
1215-0017)

[29 FR 97, Jan. 4, 1964, as amended at 47 FR 145, Jan. 5, 1982]



Sec. 3.5  Payroll deductions permissible without application to or approval of the Secretary of Labor.

    Deductions made under the circumstances or in the situations 
described in the paragraphs of this section may be made without 
application to and approval of the Secretary of Labor:
    (a) Any deduction made in compliance with the requirements of 
Federal, State, or local law, such as Federal or State withholding 
income taxes and Federal social security taxes.
    (b) Any deduction of sums previously paid to the employee as a bona 
fide prepayment of wages when such prepayment is made without discount 
or interest. A bona fide prepayment of wages is considered to have been 
made only when cash or its equivalent has been advanced to the person 
employed in such manner as to give him complete freedom of disposition 
of the advanced funds.
    (c) Any deduction of amounts required by court process to be paid to 
another, unless the deduction is in favor of the contractor, 
subcontractor, or any affiliated person, or when collusion or 
collaboration exists.
    (d) Any deduction constituting a contribution on behalf of the 
person employed to funds established by the employer or representatives 
of employees, or both, for the purpose of providing either from 
principal or income, or both, medical or hospital care, pensions or 
annuities on retirement, death benefits, compensation for injuries, 
illness, accidents, sickness, or disability, or for insurance to provide 
any of the foregoing, or unemployment benefits, vacation pay, savings 
accounts, or similar

[[Page 26]]

payments for the benefit of employees, their families and dependents: 
Provided, however, That the following standards are met:
    (1) The deduction is not otherwise prohibited by law;
    (2) It is either:
    (i) Voluntarily consented to by the employee in writing and in 
advance of the period in which the work is to be done and such consent 
is not a condition either for the obtaining of or for the continuation 
of employment, or
    (ii) provided for in a bona fide collective bargaining agreement 
between the contractor or subcontractor and representatives of its 
employees;
    (3) No profit or other benefit is otherwise obtained, directly or 
indirectly, by the contractor or subcontractor or any affiliated person 
in the form of commission, dividend, or otherwise; and
    (4) The deductions shall serve the convenience and interest of the 
employee.
    (e) Any deduction contributing toward the purchase of United States 
Defense Stamps and Bonds when voluntarily authorized by the employee.
    (f) Any deduction requested by the employee to enable him to repay 
loans to or to purchase shares in credit unions organized and operated 
in accordance with Federal and State credit union statutes.
    (g) Any deduction voluntarily authorized by the employee for the 
making of contributions to governmental or quasi-governmental agencies, 
such as the American Red Cross.
    (h) Any deduction voluntarily authorized by the employee for the 
making of contributions to Community Chests, United Givers Funds, and 
similar charitable organizations.
    (i) Any deductions to pay regular union initiation fees and 
membership dues, not including fines or special assessments: Provided, 
however, That a collective bargaining agreement between the contractor 
or subcontractor and representatives of its employees provides for such 
deductions and the deductions are not otherwise prohibited by law.
    (j) Any deduction not more than for the ``reasonable cost'' of 
board, lodging, or other facilities meeting the requirements of section 
3(m) of the Fair Labor Standards Act of 1938, as amended, and part 531 
of this title. When such a deduction is made the additional records 
required under Sec. 516.25(a) of this title shall be kept.
    (k) Any deduction for the cost of safety equipment of nominal value 
purchased by the employee as his own property for his personal 
protection in his work, such as safety shoes, safety glasses, safety 
gloves, and hard hats, if such equipment is not required by law to be 
furnished by the employer, if such deduction is not violative of the 
Fair Labor Standards Act or prohibited by other law, if the cost on 
which the deduction is based does not exceed the actual cost to the 
employer where the equipment is purchased from him and does not include 
any direct or indirect monetary return to the employer where the 
equipment is purchased from a third person, and if the deduction is 
either
    (1) Voluntarily consented to by the employee in writing and in 
advance of the period in which the work is to be done and such consent 
is not a condition either for the obtaining of employment or its 
continuance; or
    (2) Provided for in a bona fide collective bargaining agreement 
between the contractor or subcontractor and representatives of its 
employees.

[29 FR 97, Jan. 4, 1964, as amended at 36 FR 9770, May 28, 1971]



Sec. 3.6  Payroll deductions permissible with the approval of the Secretary of Labor.

    Any contractor or subcontractor may apply to the Secretary of Labor 
for permission to make any deduction not permitted under Sec. 3.5. The 
Secretary may grant permission whenever he finds that:
    (a) The contractor, subcontractor, or any affiliated person does not 
make a profit or benefit directly or indirectly from the deduction 
either in the form of a commission, dividend, or otherwise;
    (b) The deduction is not otherwise prohibited by law;
    (c) The deduction is either (1) voluntarily consented to by the 
employee in writing and in advance of the period in which the work is to 
be done and such

[[Page 27]]

consent is not a condition either for the obtaining of employment or its 
continuance, or (2) provided for in a bona fide collective bargaining 
agreement between the contractor or subcontractor and representatives of 
its employees; and
    (d) The deduction serves the convenience and interest of the 
employee.



Sec. 3.7  Applications for the approval of the Secretary of Labor.

    Any application for the making of payroll deductions under Sec. 3.6 
shall comply with the requirements prescribed in the following 
paragraphs of this section:
    (a) The application shall be in writing and shall be addressed to 
the Secretary of Labor.
    (b) The application need not identify the contract or contracts 
under which the work in question is to be performed. Permission will be 
given for deductions on all current and future contracts of the 
applicant for a period of 1 year. A renewal of permission to make such 
payroll deduction will be granted upon the submission of an application 
which makes reference to the original application, recites the date of 
the Secretary of Labor's approval of such deductions, states 
affirmatively that there is continued compliance with the standards set 
forth in the provisions of Sec. 3.6, and specifies any conditions which 
have changed in regard to the payroll deductions.
    (c) The application shall state affirmatively that there is 
compliance with the standards set forth in the provisions of Sec. 3.6. 
The affirmation shall be accompanied by a full statement of the facts 
indicating such compliance.
    (d) The application shall include a description of the proposed 
deduction, the purpose to be served thereby, and the classes of laborers 
or mechanics from whose wages the proposed deduction would be made.
    (e) The application shall state the name and business of any third 
person to whom any funds obtained from the proposed deductions are to be 
transmitted and the affiliation of such person, if any, with the 
applicant.

[29 FR 97, Jan. 4, 1964, as amended at 36 FR 9771, May 28, 1971]



Sec. 3.8  Action by the Secretary of Labor upon applications.

    The Secretary of Labor shall decide whether or not the requested 
deduction is permissible under provisions of Sec. 3.6; and shall notify 
the applicant in writing of his decision.



Sec. 3.9  Prohibited payroll deductions.

    Deductions not elsewhere provided for by this part and which are not 
found to be permissible under Sec. 3.6 are prohibited.



Sec. 3.10  Methods of payment of wages.

    The payment of wages shall be by cash, negotiable instruments 
payable on demand, or the additional forms of compensation for which 
deductions are permissible under this part. No other methods of payment 
shall be recognized on work subject to the Copeland Act.



Sec. 3.11  Regulations part of contract.

    All contracts made with respect to the construction, prosecution, 
completion, or repair of any public building or public work or building 
or work financed in whole or in part by loans or grants from the United 
States covered by the regulations in this part shall expressly bind the 
contractor or subcontractor to comply with such of the regulations in 
this part as may be applicable. In this regard, see Sec. 5.5(a) of this 
subtitle.



PART 4--LABOR STANDARDS FOR FEDERAL SERVICE CONTRACTS--Table of Contents




  Subpart A--Service Contract Labor Standards Provisions and Procedures

Sec.
4.1  Purpose and scope.
4.1a  Definitions and use of terms.
4.1b  Payment of minimum compensation based on collectively bargained 
          wage rates and fringe benefits applicable to employment under 
          predecessor contract.
4.2  Payment of minimum wage specified in section 6(a)(1) of the Fair 
          Labor Standards Act of 1938 under all service contracts.
4.3  Wage determinations.
4.4  Notice of intention to make a service contract.
4.5  Contract specification of determined minimum wages and fringe 
          benefits.

[[Page 28]]

4.6  Labor standards clauses for Federal service contracts exceeding 
          $2,500.
4.7  [Reserved]
4.8  Notice of awards.
4.9  [Reserved]
4.10  Substantial variance proceedings under section 4(c) of the Act.
4.11  Arm's-length proceedings.
4.12  Substantial interest proceedings.

                Subpart B--Wage Determination Procedures

4.50  Types of wage and fringe benefit determinations.
4.51  Prevailing in the locality determinations.
4.52  Fringe benefit determinations.
4.53  Collective bargaining agreement (successorship) determinations.
4.54  Locality basis of wage and fringe benefit determinations.
4.55  Issuance and revision of wage determinations.
4.56  Review and reconsideration of wage determinations.

   Subpart C--Application of the McNamara-O'Hara Service Contract Act

                              Introductory

4.101  Official rulings and interpretations in this subpart.
4.102  Administration of the Act.
4.103  The Act.
4.104  What the Act provides, generally.
4.105  The Act as amended.
4.106  [Reserved]

                 Agencies Whose Contracts May Be Covered

4.107  Federal contracts.
4.108  District of Columbia contracts.
4.109  [Reserved]

                       Covered Contracts Generally

4.110  What contracts are covered.
4.111  Contracts ``to furnish services.''
4.112  Contracts to furnish services ``in the United States.''
4.113  Contracts to furnish services ``through the use of service 
          employees.''
4.114  Subcontracts.

                           Specific Exclusions

4.115  Exemptions and exceptions, generally.
4.116  Contracts for construction activity.
4.117  Work subject to requirements of Walsh-Healey Act.
4.118  Contracts for carriage subject to published tariff rates.
4.119  Contracts for services of communications companies.
4.120  Contracts for public utility services.
4.121  Contracts for individual services.
4.122  Contracts for operation of postal contract stations.
4.123  Administrative limitations, variations, tolerances, and 
          exemptions.
4.124--4.129  [Reserved]

         Particular Application of Contract Coverage Principles

4.130  Types of covered service contracts illustrated.
4.131  Furnishing services involving more than use of labor.
4.132  Services and other items to be furnished under a single contract.
4.133  Beneficiary of contract services.
4.134  Contracts outside the Act's coverage.
4.135--4.139  [Reserved]

                     Determining Amount of Contract

4.140  Significance of contract amount.
4.141  General criteria for measuring amount.
4.142  Contracts in an indefinite amount.

                      Changes in Contract Coverage

4.143  Effects of changes or extensions of contracts, generally.
4.144  Contract modifications affecting amount.
4.145  Extended term contracts.

                           Period of Coverage

4.146  Contract obligations after award, generally.
4.147--4.149  [Reserved]

                      Employees Covered by the Act

4.150  Employee coverage, generally.
4.151  Employees covered by provisions of section 2(a).
4.152  Employees subject to prevailing compensation provisions of 
          sections 2(a) (1) and (2) and 4(c).
4.153  Inapplicability of prevailing compensation provisions to some 
          employees.
4.154  Employees covered by sections 2(a) (3) and (4).
4.155  Employee coverage does not depend on form of employment contract.
4.156  Employees in bona fide executive, administrative, or professional 
          capacity.
4.157--4.158  [Reserved]

                    Subpart D--Compensation Standards

4.159  General minimum wage.
4.160  Effect of section 6(e) of the Fair Labor Standards Act.
4.161  Minimum monetary wages under contracts exceeding $2,500.
4.162  Fringe benefits under contracts exceeding $2,500.
4.163  Section 4(c) of the Act.
4.164  [Reserved]

[[Page 29]]

                 Compliance With Compensation Standards

4.165  Wage payments and fringe benefits--in general.
4.166  Wage payments--unit of payment.
4.167  Wage payments--medium of payment.
4.168  Wage payments--deductions from wages paid.
4.169  Wage payments--work subject to different rates.
4.170  Furnishing fringe benefits or equivalents.
4.171  ``Bona fide'' fringe benefits.
4.172  Meeting requirements for particular fringe benefits--in general.
4.173  Meeting requirements for vacation fringe benefits.
4.174  Meeting requirements for holiday fringe benefits.
4.175  Meeting requirements for health, welfare, and/or pension 
          benefits.
4.176  Payment of fringe benefits to temporary and part-time employees.
4.177  Discharging fringe benefit obligations by equivalent means.
4.178  Computation of hours worked.
4.179  Identification of contract work.

                    Overtime Pay of Covered Employees

4.180  Overtime pay--in general.
4.181  Overtime pay provisions of other Acts.
4.182  Overtime pay of service employees entitled to fringe benefits.

                           Notice to Employees

4.183  Employees must be notified of compensation required.
4.184  Posting of notice.

                                 Records

4.185  Recordkeeping requirements.
4.186  [Reserved]

                         Subpart E--Enforcement

4.187  Recovery of underpayments.
4.188  Ineligibility for further contracts when violations occur.
4.189  Administrative proceedings relating to enforcement of labor 
          standards.
4.190  Contract cancellation.
4.191  Complaints and compliance assistance.

    Authority: 41 U.S.C. 351 et seq.; 41 U.S.C. 38 and 39; 5 U.S.C. 301.

    Source: 48 FR 49762, Oct. 27, 1983, unless otherwise noted.

    Editorial Note: Nomenclature changes to Part 4 appear at 61 FR 
19984, May 3, 1996.



  Subpart A--Service Contract Labor Standards Provisions and Procedures



Sec. 4.1  Purpose and scope.

    This part contains the Department of Labor's rules relating to the 
administration of the McNamara-O'Hara Service Contract Act of 1965, as 
amended, referred to hereinafter as the Act. Rules of practice for 
administrative proceedings under the Act and for the review of wage 
determinations are contained in parts 6 and 8 of this chapter. See part 
1925 of this title for the safety and health standards applicable under 
the Service Contract Act.



Sec. 4.1a  Definitions and use of terms.

    As used in this part, unless otherwise indicated by the context--
    (a) Act, Service Contract Act, McNamara-O'Hara Act, or Service 
Contract Act of 1965 shall mean the Service Contract Act of 1965 as 
amended by Public Law 92-473, 86 Stat. 789, effective October 9, 1972, 
Public Law 93-57, 87 Stat. 140, effective July 6, 1973, and Public Law 
94-489, 90 Stat. 2358, effective October 13, 1976 and any subsequent 
amendments thereto.
    (b) Secretary includes the Secretary of Labor, the Deputy Under 
Secretary for Employment Standards, and their authorized 
representatives.
    (c) Wage and Hour Division means the organizational unit in the 
Employment Standards Administration of the Department of Labor to which 
is assigned the performance of functions of the Secretary under the 
Service Contract Act of 1965, as amended.
    (d) Administrator means the Administrator of the Wage and Hour 
Division, or authorized representative.
    (e) Contract includes any contract subject wholly or in part to the 
provisions of the Service Contract Act of 1965 as amended, and any 
subcontract of any tier thereunder. (See Secs. 4.10-4.134.)
    (f) Contractor includes a subcontractor whose subcontract is subject 
to provisions of the Act. Also, the term employer means, and is used 
interchangeably with, the terms contractor and subcontractor in various 
sections in

[[Page 30]]

this part. The U.S. Government, its agencies, and instrumentalities are 
not contractors, subcontractors, employers or joint employers for 
purposes of compliance with the provisions of the Act.
    (g) Affiliate or affiliated person includes a spouse, child, parent, 
or other close relative of the contractor or subcontractor; a partner or 
officer of the contractor or subcontractor; a corporation closely 
connected with a contractor or subcontractor as a parent, subsidiary, or 
otherwise; and an officer or agent of such corporation. An affiliation 
is also deemed to exist where, directly or indirectly, one business 
concern or individual controls or has the power to control the other or 
where a third party controls or has the power to control both.
    (h) Wage determination includes any determination of minimum wage 
rates or fringe benefits made pursuant to the provisions of sections 
2(a) and/or 4(c) of the Act for application to the employment in a 
locality of any class or classes of service employees in the performance 
of any contract in excess of $2,500 which is subject to the provisions 
of the Service Contract Act of 1965.



Sec. 4.1b  Payment of minimum compensation based on collectively bargained wage rates and fringe benefits applicable to employment under predecessor contract.

    (a) Section 4(c) of the Service Contract Act of 1965 as amended 
provides special minimum wage and fringe benefit requirements applicable 
to every contractor and subcontractor under a contract which succeeds a 
contract subject to the Act and under which substantially the same 
services as under the predecessor contract are furnished in the same 
locality. Section 4(c) provides that no such contractor or subcontractor 
shall pay any service employee employed on the contract work less than 
the wages and fringe benefits provided for in a collective bargaining 
agreement as a result of arms-length negotiations, to which such service 
employees would have been entitled if they were employed under the 
predecessor contract, including accrued wages and fringe benefits and 
any prospective increases in wages and fringe benefits provided for in 
such collective bargaining agreement. If, however, the Secretary finds 
after a hearing in accordance with the regulations set forth in 
Sec. 4.10 of this subpart and parts 6 and 8 of this title that in any of 
the foregoing circumstances such wages and fringe benefits are 
substantially at variance with those which prevail for service of a 
character similar in the locality, those wages and/or fringe benefits in 
such collective bargaining agreement which are found to be substantially 
at variance shall not apply, and a new wage determination shall be 
issued. If the contract has been awarded and work begun prior to a 
finding that the wages and/or fringe benefits in a collective bargaining 
agreement are substantially at variance with those prevailing in the 
locality, the payment obligation of such contractor or subcontractor 
with respect to the wages and fringe benefits contained in the new wage 
determination shall be applicable as of the date of the Administrative 
Law Judge's decision or, where the decision is reviewed by the 
Administrative Review Board, the date of the decision of the 
Administrative Review Board. (See also Sec. 4.163(c).)
    (b) Pursuant to section 4(b) of the Act, the application of section 
4(c) is made subject to the following variation in the circumstances and 
under the conditions described: The wage rates and fringe benefits 
provided for in any collective bargaining agreement applicable to the 
performance of work under the predecessor contract which is consummated 
during the period of performance of such contract shall not be effective 
for purposes of the successor contract under the provisions of section 
4(c) of the Act or under any wage determination implementing such 
section issued pursuant to section 2(a) of the Act, if--
    (1) In the case of a successor contract for which bids have been 
invited by formal advertising, notice of the terms of such new or 
changed collective bargaining agreement is received by the contracting 
agency less than 10 days before the date set for opening of bids, 
provided that the contracting agency finds that there is not reasonable 
time still available to notify bidders; or

[[Page 31]]

    (2) Notice of the terms of a new or changed collective bargaining 
agreement is received by the agency after award of a successor contract 
to be entered into pursuant to negotiations or as a result of the 
execution of a renewal option or an extension of the initial contract 
term, provided that the contract start of performance is within 30 days 
of such award or renewal option or extension. If the contract does not 
specify a start of performance date which is within 30 days from the 
award, and/or performance of such procurement does not commence within 
this 30-day period, any notice of the terms of a new or changed 
collective bargaining agreement received by the agency not less than 10 
days before commencement of the contract will be effective for purposes 
of the successor contract under section 4(c); and
    (3) The limitations in paragraph (b)(1) or (2) of this section shall 
apply only if the contracting officer has given both the incumbent 
(predecessor) contractor and his employees' collective bargaining 
representative written notification at least 30 days in advance of all 
applicable estimated procurement dates, including issue of bid 
solicitation, bid opening, date of award, commencement of negotiations, 
receipt of proposals, or the commencement date of a contract resulting 
from a negotiation, option, or extension, as the case may be.



Sec. 4.2  Payment of minimum wage specified in section 6(a)(1) of the Fair Labor Standards Act of 1938 under all service contracts.

    Section 2(b)(1) of the Service Contract Act of 1965 provides in 
effect that, regardless of contract amount, no contractor or 
subcontractor performing work under any Federal contract the principal 
purpose of which is to furnish services through the use of service 
employees shall pay any employees engaged in such work less than the 
minimum wage specified in section 6(a)(1) of the Fair Labor Standards 
Act of 1938, as amended.

[61 FR 68663, Dec. 30, 1996]



Sec. 4.3  Wage determinations.

    (a) The minimum monetary wages and fringe benefits for service 
employees which the Act requires to be specified in contracts and bid 
solicitations subject to section 2(a) thereof will be set forth in wage 
determinations issued by the Administrator. Wage determinations shall be 
issued as soon as administratively feasible for all contracts subject to 
section 2(a) of the Act, and will be issued for all contracts entered 
into under which more than 5 service employees are to be employed.
    (b) Such wage determinations will set forth for the various classes 
of service employees to be employed in furnishing services under such 
contracts in the appropriate localities, minimum monetary wage rates to 
be paid and minimum fringe benefits to be furnished them during the 
periods when they are engaged in the performance of such contracts, 
including, where appropriate under the Act, provisions for adjustments 
in such minimum rates and benefits to be placed in effect under such 
contracts at specified future times. The wage rates and fringe benefits 
set forth in such wage determinations shall be determined in accordance 
with the provisions of sections 2(a)(1), (2), and (5), 4(c) and 4(d) of 
the Act from those prevailing in the locality for such employees, with 
due consideration of the rates that would be paid for direct Federal 
employment of any classes of such employees whose wages, if federally 
employed, would be determined as provided in 5 U.S.C. 5341 or 5 U.S.C. 
5332, or from pertinent collective bargaining agreements with respect to 
the implementation of section 4(c). The wage rates and fringe benefits 
so determined for any class of service employees to be engaged in 
furnishing covered contract services in a locality shall be made 
applicable by contract to all service employees of such class employed 
to perform such services in the locality under any contract subject to 
section 2(a) of the Act which is entered into thereafter and before such 
determination has been rendered obsolete by a withdrawal, modification, 
or supersedure.
    (c) Generally, wage determinations issued for solicitations or 
negotiations

[[Page 32]]

for any contract where the place of performance is unknown will contain 
minimum monetary wages and fringe benefits for the various geographic 
localities where the work may be performed which were identified in the 
initial solicitation (see Sec. 4.4(a)(2)(i)).
    (d) Wage determinations will be available for public inspection 
during business hours at the Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC, and 
copies will be made available on request at Regional Offices of the Wage 
and Hour Division.



Sec. 4.4  Notice of intention to make a service contract.

    (a)(1) For any contract exceeding $2,500 which may be subject to the 
Act, the contracting agency shall file with the Wage and Hour Division, 
Employment Standards Administration, Department of Labor, its notice of 
intention to make a service contract. With respect to recurring or known 
requirements, such notices shall be filed not less than 60 days (nor 
more than 120 days, except with the approval of the Wage and Hour 
Division) prior to: (i) Any invitation for bids, (ii) request for 
proposals, (iii) commencement of negotiations, (iv) exercise of option 
or contract extension, (v) annual anniversary date of a multi-year 
contract subject to annual fiscal appropriations of the Congress, or 
(vi) each biennial anniversary date of a multi-year contract not subject 
to such annual appropriations, if so authorized by the Wage and Hour 
Division. (See Sec. 4.4(d).) Notices with regard to solicitations where 
such planning is not feasible shall be submitted as soon as possible, 
but not later than 30 days prior to the above contracting actions. Such 
notice shall be submitted on Standard Form 98, Notice of Intention to 
Make a Service Contract, and Standard Form 98-A or a statement 
containing the information in paragraph (b) of this section and shall be 
completed in accordance with the instruction provided and shall be 
supplemented by the information required under paragraphs (c) and (d) of 
this section. Supplies of Standard Forms 98 and 98-A are available in 
all GSA supply depots under stock numbers 7540-926-8972 and 7540-118-
1008, respectively. If there exists any question or doubt as to the 
possible application of the Act to a particular procurement, the 
contracting agency shall submit such question in a timely manner to the 
Administrator for determination.
    (2)(i) Where the place of performance of a contract for services 
subject to the Act is unknown at the time of solicitation, the 
solicitation need not initially contain a wage determination. The 
contracting agency shall, upon identification of firms participating in 
the procurement in response to an initial solicitation, file with the 
Wage and Hour Division, Employment Standards Administration, Department 
of Labor, its notice of intention to make a service contract. In 
addition to the requirements contained in paragraph (a)(1) of this 
section, such submission shall identify each location where the work may 
be performed as indicated by participating firms. Subsequent amendments 
to the solicitation setting forth the wage determinations and any 
necessary change in the date and time for submission of final bids shall 
be made upon receipt of wage determinations. An applicable wage 
determination must be obtained for each firm participating in the 
bidding for the location in which it would perform the contract. The 
appropriate wage determination shall be incorporated in the resultant 
contract documents and shall be applicable to all work performed 
thereunder (regardless of whether the successful contractor subsequently 
changes the place(s) of contract performance).
    (ii) There may be unusual situations, as determined by the 
Department of Labor upon consultation with a contracting agency, where 
the procedure in paragraph (a)(2)(i) of this section is not practicable 
in a particular situation, in which event the Department may authorize a 
modified procedure which may result in the subsequent issuance of wage 
determinations for one or more composite localities.
    (b) The contracting agency shall file with its Notice of Intention 
to Make a Service Contract (SF-98) either a Standard Form 98-A or a 
statement in

[[Page 33]]

writing, containing the following information concerning the service 
employees expected by the agency to be employed by the contractor and 
any subcontractors in performing the contract:
    (1) The number of such employees of all classes, or a statement 
indicating whether such number will or will not exceed 5, the number for 
which the inclusion of a wage determination in the contract is mandatory 
under the provisions of section 10 of the Act as set forth in 
Sec. 4.3(a); and
    (2) A listing of those classes of service employees expected to be 
employed under the contract which, if employed by the agency, would be 
subject to the wage provisions of 5 U.S.C. 5341 or 5 U.S.C. 5332, 
together with a specification of the rates of wages and fringe benefits 
that would be paid by the Government to employees of each such class if 
such statute were applicable to them. (Under section 2(a)(5) of the Act 
and Sec. 4.6 the inclusion of such a statement in the service contract 
is also required.)
    (c) If the services to be furnished under the proposed contract will 
be substantially the same as services being furnished in the same 
locality by an incumbent contractor whose contract the proposed contract 
will succeed, and if such incumbent contractor is furnishing such 
services through the use of service employees whose wage rates and 
fringe benefits are the subject of one or more collective bargaining 
agreements, the contracting agency shall file with its Notice of 
Intention to Make a Service Contract (SF-98) a copy of each such 
collective bargaining agreement together with any related documents 
specifying the wage rates and fringe benefits currently or prospectively 
payable under such agreement. If the place of contract performance is 
unknown, the contracting agency will submit the collective bargaining 
agreement of the incumbent contractor for incorporation into a wage 
determination applicable to a potential bidder located in the same 
geographic area as the predecessor contractor (section 4.4(a)(2)). If 
such services are being furnished at more than one locality and the 
collectively bargained wage rates and fringe benefits are different at 
different localities or do not apply to one or more localities, the 
agency shall identify the localities to which such agreements have 
application. If the collective bargaining agreement does not apply to 
all service employees under the contract, the agency shall identify the 
employees and/or work subject to the collective bargaining agreement. In 
the event that the agency has reason to believe that any such collective 
bargaining agreement was not entered into as a result of arm's-length 
negotiations, a full statement of the facts so indicating shall be 
transmitted with the copy of such agreement. See Sec. 4.11. If the 
agency has information indicating that any such collectively bargained 
wage rates and fringe benefits are substantially at variance with those 
prevailing for services of a similar character in the locality, the 
agency shall so advise the Wage and Hour Division and, if it believes a 
hearing thereon pursuant to section 4(c) of the Act is warranted, shall 
file its request for such hearing pursuant to Sec. 4.10 at the time of 
filing the Notice of Intention to Make a Service Contract (Form SF-98).
    (d) If the proposed contract is for a multi-year period subject to 
other than annual appropriations, the contracting agency shall file with 
its Standard Form 98 a statement in writing concerning the type of 
funding and the contemplated term of the proposed contract. Unless 
otherwise advised by the Wage and Hour Division that a Standard Form 98 
must be filed on the annual anniversary date, a new Standard Form 98 
shall be submitted on each biennial anniversary date of the proposed 
multi-year contract in the event its term is for a period in excess of 
two years.
    (e) Any Standard Form 98 submitted by a contracting agency without 
the information required under paragraphs (b), (c), or (d) of this 
section will be returned to the agency for further action.
    (f) If exceptional circumstances prevent the filing of the notice of 
intention and supplemental information required by this section on a 
date at least 60 days (or 30 days in the case of unplanned procurements) 
prior to any

[[Page 34]]

invitation for bids, request for proposals, or commencement of 
negotiations, the notice shall be submitted to the Wage and Hour 
Division as soon as practicable with a detailed explanation of the 
special circumstances which prevented timely submission. In the event 
the proposed contract involves performance by more than 5 service 
employees and an emergency situation requires an immediate award, the 
contracting agency shall contact the Wage and Hour Division by telephone 
for guidance prior to any such award. In no event may a contract subject 
to the act on which more than 5 service employees are contemplated to be 
employed be awarded without an appropriate wage determination. (Section 
10 of the Act.)
    (g) If any invitation for bids, request for proposals, bid opening, 
or commencement of negotiations for a proposed contract for which a wage 
determination was provided in response to a Standard Form 98 has been 
delayed, for whatever reason, more than 60 days from the date of such 
procurement action as indicated on the submitted Standard Form 98, the 
contracting agency shall contact the Wage and Hour Division for the 
purpose of determining whether the wage determination issued pursuant to 
the initial submission is still current. Any revision of a wage 
determination received by the contracting agency as a result of such 
communication or upon discovery by the Department of Labor of a delay, 
shall supersede and replace the earlier response as the wage 
determination applicable to such procurement, subject to the time frames 
set forth in Sec. 4.5(a)(2).



Sec. 4.5  Contract specification of determined minimum wages and fringe benefits.

    (a) Any contract in excess of $2,500 shall contain, as an 
attachment, the applicable, currently effective wage determination 
specifying the minimum wages and fringe benefits for service employees 
to be employed thereunder, including any document referred to in 
paragraphs (a)(1) or (2) of this section;
    (1) Any communication from the Wage and Hour Division, Employment 
Standards Administration, Department of Labor, responsive to the notice 
required by Sec. 4.4; or
    (2) Any revision of a wage determination issued prior to the award 
of the contract or contracts which specifies minimum wage rates or 
fringe benefits for classes of service employees whose wages or fringe 
benefits were not previously covered by wage determinations, or which 
changes previously determined minimum wage rates and fringe benefits for 
service employees employed on covered contracts in the locality. 
However, revisions received by the Federal agency later than 10 days 
before the opening of bids, in the case of contracts entered into 
pursuant to competitive bidding procedures, shall not be effective if 
the Federal agency finds that there is not a reasonable time still 
available to notify bidders of the revision. In the case of procurements 
entered into pursuant to negotiations (or in the case of the execution 
of an option or an extension of the initial contract term), revisions 
received by the agency after award (or execution of an option or 
extension of term, as the case may be) of the contract shall not be 
effective provided that the contract start of performance is within 30 
days of such award (or execution of an option or extension of term). If 
the contract does not specify a start of performance date which is 
within 30 days from the award, and/or if performance of such procurement 
does not commence within this 30-day period, the Department of Labor 
shall be notified and any notice of a revision received by the agency 
not less than 10 days before commencement of the contract shall be 
effective. In situations arising under section 4(c) of the Act, the 
provisions in Sec. 4.1b(b) apply.
    (b)(1) The following exemption from the compensation requirements of 
section 2(a) of the Act applies, subject to the limitations set forth in 
paragraphs (b)(2), (3), and (4) of this section: To avoid serious 
impairment of the conduct of Government business it has been found 
necessary and proper to provide exemption from the determined wage and 
fringe benefits section of the Act (section 2(a)(1), (2)) but not the 
minimum wage specified under section 6(a)(1) of the Fair Labor Standards 
Act of 1938, as amended (section 2(b) of

[[Page 35]]

this Act), of contracts under which five or less service employees are 
to be employed, and for which no such wage or fringe benefit 
determination has been issued;
    (2) The exemption provided in paragraph (b)(1) of this section, 
which was adopted pursuant to section 4(b) of the Act prior to its 
amendment by Public Law 92-473, does not extend to undetermined wages or 
fringe benefits in contracts for which one or more, but not all, classes 
of service employees are the subject of an applicable wage 
determination. The procedure for determination of wage rates and fringe 
benefits for any classes of service employees engaged in performing such 
contracts whose wages and fringe benefits are not specified in the 
applicable wage determination is set forth in Sec. 4.6(b).
    (3) The exemption provided in paragraph (b)(1) of this section does 
not exempt any contract from the application of the provisions of 
section 4(c) of the Act as amended, concerning successor contracts.
    (4) The exemption provided in paragraph (b)(1) of this section does 
not apply to any contract for which section 10 of the Act as amended 
requires an applicable wage determination.
    (c)(1) If the notice of intention required by Sec. 4.4 is not filed 
with the required supporting documents within the time provided in such 
section, the contracting agency shall, through the exercise of any and 
all of its power and authority that may be needed (including, where 
necessary, its authority to negotiate, its authority to pay any 
necessary additional costs, and its authority under any provision of the 
contract authorizing changes), include in the contract any wage 
determinations communicated to it by the Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, within 30 
days of the receipt of such wage determination(s). With respect to any 
contract for which section 10 of the Act requires an applicable wage 
determination, the Administrator may require retroactive application of 
such wage determination.
    (2) Where the Department of Labor discovers and determines, whether 
before or subsequent to a contract award, that a contracting agency made 
an erroneous determination that the Service Contract Act did not apply 
to a particular procurement and/or failed to include an appropriate wage 
determination in a covered contract, the contracting agency, within 30 
days of notification by the Department of Labor, shall include in the 
contract the stipulations contained in Sec. 4.6 and any applicable wage 
determination issued by the Administrator or his authorized 
representative through the exercise of any and all authority that may be 
needed (including, where necessary, its authority to negotiate or amend, 
its authority to pay any necessary additional costs, and its authority 
under any contract provision authorizing changes, cancellation, and 
termination). With respect to any contract subject to section 10 of the 
Act, the Administrator may require retroactive application of such wage 
determination. (See 53 Comp. Gen. 412, (1973); Curtiss-Wright Corp. v. 
McLucas, 381 F. Supp. 657 (D NJ 1974); Marine Engineers Beneficial 
Assn., District 2 v. Military Sealift Command, 86 CCH Labor Cases 
para.33,782 (D DC 1979); Brinks, Inc. v. Board of Governors of the 
Federal Reserve System, 466 F. Supp. 112 (D DC 1979), 466 F. Supp. 116 
(D DC 1979).) (See also 32 CFR 1-403.)
    (d) In cases where the contracting agency has filed its SF-98 within 
the time limits discussed in Sec. 4.4(a) and has not received a response 
from the Department of Labor, the contracting agency shall, with respect 
to any contract for which section 10 of the Act and Sec. 4.3 of this 
part mandate the inclusion of an applicable wage determination, contact 
the Wage and Hour Division by telephone for guidance.



Sec. 4.6  Labor standards clauses for Federal service contracts exceeding $2,500.

    The clauses set forth in the following paragraphs shall be included 
in full by the contracting agency in every contract entered into by the 
United States or the District of Columbia, in excess of $2,500, or in an 
indefinite amount, the principal purpose of which is to furnish services 
through the use of service employees:
    (a) Service Contract Act of 1965, as amended: This contract is 
subject to the Service Contract Act of 1965, as

[[Page 36]]

amended (41 U.S.C. 351 et seq.) and is subject to the following 
provisions and to all other applicable provisions of the Act and 
regulations of the Secretary of Labor issued thereunder (29 CFR part 4).
    (b)(1) Each service employee employed in the performance of this 
contract by the contractor or any subcontractor shall be paid not less 
than the minimum monetary wages and shall be furnished fringe benefits 
in accordance with the wages and fringe benefits determined by the 
Secretary of Labor or authorized representative, as specified in any 
wage determination attached to this contract.
    (2)(i) If there is such a wage determination attached to this 
contract, the contracting officer shall require that any class of 
service employee which is not listed therein and which is to be employed 
under the contract (i.e., the work to be performed is not performed by 
any classification listed in the wage determination), be classified by 
the contractor so as to provide a reasonable relationship (i.e., 
appropriate level of skill comparison) between such unlisted 
classifications and the classifications listed in the wage 
determination. Such conformed class of employees shall be paid the 
monetary wages and furnished the fringe benefits as are determined 
pursuant to the procedures in this section.
    (ii) Such conforming procedure shall be initiated by the contractor 
prior to the performance of contract work by such unlisted class of 
employee. A written report of the proposed conforming action, including 
information regarding the agreement or disagreement of the authorized 
representative of the employees involved or, where there is no 
authorized representative, the employees themselves, shall be submitted 
by the contractor to the contracting officer no later than 30 days after 
such unlisted class of employees performs any contract work. The 
contracting officer shall review the proposed action and promptly submit 
a report of the action, together with the agency's recommendation and 
all pertinent information including the position of the contractor and 
the employees, to the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, for review. The Wage and Hour 
Division will approve, modify, or disapprove the action or render a 
final determination in the event of disagreement within 30 days of 
receipt or will notify the contracting officer within 30 days of receipt 
that additional time is necessary.
    (iii) The final determination of the conformance action by the Wage 
and Hour Division shall be transmitted to the contracting officer who 
shall promptly notify the contractor of the action taken. Each affected 
employee shall be furnished by the contractor with a written copy of 
such determination or it shall be posted as a part of the wage 
determination.
    (iv)(A) The process of establishing wage and fringe benefit rates 
that bear a reasonable relationship to those listed in a wage 
determination cannot be reduced to any single formula. The approach used 
may vary from wage determination to wage determination depending on the 
circumstances. Standard wage and salary administration practices which 
rank various job classifications by pay grade pursuant to point schemes 
or other job factors may, for example, be relied upon. Guidance may also 
be obtained from the way different jobs are rated under Federal pay 
systems (Federal Wage Board Pay System and the General Schedule) or from 
other wage determinations issued in the same locality. Basic to the 
establishment of any conformable wage rate(s) is the concept that a pay 
relationship should be maintained between job classifications based on 
the skill required and the duties performed.
    (B) In the case of a contract modification, an exercise of an option 
or extension of an existing contract, or in any other case where a 
contractor succeeds a contract under which the classification in 
question was previously conformed pursuant to this section, a new 
conformed wage rate and fringe benefits may be assigned to such 
conformed classification by indexing (i.e., adjusting) the previous 
conformed rate and fringe benefits by an amount equal to the average 
(mean) percentage increase (or decrease, where appropriate) between the 
wages and fringe benefits specified for all classifications to be

[[Page 37]]

used on the contract which are listed in the current wage determination, 
and those specified for the corresponding classifications in the 
previously applicable wage determination. Where conforming actions are 
accomplished in accordance with this paragraph prior to the performance 
of contract work by the unlisted class of employees, the contractor 
shall advise the contracting officer of the action taken but the other 
procedures in paragraph (b)(2)(ii) of this section need not be followed.
    (C) No employee engaged in performing work on this contract shall in 
any event be paid less than the currently applicable minimum wage 
specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, 
as amended.
    (v) The wage rate and fringe benefits finally determined pursuant to 
paragraphs (b)(2)(i) and (ii) of this section shall be paid to all 
employees performing in the classification from the first day on which 
contract work is performed by them in the classification. Failure to pay 
such unlisted employees the compensation agreed upon by the interested 
parties and/or finally determined by the Wage and Hour Division 
retroactive to the date such class of employees commenced contract work 
shall be a violation of the Act and this contract.
    (vi) Upon discovery of failure to comply with paragraphs (b)(2)(i) 
through (v) of this section, the Wage and Hour Division shall make a 
final determination of conformed classification, wage rate, and/or 
fringe benefits which shall be retroactive to the date such class of 
employees commenced contract work.
    (3) If, as authorized pursuant to section 4(d) of the Service 
Contract Act of 1965 as amended, the term of this contract is more than 
1 year, the minimum monetary wages and fringe benefits required to be 
paid or furnished thereunder to service employees shall be subject to 
adjustment after 1 year and not less often than once every 2 years, 
pursuant to wage determinations to be issued by the Wage and Hour 
Division, Employment Standards Administration of the Department of Labor 
as provided in such Act.
    (c) The contractor or subcontractor may discharge the obligation to 
furnish fringe benefits specified in the attachment or determined 
conformably thereto by furnishing any equivalent combinations of bona 
fide fringe benefits, or by making equivalent or differential payments 
in cash in accordance with the applicable rules set forth in subpart D 
of 29 CFR part 4, and not otherwise.
    (d)(1) In the absence of a minimum wage attachment for this 
contract, neither the contractor nor any subcontractor under this 
contract shall pay any person performing work under the contract 
(regardless of whether they are service employees) less than the minimum 
wage specified by section 6(a)(1) of the Fair Labor Standards Act of 
1938. Nothing in this provision shall relieve the contractor or any 
subcontractor of any other obligation under law or contract for the 
payment of a higher wage to any employee.
    (2) If this contract succeeds a contract, subject to the Service 
Contract Act of 1965 as amended, under which substantially the same 
services were furnished in the same locality and service employees were 
paid wages and fringe benefits provided for in a collective bargaining 
agreement, in the absence of the minimum wage attachment for this 
contract setting forth such collectively bargained wage rates and fringe 
benefits, neither the contractor nor any subcontractor under this 
contract shall pay any service employee performing any of the contract 
work (regardless of whether or not such employee was employed under the 
predecessor contract), less than the wages and fringe benefits provided 
for in such collective bargaining agreements, to which such employee 
would have been entitled if employed under the predecessor contract, 
including accrued wages and fringe benefits and any prospective 
increases in wages and fringe benefits provided for under such 
agreement. No contractor or subcontractor under this contract may be 
relieved of the foregoing obligation unless the limitations of 
Sec. 4.1b(b) of 29 CFR part 4 apply or unless the Secretary of Labor or 
his authorized representative finds, after a hearing as provided in 
Sec. 4.10 of 29 CFR part 4 that

[[Page 38]]

the wages and/or fringe benefits provided for in such agreement are 
substantially at variance with those which prevail for services of a 
character similar in the locality, or determines, as provided in 
Sec. 4.11 of 29 CFR part 4, that the collective bargaining agreement 
applicable to service employees employed under the predecessor contract 
was not entered into as a result of arm's-length negotiations. Where it 
is found in accordance with the review procedures provided in 29 CFR 
4.10 and/or 4.11 and parts 6 and 8 that some or all of the wages and/or 
fringe benefits contained in a predecessor contractor's collective 
bargaining agreement are substantially at variance with those which 
prevail for services of a character similar in the locality, and/or that 
the collective bargaining agreement applicable to service employees 
employed under the predecessor contract was not entered into as a result 
of arm's-length negotiations, the Department will issue a new or revised 
wage determination setting forth the applicable wage rates and fringe 
benefits. Such determination shall be made part of the contract or 
subcontract, in accordance with the decision of the Administrator, the 
Administrative Law Judge, or the Administrative Review Board, as the 
case may be, irrespective of whether such issuance occurs prior to or 
after the award of a contract or subcontract. 53 Comp. Gen. 401 (1973). 
In the case of a wage determnation issued solely as a result of a 
finding of substantial variance, such determination shall be effective 
as of the date of the final administrative decision.
    (e) The contractor and any subcontractor under this contract shall 
notify each service employee commencing work on this contract of the 
minimum monetary wage and any fringe benefits required to be paid 
pursuant to this contract, or shall post the wage determination attached 
to this contract. The poster provided by the Department of Labor 
(Publication WH 1313) shall be posted in a prominent and accessible 
place at the worksite. Failure to comply with this requirement is a 
violation of section 2(a)(4) of the Act and of this contract.
    (f) The contractor or subcontractor shall not permit any part of the 
services called for by this contract to be performed in buildings or 
surroundings or under working conditions provided by or under the 
control or supervision of the contractor or subcontractor which are 
unsanitary or hazardous or dangerous to the health or safety of service 
employees engaged to furnish these services, and the contractor or 
subcontractor shall comply with the safety and health standards applied 
under 29 CFR part 1925.
    (g)(1) The contractor and each subcontractor performing work subject 
to the Act shall make and maintain for 3 years from the completion of 
the work records containing the information specified in paragraphs 
(g)(1) (i) through (vi) of this section for each employee subject to the 
Act and shall make them available for inspection and transcription by 
authorized representatives of the Wage and Hour Division, Employment 
Standards Administration of the U.S. Department of Labor:
    (i) Name and address and social security number of each employee.
    (ii) The correct work classification or classifications, rate or 
rates of monetary wages paid and fringe benefits provided, rate or rates 
of fringe benefit payments in lieu thereof, and total daily and weekly 
compensation of each employee.
    (iii) The number of daily and weekly hours so worked by each 
employee.
    (iv) Any deductions, rebates, or refunds from the total daily or 
weekly compensation of each employee.
    (v) A list of monetary wages and fringe benefits for those classes 
of service employees not included in the wage determination attached to 
this contract but for which such wage rates or fringe benefits have been 
determined by the interested parties or by the Administrator or 
authorized representative pursuant to the labor standards clause in 
paragraph (b) of this section. A copy of the report required by the 
clause in paragraph (b)(2)(ii) of this section shall be deemed to be 
such a list.
    (vi) Any list of the predecessor contractor's employees which had 
been furnished to the contractor pursuant to Sec. 4.6(l)(2).

[[Page 39]]

    (2) The contractor shall also make available a copy of this contract 
for inspection or transcription by authorized representatives of the 
Wage and Hour Division.
    (3) Failure to make and maintain or to make available such records 
for inspection and transcription shall be a violation of the regulations 
and this contract, and in the case of failure to produce such records, 
the contracting officer, upon direction of the Department of Labor and 
notification of the contractor, shall take action to cause suspension of 
any further payment or advance of funds until such violation ceases.
    (4) The contractor shall permit authorized representatives of the 
Wage and Hour Division to conduct interviews with employees at the 
worksite during normal working hours.
    (h) The contractor shall unconditionally pay to each employee 
subject to the Act all wages due free and clear and without subsequent 
deduction (except as otherwise provided by law or Regulations, 29 CFR 
part 4), rebate, or kickback on any account. Such payments shall be made 
no later than one pay period following the end of the regular pay period 
in which such wages were earned or accrued. A pay period under this Act 
may not be of any duration longer than semi-monthly.
    (i) The contracting officer shall withhold or cause to be withheld 
from the Government prime contractor under this or any other Government 
contract with the prime contractor such sums as an appropriate official 
of the Department of Labor requests or such sums as the contracting 
officer decides may be necessary to pay underpaid employees employed by 
the contractor or subcontractor. In the event of failure to pay any 
employees subject to the Act all or part of the wages or fringe benefits 
due under the Act, the agency may, after authorization or by direction 
of the Department of Labor and written notification to the contractor, 
take action to cause suspension of any further payment or advance of 
funds until such violations have ceased. Additionally, any failure to 
comply with the requirements of these clauses relating to the Service 
Contract Act of 1965, may be grounds for termination of the right to 
proceed with the contract work. In such event, the Government may enter 
into other contracts or arrangements for completion of the work, 
charging the contractor in default with any additional cost.
    (j) The contractor agrees to insert these clauses in this section 
relating to the Service Contract Act of 1965 in all subcontracts subject 
to the Act. The term contractor as used in these clauses in any 
subcontract, shall be deemed to refer to the subcontractor, except in 
the term Government prime contractor.
    (k)(1) As used in these clauses, the term service employee means any 
person engaged in the performance of this contract other than any person 
employed in a bona fide executive, administrative, or professional 
capacity, as those terms are defined in part 541 of title 29, Code of 
Federal Regulations, as of July 30, 1976, and any subsequent revision of 
those regulations. The term service employee includes all such persons 
regardless of any contractual relationship that may be alleged to exist 
between a contractor or subcontractor and such persons.
    (2) The following statement is included in contracts pursuant to 
section 2(a)(5) of the Act and is for informational purposes only:
    The following classes of service employees expected to be employed 
under the contract with the Government would be subject, if employed by 
the contracting agency, to the provisions of 5 U.S.C. 5341 or 5 U.S.C. 
5332 and would, if so employed, be paid not less than the following 
rates of wages and fringe benefits:

------------------------------------------------------------------------
                                                               Monetary
                       Employee class                        wage-fringe
                                                               benefits
------------------------------------------------------------------------
                                                             ...........
                                                             ...........
                                                             ...........
------------------------------------------------------------------------

    (l)(1) If wages to be paid or fringe benefits to be furnished any 
service employees employed by the Government prime contractor or any 
subcontractor under the contract are provided for in a collective 
bargaining agreement which is or will be effective during any period in 
which the contract is being performed, the Government prime contractor 
shall report such fact

[[Page 40]]

to the contracting officer, together with full information as to the 
application and accrual of such wages and fringe benefits, including any 
prospective increases, to service employees engaged in work on the 
contract, and a copy of the collective bargaining agreement. Such report 
shall be made upon commencing performance of the contract, in the case 
of collective bargaining agreements effective at such time, and in the 
case of such agreements or provisions or amendments thereof effective at 
a later time during the period of contract performance, such agreements 
shall be reported promptly after negotiation thereof.
    (2) Not less than 10 days prior to completion of any contract being 
performed at a Federal facility where service employees may be retained 
in the performance of the succeeding contract and subject to a wage 
determination which contains vacation or other benefit provisions based 
upon length of service with a contractor (predecessor) or successor 
(Sec. 4.173 of Regulations, 29 CFR part 4), the incumbent prime 
contractor shall furnish to the contracting officer a certified list of 
the names of all service employees on the contractor's or 
subcontractor's payroll during the last month of contract performance. 
Such list shall also contain anniversary dates of employment on the 
contract either with the current or predecessor contractors of each such 
service employee. The contracting officer shall turn over such list to 
the successor contractor at the commencement of the succeeding contract.
    (m) Rulings and interpretations of the Service Contract Act of 1965, 
as amended, are contained in Regulations, 29 CFR part 4.
    (n)(1) By entering into this contract, the contractor (and officials 
thereof) certifies that neither it (nor he or she) nor any person or 
firm who has a substantial interest in the contractor's firm is a person 
or firm ineligible to be awarded Government contracts by virtue of the 
sanctions imposed pursuant to section 5 of the Act.
    (2) No part of this contract shall be subcontracted to any person or 
firm ineligible for award of a Government contract pursuant to section 5 
of the Act.
    (3) The penalty for making false statements is prescribed in the 
U.S. Criminal Code, 18 U.S.C. 1001.
    (o) Notwithstanding any of the clauses in paragraphs (b) through (m) 
of this section relating to the Service Contract Act of 1965, the 
following employees may be employed in accordance with the following 
variations, tolerances, and exemptions, which the Secretary of Labor, 
pursuant to section 4(b) of the Act prior to its amendment by Public Law 
92-473, found to be necessary and proper in the public interest or to 
avoid serious impairment of the conduct of Government business:
    (1) Apprentices, student-learners, and workers whose earning 
capacity is impaired by age, physical, or mental deficiency or injury 
may be employed at wages lower than the minimum wages otherwise required 
by section 2(a)(1) or 2(b)(1) of the Service Contract Act without 
diminishing any fringe benefits or cash payments in lieu thereof 
required under section 2(a)(2) of that Act, in accordance with the 
conditions and procedures prescribed for the employment of apprentices, 
student-learners, handicapped persons, and handicapped clients of 
sheltered workshops under section 14 of the Fair Labor Standards Act of 
1938, in the regulations issued by the Administrator (29 CFR parts 520, 
521, 524, and 525).
    (2) The Administrator will issue certificates under the Service 
Contract Act for the employment of apprentices, student-learners, 
handicapped persons, or handicapped clients of sheltered workshops not 
subject to the Fair Labor Standards Act of 1938, or subject to different 
minimum rates of pay under the two acts, authorizing appropriate rates 
of minimum wages (but without changing requirements concerning fringe 
benefits or supplementary cash payments in lieu thereof), applying 
procedures prescribed by the applicable regulations issued under the 
Fair Labor Standards Act of 1938 (29 CFR parts 520, 521, 524, and 525).
    (3) The Administrator will also withdraw, annul, or cancel such 
certificates in accordance with the regulations in parts 525 and 528 of 
title 29 of the Code of Federal Regulations.
    (p) Apprentices will be permitted to work at less than the 
predetermined

[[Page 41]]

rate for the work they perform when they are employed and individually 
registered in a bona fide apprenticeship program registered with a State 
Apprenticeship Agency which is recognized by the U.S. Department of 
Labor, or if no such recognized agency exists in a State, under a 
program registered with the Bureau of Apprenticeship and Training, 
Employment and Training Administration, U.S. Department of Labor. Any 
employee who is not registered as an apprentice in an approved program 
shall be paid the wage rate and fringe benefits contained in the 
applicable wage determination for the journeyman classification of work 
actually performed. The wage rates paid apprentices shall not be less 
than the wage rate for their level of progress set forth in the 
registered program, expressed as the appropriate percentage of the 
journeyman's rate contained in the applicable wage determination. The 
allowable ratio of apprentices to journeymen employed on the contract 
work in any craft classification shall not be greater than the ratio 
permitted to the contractor as to his entire work force under the 
registered program.
    (q) Where an employee engaged in an occupation in which he or she 
customarily and regularly receives more than $30 a month in tips, the 
amount of tips received by the employee may be credited by the employer 
against the minimum wage required by Section 2(a)(1) or 2(b)(1) of the 
Act to the extent permitted by section 3(m) of the Fair Labor Standards 
Act and Regulations, 29 CFR Part 531. To utilize this proviso:
    (1) The employer must inform tipped employees about this tip credit 
allowance before the credit is utilized;
    (2) The employees must be allowed to retain all tips (individually 
or through a pooling arrangement and regardless of whether the employer 
elects to take a credit for tips received);
    (3) The employer must be able to show by records that the employee 
receives at least the applicable Service Contract Act minimum wage 
through the combination of direct wages and tip credit;
    (4) The use of such tip credit must have been permitted under any 
predecessor collective bargaining agreement applicable by virtue of 
section 4(c) of the Act.
    (r) Disputes concerning labor standards. Disputes arising out of the 
labor standards provisions of this contract shall not be subject to the 
general disputes clause of this contract. Such disputes shall be 
resolved in accordance with the procedures of the Department of Labor 
set forth in 29 CFR parts 4, 6, and 8. Disputes within the meaning of 
this clause include disputes between the contractor (or any of its 
subcontractors) and the contracting agency, the U.S. Department of 
Labor, or the employees or their representatives.

(The information collection, recordkeeping, and reporting requirements 
contained in this section have been approved by the Office of Management 
and Budget under the following numbers:

------------------------------------------------------------------------
                                                             OMB control
                         Paragraph                              number
------------------------------------------------------------------------
(b)(2) (i)--(iv)...........................................    1215-0150
(e)........................................................    1215-0150
(g)(1) (i)--(iv)...........................................    1215-0017
(g)(1) (v), (vi)...........................................    1215-0150
(l) (1), (2)...............................................    1215-0150
(q)(3).....................................................    1215-0017
------------------------------------------------------------------------


[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983, as amended at 61 
FR 68663, Dec. 30, 1996]



Sec. 4.7  [Reserved]



Sec. 4.8  Notice of awards.

    Whenever an agency of the United States or the District of Columbia 
awards a contract subject to the Act which may be in excess of $10,000 
and such agency does not submit Standard Form 279, FPDS Individual 
Contract Action Report, or its equivalent, to the Federal Procurement 
Data System, it shall furnish the Wage and Hour Division, ESA, an 
original and one copy of Standard Form 99, Notice of Award of Contract, 
unless it makes other arrangements with the Wage and Hour Division for 
notifying it of such contract awards. The form shall be completed as 
follows:
    (a) Items 1 through 7 and 12 and 13: Self-explanatory;
    (b) Item 8: Enter the notation ``Service Contract Act;''
    (c) Item 9: Leave blank;
    (d) Item 10: (1) Enter the notation ``Major Category,'' and indicate 
beside this entry the general service area into

[[Page 42]]

which the contract falls (e.g., food services, grounds maintenance, 
computer services, installation or facility support services, custodial-
janitorial service, garbage collection, insect and rodent control, 
laundry and drycleaning services, etc.);
    (e) Item 11: Enter the dollar amount of the contract, or the 
estimated dollar value with the notation ``estimated'' (if the exact 
amount is not known). If neither the exact nor the estimated dollar 
value is known, enter ``indefinite,'' or ``not to exceed $____.'' 
Supplies of Standard Form 99 are available in all GSA supply depots 
under stock number 7540-634-4049.



Sec. 4.9  [Reserved]



Sec. 4.10  Substantial variance proceedings under section 4(c) of the Act.

    (a) Statutory provision. Under section 4(c) of the Act, and under 
corresponding wage determinations made as provided in section 2(a)(1) 
and (2) of the Act, contractors and subcontractors performing contracts 
subject to the Act generally are obliged to pay to service employees 
employed on the contract work wages and fringe benefits not less than 
those to which they would have been entitled under a collective 
bargaining agreement if they were employed on like work under a 
predecessor contract in the same locality. (See Secs. 4.1b, 4.3, 
4.6(d)(2).) Section 4(c) of the Act provides, however, that ``such 
obligations shall not apply if the Secretary finds after a hearing in 
accordance with regulations adopted by the Secretary that such wages and 
fringe benefits are substantially at variance with those which prevail 
for services of a character similar in the locality''.
    (b) Prerequisites for hearing. (1)(i) A request for a hearing under 
this section may be made by the contracting agency or other person 
affected or interested, including contractors or prospective contractors 
and associations of contractors, representatives of employees, and other 
interested Governmental agencies. Such a request shall be submitted in 
writing to the Administrator, Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC 
20210, and shall include the following:
    (A) The number of any wage determination at issue, the name of the 
contracting agency whose contract is involved, and a brief description 
of the services to be performed under the contract;
    (B) A statement regarding the status of the procurement and any 
estimated procurement dates, such as bid opening, contract award, 
commencement date of the contract or its follow-up option period;
    (C) A statement of the applicant's case, setting forth in detail the 
reasons why the applicant believes that a substantial variance exists 
with respect to some or all of the wages and/or fringe benefits, 
attaching available data concerning wages and/or fringe benefits 
prevailing in the locality;
    (D) Names and addresses (to the extent known) of interested parties.
    (ii) If the information in paragraph (b)(1)(i) of this section is 
not submitted with the request, the Administrator may deny the request 
or request supplementary information, at his/her discretion. No 
particular form is prescribed for submission of a request under this 
section.
    (2) The Administrator will respond to the party requesting a hearing 
within 30 days after receipt, granting or denying the request or 
advising that additional time is necessary for a decision. No hearing 
will be provided pursuant to this section and section 4(c) of the Act 
unless the Administrator determines from information available or 
submitted with a request for such a hearing that there may be a 
substantial variance between some or all of the wage rates and/or fringe 
benefits provided for in a collective bargaining agreement to which the 
service employees would otherwise be entitled by virtue of the 
provisions of section 4(c) of the Act, and those which prevail for 
services of a character similar in the locality.
    (3) Pursuant to section 4(b) of the Act, requests for a hearing 
shall not be considered unless received as specified below, except in 
those situations where the Administrator determines that extraordinary 
circumstances exist:

[[Page 43]]

    (i) For advertised contracts, prior to ten days before the award of 
the contract;
    (ii) For negotiated contracts and for contracts with provisions 
extending the initial term by option, prior to the commencement date of 
the contract or the follow-up option period, as the case may be.
    (c) Referral to the Chief Administrative Law Judge. When the 
Administrator determines from the information available or submitted 
with a request for a hearing that there may be a substantial variance, 
the Administrator on his/her own motion or on application of any 
interested person will by order refer the issue to the Chief 
Administrative Law Judge, for designation of an Administrative Law Judge 
who shall conduct such a fact finding hearing as may be necessary to 
render a decision solely on the issue of whether the wages and/or fringe 
benefits contained in the collective bargaining agreement which was the 
basis for the wage determination at issue are substantially at variance 
with those which prevail for services of a character similar in the 
locality. However, in situations where there is also a question as to 
whether the collective bargaining agreement was reached as a result of 
``arm's-length negotiations'' (see Sec. 4.11), the referral shall 
include both issues for resolution in one proceeding. No authority is 
delegated under this section to hear and/or decide any other issues 
pertaining to the Service Contract Act. As provided in section 4(a) of 
the Act, the provisions of section 4 and 5 of the Walsh-Healey Public 
Contracts Act (41 U.S.C. 38, 39) shall be applicable to such proceeding, 
which shall be conducted in accordance with the procedures set forth at 
29 CFR part 6.
    (d) The Administrator shall be an interested party and shall have 
the opportunity to participate in the proceeding to the degree he/she 
considers appropriate.



Sec. 4.11  Arm's length proceedings.

    (a) Statutory provision. Under section 4(c) of the Act, the wages 
and fringe benefits provided in the predecessor contractor's collective 
bargaining agreement must be reached ``as a result of arm's-length 
negotiations.'' This provision precludes arrangements by parties to a 
collective bargaining agreement who, either separately or together, act 
with an intent to take advantage of the wage determination scheme 
provided for in sections 2(a) and 4(c) of the Act. See Trinity Services, 
Inc. v. Marshall, 593 F.2d 1250 (D.C. Cir. 1978). A finding as to 
whether a collective bargaining agreement or particular wages and fringe 
benefits therein are reached as a result of arm's-length negotiations 
may be made through investigation, hearing or otherwise pursuant to the 
Secretary's authority under section 4(a) of the Act.
    (b) Prerequisites for hearing. (1) A request for a determination 
under this section may be made by a contracting agency or other person 
affected or interested, including contractors or prospective contractors 
and associations of contractors, representatives of employees, and 
interested Governmental agencies. Such a request shall be submitted in 
writing to the Administrator, Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC 
20210. Although no particular form is prescribed for submission of a 
request under this section, such request shall include the following 
information:
    (i) A statement of the applicant's case setting forth in detail the 
reasons why the applicant believes that the wages and fringe benefits 
contained in the collective bargaining agreement were not reached as a 
result of arm's-length negotiations;
    (ii) A statement regarding the status of the procurement and any 
estimated procurement dates, such as bid opening, contract award, 
commencement date of the contract or its follow-up option period;
    (iii) Names and addresses (to the extent known) of interested 
parties.
    (2) Pursuant to section 4(b) of the Act, requests for a hearing 
shall not be considered unless received as specified below except in 
those situations where the Administrator determines that extraordinary 
circumstances exist:
    (i) For advertised contracts, prior to ten days before the award of 
the contract;

[[Page 44]]

    (ii) For negotiated contracts and for contracts with provisions 
extending the term by option, prior to the commencement date of the 
contract or the follow-up option period, as the case may be.
    (c)(1) The Administrator, on his/her own motion or after receipt of 
a request for a determination, may make a finding on the issue of arm's-
length negotiations.
    (2) If the Administrator determines that there may not have been 
arm's-length negotiations, but finds that there is insufficient evidence 
to render a final decision thereon, the Administrator may refer the 
issue to the Chief Administrative Law Judge in accordance with paragraph 
(d) of this section.
    (3)(i) If the Administrator finds that the collective bargaining 
agreement or wages and fringe benefits at issue were reached as a result 
of arm's-length negotiations or that arm's-length negotiations did not 
take place, the interested parties, including the parties to the 
collective bargaining agreement, will be notified of the Administrator's 
findings, which shall include the reasons therefor, and such parties 
shall be afforded an opportunity to request that a hearing be held to 
render a decision on the issue of arm's-length negotiations.
    (ii) Such parties shall have 20 days from the date of the 
Administrator's ruling to request a hearing. A detailed statement of the 
reasons why the Administrator's ruling is in error, including facts 
alleged to be in dispute, if any, shall be submitted with the request 
for a hearing.
    (iii) If no hearing is requested within the time mentioned in 
paragraph (c)(3)(ii) of this section, the Administrator's ruling shall 
be final, and, in the case of a finding that arm's-length negotiations 
did not take place, a new wage determination will be issued for the 
contract. If a hearing is requested, the decision of the Administrator 
shall be inoperative.
    (d) Referral to the Chief Administrative Law Judge. The 
Administrator on his/her own motion, under paragraph (c)(2) of this 
section or upon a request for a hearing under paragraph (c)(3)(ii) of 
this section where the Administrator determines that material facts are 
in dispute, shall by order refer the issue to the Chief Administrative 
Law Judge for designation of an Administrative Law Judge, who shall 
conduct such hearings as may be necessary to render a decision solely on 
the issue of arm's-length negotiations. However, in situations where 
there is also a question as to whether some or all of the collectively 
bargained wage rates and/or fringe benefits are substantially at 
variance (see Sec. 4.10), the referral shall include both issues for 
resolution in one proceeding. As provided in section 4(a) of the Act, 
the provisions of sections 4 and 5 of the Walsh-Healey Public Contracts 
Act (41 U.S.C. 38, 39) shall be applicable to such proceeding, which 
shall be conducted in accordance with the procedures set forth at 29 CFR 
part 6.
    (e) Referral to the Administrative Review Board. When a party 
requests a hearing under paragraph (c)(3)(ii) of this section and the 
Administrator determines that no material facts are in dispute, the 
Administrator shall refer the issue and the record compiled thereon to 
the Administrative Review Board to render a decision solely on the issue 
of arm's-length negotiations. Such proceeding shall be conducted in 
accordance with the procedures set forth at 29 CFR part 8.



Sec. 4.12  Substantial interest proceedings.

    (a) Statutory provision. Under section 5(a) of the Act, no contract 
of the United States (or the District of Columbia) shall be awarded to 
the persons or firms appearing on the list distributed by the 
Comptroller General giving the names of persons or firms who have been 
found to have violated the Act until 3 years have elapsed from the date 
of publication of the list. Section 5(a) further states that ``no 
contract of the United States shall be awarded * * * to any firm, 
corporation, partnership, or association in which such persons or firms 
have a substantial interest * * * .'' A finding as to whether persons or 
firms whose names appear on the debarred bidders list have a substantial 
interest in any other firm, corporation, partnership, or association may 
be made through investigation, hearing,

[[Page 45]]

or otherwise pursuant to the Secretary's authority under section 4(a) of 
the Act.
    (b) Ineligibility. See Sec. 4.188 of this part for the Secretary's 
rulings and interpretations with respect to substantial interest.
    (c)(1) A request for a determination under this section may be made 
by any interested party, including contractors or prospective 
contractors, and associations of contractors, representatives of 
employees, and interested Government agencies. Such a request shall be 
submitted in writing to the Administrator, Wage and Hour Division, 
Employment Standards Administration, U.S. Department of Labor, 
Washington, DC 20210.
    (2) The request shall include a statement setting forth in detail 
why the petitioner believes that a person or firm whose name appears on 
the debarred bidders list has a substantial interest in any firm, 
corporation, partnership, or association which is seeking or has been 
awarded a contract of the United States or the District of Columbia. No 
particular form is prescribed for the submission of a request under this 
section.
    (d)(1) The Administrator, on his/her own motion or after receipt of 
a request for a determination, may make a finding on the issue of 
substantial interest.
    (2) If the Administrator determines that there may be a substantial 
interest, but finds that there is insufficient evidence to render a 
final ruling thereon, the Administrator may refer the issue to the Chief 
Administrative Law Judge in accordance with paragraph (e) of this 
section.
    (3) If the Administrator finds that no substantial interest exists, 
or that there is not sufficient information to warrant the initiation of 
an investigation, the requesting party, if any, will be so notified and 
no further action taken.
    (4)(i) If the Administrator finds that a substantial interest 
exists, the person or firm affected will be notified of the 
Administrator's finding, which shall include the reasons therefor, and 
such person or firm shall be afforded an opportunity to request that a 
hearing be held to render a decision on the issue of substantial 
interest.
    (ii) Such person or firm shall have 20 days from the date of the 
Administrator's ruling to request a hearing. A detailed statement of the 
reasons why the Administrator's ruling is in error, including facts 
alleged to be in dispute, if any, shall be submitted with the request 
for a hearing.
    (iii) If no hearing is requested within the time mentioned in 
paragraph (d)(4)(ii) of this section, the Administrator's finding shall 
be final and the Administrator shall so notify the Comptroller General. 
If a hearing is requested, the decision of the Administrator shall be 
inoperative unless and until the Administrative Law Judge or the 
Administrative Review Board issues an order that there is a substantial 
interest.
    (e) Referral to the Chief Administrative Law Judge. The 
Administrator on his/her own motion, or upon a request for a hearing 
where the Administrator determines that relevant facts are in dispute, 
shall by order refer the issue to the Chief Administrative Law Judge, 
for designation of an Administrative Law Judge who shall conduct such 
hearings as may be necessary to render a decision solely on the issue of 
substantial interest. As provided in section 4(a) of the Act, the 
provisions of sections 4 and 5 of the Walsh-Healey Public Contracts Act 
(41 U.S.C. 38, 39) shall be applicable to such proceedings, which shall 
be conducted in accordance with the procedures set forth at 29 CFR part 
6.
    (f) Referral to the Administrative Review Board. When the person or 
firm requests a hearing and the Administrator determines that relevant 
facts are not in dispute, the Administrator will refer the issue and the 
record compiled thereon to the Administrative Review Board to render a 
decision solely on the issue of substantial interest. Such proceeding 
shall be conducted in accordance with the procedures set forth at 29 CFR 
part 8.

[[Page 46]]



                Subpart B--Wage Determination Procedures



Sec. 4.50  Types of wage and fringe benefit determinations.

    The Administrator specifies the minimum monetary wages and fringe 
benefits to be paid as required under the Act in two types of 
determinations:
    (a) Prevailing in the locality. Determinations that set forth 
minimum monetary wages and fringe benefits determined to be prevailing 
for various classes of service employees in the locality (sections 
2(a)(1) and 2(a)(2) of the Act) after giving ``due consideration'' to 
the rates applicable to such service employees if directly hired by the 
Federal Government (section 2(a)(5) of the Act); and
    (b) Collective Bargaining Agreement--(Successorship). Determinations 
that set forth the wage rates and fringe benefits, including accrued and 
prospective increases, contained in a collective bargaining agreement 
applicable to the service employees who performed on a predecessor 
contract in the same locality (sections 4(c) and 2(a)(1) and (2) of the 
Act).



Sec. 4.51  Prevailing in the locality determinations.

    (a) Information considered. The minimum monetary wages and fringe 
benefits set forth in determinations of the Secretary are based on all 
available pertinent information as to wage rates and fringe benefits 
being paid at the time the determination is made. Such information is 
most frequently derived from area surveys made by the Bureau of Labor 
Statistics, U.S. Department of Labor, or other Labor Department 
personnel. Information may also be obtained from Government contracting 
officers and from other available sources, including employees and their 
representatives and employers and their associations. The determinations 
may be based on the wage rates and fringe benefits contained in 
collective bargaining agreements where they have been determined to 
prevail in a locality for specified occupational class(es) of employees.
    (b) Determination of prevailing rates. Where a single rate is paid 
to a majority (50 percent or more) of the workers in a class of service 
employees engaged in similar work in a particular locality, that rate is 
determined to prevail. The wage rates and fringe benefits in a 
collective bargaining agreement covering 2,001 janitors in a locality, 
for example, prevail if it is determined that no more than 4,000 workers 
are engaged in such janitorial work in that locality. In the case of 
information developed from surveys, statistical measurements of central 
tendency such as a median (a point in a distribution of wage rates where 
50 percent of the surveyed workers receive that or a higher rate and an 
equal number receive a lesser rate) or the mean (average) are considered 
reliable indicators of the prevailing rate. Which of these statistical 
measurements will be applied in a given case will be determined after a 
careful analysis of the overall survey, separate classification data, 
patterns existing between survey periods, and the way the separate 
classification data interrelate. Use of the median is the general rule. 
However, the mean (average) rate may be used in situations where, after 
analysis, it is determined that the median is not a reliable indicator. 
Examples where the mean may be used include situations where:
    (1) The number of workers studied for the job classification 
constitutes a relatively small sample and the computed median results in 
an actual rate that is paid to few of the studied workers in the class;
    (2) Statistical deviation such as a skewed (bimodal or multimodal) 
frequency distribution biases the median rate due to large 
concentrations of workers toward either end of the distribution curve 
and the computed median results in an actual rate that is paid to few of 
the studied workers in the class; or
    (3) The computed median rate distorts historic wage relationships 
between job levels within a classification family (i.e., Electronic 
Technician Classes A, B, and C levels within the Electronic technician 
classification family), between classifications of different skill 
levels (i.e., a maintenance electrician as compared with a maintenance 
carpenter), or, for example, yields a wage movement inconsistent with 
the pattern shown by the survey

[[Page 47]]

overall or with related and/or similarly skilled job classifications.
    (c) Slotting wage rates. In some instances, a wage survey for a 
particular locality may result in insufficient data for one or more job 
classifications that are required in the performance of a contract. 
Establishment of a prevailing wage rate for certain such classifications 
may be accomplished through a ``slotting'' procedure, such as that used 
under the Federal pay system. Under this procedure, 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. As an example, 
a wage rate found prevailing for the janitorial classification may be 
adopted for the classification of mess attendant if the skill and duties 
attributed to each classification are known to be rated similarly under 
pay classification schemes. (Both classifications are assigned the same 
wage grade under the Coordinated Federal Wage System and are paid at the 
Wage Board grade 2 when hired directly by a Federal agency.)
    (d) Due consideration. In making wage and fringe benefit 
determinations, section 2(a)(5) of the Act requires that due 
consideration be given to the rates that would be paid by the Federal 
agency to the various classes of service employees if section 5341 or 
section 5332 of title 5 U.S.C., were applicable to them. Section 5341 
refers to the Wage Board or Coordinated Federal Wage System for ``blue 
collar'' workers and section 5332 refers to the General Schedule pay 
system for ``white collar'' workers. The term due consideration implies 
the exercise of discretion on the basis of the facts and circumstances 
surrounding each determination, recognizing the legislative objective of 
narrowing the gap between the wage rates and fringe benefits prevailing 
for service employees and those established for Federal employees. Each 
wage determination is based on a survey or other information on the wage 
rates and fringe benefits being paid in a particular locality and also 
takes into account those wage rates and fringe benefits which would be 
paid under Federal pay systems.



Sec. 4.52  Fringe benefit determinations.

    (a) Wage determinations issued pursuant to the Service Contract Act 
ordinarily contain provisions for vacation and holiday benefits 
prevailing in the locality. In addition, wage determinations contain a 
prescribed minimum rate for all other benefits, such as insurance, 
pension, etc., which are not required as a matter of law (i.e., 
excluding Social Security, unemployment insurance, and workers' 
compensation payments and similar statutory benefits), based upon the 
sum of the benefits contained in the U.S. Bureau of Labor Statistics, 
Employment Cost Index (ECI), for all employees in private industry, 
nationwide (and excluding ECI components for supplemental pay, such as 
shift differential, which are considered wages rather than fringe 
benefits under SCA). Pursuant to Section 4(b) of the Act and Sec. 4.123, 
the Secretary has determined that it is necessary and proper in the 
public interest, and in accord with remedial purposes of the Act to 
protect prevailing labor standards, to issue a variation from the Act's 
requirement that fringe benefits be determined for various classes of 
service employees in the locality.
    (b) The minimum rate for all benefits (other than holidays and 
vacation) which are not legally required, as prescribed in paragraph (a) 
of this section, shall be phased in over a four-year period beginning 
June 1, 1997. The first year the rate will be $.90 per hour plus one-
fourth of the difference between $.90 per hour and the rate prescribed 
in paragraph (a) of this section; the second year the rate will be 
increased by one-third of the difference between the rate set the first 
year and the rate prescribed; the third year the rate will be increased 
by one-half of the difference between the rate set in the second year 
and the rate prescribed; and the fourth year and thereafter the rate 
will be the rate prescribed in paragraph (a) of this section.
    (c) Where it is determined pursuant to Sec. 4.51(b) that a single 
fringe benefit rate is paid with respect to a majority of the workers in 
a class of service employees engaged in similar work in a locality, that 
rate will be determined to prevail notwithstanding the rate

[[Page 48]]

which would otherwise be prescribed pursuant to this section. 
Ordinarily, it will be found that a majority of workers receive fringe 
benefits at a single level where those workers are subject to a 
collective bargaining agreement whose provisions have been found to 
prevail in the locality.
    (d) A significant number of contracts contain a prevailing fringe 
benefit rate of $2.56 per hour. Generally, these contracts are large 
base support contracts, contracts requiring competition from large 
corporations, contracts requiring highly technical services, and 
contracts solicited pursuant to A-76 procedures (displacement of Federal 
employees), as well as successor contracts thereto. The $2.56 benefit 
rate shall continue to be issued for all contracts containing the $2.56 
benefit rate, as well as resolicitations and other successor contracts 
for substantially the same services, until the fringe benefit rate 
determined in accordance with paragraphs (a) and (b) of this section 
equals or exceeds $2.56 per hour.
    (e) Variance procedure. (1) The Department will consider variations 
requested by contracting agencies pursuant to Section 4(b) of the Act 
and Sec. 4.123, from the methodology described in paragraph (a) of this 
section for determining prevailing fringe benefit rates. This variation 
procedure will not be utilized to routinely permit separate fringe 
benefit packages for classes of employees and industries, but rather 
will be limited to the narrow circumstances set forth herein where 
special needs of contracting agencies require this procedure. Such 
variations will be considered where the agency demonstrates that because 
of the special circumstances of the particular industry, the variation 
is necessary and proper in the public interest or to avoid the serious 
impairment of government business. Such a demonstration might be made, 
for example, where an agency is unable to obtain contractors willing to 
bid on a contract because the service will be performed at the 
contractor's facility by employees performing work for the Government 
and other customers, and as a result, paying the required SCA fringe 
benefits would cause undue disruption to the contractor's own work force 
and pay practices.
    (2) It will also be necessary for the agency to demonstrate that a 
variance is in accordance with the remedial purpose of the Act to 
protect prevailing labor standards, by providing comprehensive data from 
a valid survey demonstrating the prevailing fringe benefits for the 
specific industry. If the agency does not continue to provide current 
data in subsequent years, the variance will be withdrawn and the rate 
prescribed in paragraph (a) of this section will be issued for the 
contract.

[61 FR 68664, Dec. 30, 1996]



Sec. 4.53  Collective bargaining agreement (successorship) determinations.

    Determinations based on the collective bargaining agreement of a 
predecessor contractor set forth by job classification each provision 
relating to wages (such as the established straight time hourly or 
salary rate, cost-of-living allowance, and any shift, hazardous, and 
other similar pay differentials) and to fringe benefits (such as holiday 
pay, vacation pay, sick leave pay, life, accidental death, disability, 
medical, and dental insurance plans, retirement or pension plans, 
severance pay, supplemental unemployment benefits, saving and thrift 
plans, stock-option plans, funeral leave, jury/witness leave, or 
military leave) contained in the predecessor's collective bargaining 
agreement, as well as conditions governing the payment of such wages and 
fringe benefits. Accrued wages and fringe benefits and prospective 
increases therein are also included. Each wage determination is limited 
in application to a specific contract succeeding a contract which had 
been performed in the same locality by a contractor with a collective 
bargaining agreement, and contains a notice to prospective bidders 
regarding their obligations under section 4(c) of the Act.

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]

[[Page 49]]



Sec. 4.54  Locality basis of wage and fringe benefit determinations.

    (a) Under section 2(a) of the Act, the Secretary or his authorized 
representative is given the authority to determine the minimum monetary 
wages and fringe benefits prevailing for various classes of service 
employees ``in the locality''. Although the term locality has reference 
to a geographic area, it has an elastic and variable meaning and 
contemplates consideration of the existing wage structures which are 
pertinent to the employment of particular classes of service employees 
on the varied kinds of service contracts. Because wage structures are 
extremely varied, there can be no precise single formula which would 
define the geographic limits of a ``locality'' that would be relevant or 
appropriate for the determination of prevailing wage rates and 
prevailing fringe benefits in all situations under the Act. The locality 
within which a wage or fringe benefit determination is applicable is, 
therefore, defined in each such determination upon the basis of all the 
facts and circumstances pertaining to that determination. Locality is 
ordinarily limited geographically to a particular county or cluster of 
counties comprising a metropolitan area. For example, a survey by the 
Bureau of Labor Statistics of the Baltimore, Maryland Standard 
Metropolitan Statistical Area includes the counties of Baltimore, 
Harford, Howard, Anne Arundel, and the City of Baltimore. A wage 
determination based on such information would define locality as the 
same geographic area included within the scope of the survey. Locality 
may also be defined as, for example, a city, a State, or, under rare 
circumstances, a region, depending on the actual place or places of 
contract performance, the geographical scope of the data on which the 
determination was based, the nature of the services being contracted 
for, and the procurement method used. In addition, in Southern Packaging 
& Storage Co. v. United States, 618 F.2d 1088 (4th Cir. 1980), the court 
held that a nationwide wage determination normally is not permissible 
under the Act, but postulated that ``there may be the rare and 
unforeseen service contract which might be performed at locations 
throughout the country and which would generate truly nationwide 
competition''.
    (b) Where the services are to be performed for a Federal agency at 
the site of the successful bidder, in contrast to services to be 
performed at a specific Federal facility or installation, or in the 
locality of such installation, the location where the work will be 
performed often cannot be ascertained at the time of bid advertisement 
or solicitation. In such instances, wage determinations will generally 
be issued for the various localities identified by the agency as set 
forth in Sec. 4.4(a)(2)(i).
    (c) Where the wage rates and fringe benefits contained in a 
collective bargaining agreement applicable to the predecessor contract 
are set forth in a determination, locality in such a determination is 
typically described as the geographic area in which the predecessor 
contract was performed. The determination applies to any successor 
contractor which performs the contract in the same locality. However, 
see Sec. 4.163(i).

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]



Sec. 4.55  Issuance and revision of wage determinations.

    (a) Section 4.4 of subpart A requires that the awarding agency file 
a notice of intention to make a service contract which is subject to the 
Act with the Wage and Hour Division, Employment Standards 
Administration, prior to any invitation for bids or the commencement of 
negotiations for any contract exceeding $2,500. Upon receipt of the 
notice, the Wage and Hour Division may issue a new determination of 
minimum monetary wages and fringe benefits for the classes of service 
employees who will perform work on the contract or may revise a 
determination which is currently in effect.
    (b) Determinations will be reviewed periodically and where 
prevailing wage rates or fringe benefits have changed, such changes will 
be reflected in revised determinations. For example, in a locality where 
it is determined that the wage rate which prevails for a particular 
class of service employees is the rate specified in a collective 
bargaining agreement(s) applicable in that

[[Page 50]]

locality, and such agreement(s) specifies increases in such rates to be 
effective on specific dates, the determinations would be revised to 
reflect such changes as they become effective. Revised determinations 
shall be applicable to contracts in accordance with the provisions of 
Sec. 4.5(a)(2) of subpart A.
    (c) Determinations issued by the Wage and Hour Division with respect 
to particular contracts are required to be incorporated in the 
invitations for bids or requests for proposals or quotations issued by 
the contracting agencies, and are to be incorporated in the contract 
specifications in accordance with Sec. 4.5 of subpart A. In this manner, 
prospective contractors and subcontractors are advised of the minimum 
monetary wages and fringe benefits required under the most recently 
applicable determination to be paid the service employees who perform 
the contract work. These requirements are, of course, the same for all 
bidders so none will be placed at a competitive disadvantage.

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]



Sec. 4.56  Review and reconsideration of wage determinations.

    (a) Review by the Administrator. (1) Any interested party affected 
by a wage determination issued under section 2(a) of the Act may request 
review and reconsideration by the Administrator. A request for review 
and reconsideration may be made by the contracting agency or other 
interested party, including contractors or prospective contractors and 
associations of contractors, representatives of employees, and other 
interested Governmental agencies. Any such request must be accompanied 
by supporting evidence. In no event shall the Administrator review a 
wage determination or its applicability after the opening of bids in the 
case of a competitively advertised procurement, or, later than 10 days 
before commencement of a contract in the case of a negotiated 
procurement, exercise of a contract option or extension. This limitation 
is necessary in order to ensure competitive equality and an orderly 
procurement process.
    (2) The Administrator shall, upon receipt of a request for 
reconsideration, review the data sources relied upon as a basis for the 
wage determination, the evidence furnished by the party requesting 
review or reconsideration, and, if necessary to resolve the matter, any 
additional information found to be relevant to determining prevailing 
wage rates and fringe benefits in a particular locality. The 
Administrator, pursuant to a review of available information, may issue 
a new wage determination, may cause the wage determination to be 
revised, or may affirm the wage determination issued, and will notify 
the requesting party in writing of the action taken. The Administrator 
will render a decision within 30 days of receipt of the request or will 
notify the requesting party in writing within 30 days of receipt that 
additional time is necessary.
    (b) Review by the Administrative Review Board. Any decision of the 
Administrator under paragraph (a) of this section may be appealed to the 
Administrative Review Board within 20 days of issuance of the 
Administrator's decision. Any such appeal shall be in accordance with 
the provisions of part 8 of this title.

[48 FR 49762, Oct. 27, 1983. Redesignated at 61 FR 68664, Dec. 30, 1996]



   Subpart C--Application of the McNamara-O'Hara Service Contract Act

                              Introductory



Sec. 4.101  Official rulings and interpretations in this subpart.

    (a) The purpose of this subpart is to provide, pursuant to the 
authority cited in Sec. 4.102, official rulings and interpretations with 
respect to the application of the McNamara-O'Hara Service Contract Act 
for the guidance of the agencies of the United States and the District 
of Columbia which may enter into and administer contracts subject to its 
provisions, the persons desiring to enter into such contracts with these 
agencies, and the contractors, subcontractors, and employees who perform 
work under such contracts.

[[Page 51]]

    (b) These rulings and interpretations are intended to indicate the 
construction of the law and regulations which the Department of Labor 
believes to be correct and which will be followed in the administration 
of the Act unless and until directed otherwise by Act of Congress or by 
authoritative ruling of the courts, or if it is concluded upon 
reexamination of an interpretation that it is incorrect. See for 
example, Skidmore v. Swift & Co., 323 U.S. 134 (1944); Roland Co. v. 
Walling, 326 U.S. 657 (1946); Endicott Johnson Corp. v. Perkins, 317 
U.S. 501, 507-509 (1943); Perkins v. Lukens Steel Co., 310 U.S. 113, 128 
(1940); United States v. Western Pacific Railroad Co., 352 U.S. 59 
(1956). The Department of Labor (and not the contracting agencies) has 
the primary and final authority and responsibility for administering and 
interpreting the Act, including making determinations of coverage. See 
Woodside Village v. Secretary of Labor, 611 F. 2d 312 (9th Cir. 1980); 
Nello L. Teer Co. v. United States, 348 F.2d 533, 539-540 (Ct. Cl. 
1965), cert. denied, 383 U.S. 934; North Georgia Building & Construction 
Trades Council v. U.S. Department of Transportation, 399 F. Supp. 58, 63 
(N.D. Ga. 1975) (Davis-Bacon Act); Curtiss-Wright Corp. v. McLucas, 364 
F. Supp. 750, 769-72 (D.N.J. 1973); and 43 Atty. Gen. Ops. ____ (March 
9, 1979); 53 Comp. Gen. 647, 649-51 (1974); 57 Comp. Gen. 501, 506 
(1978).
    (c) Court decisions arising under the Act (as well as under related 
remedial labor standards laws such as the Walsh-Healey Public Contracts 
Act, the Davis-Bacon Act, the Contract Work Hours and Safety Standards 
Act, and the Fair Labor Standards Act) which support policies and 
interpretations contained in this part are cited where it is believed 
that they may be helpful. On matters which have not been authoritatively 
determined by the courts, it is necessary for the Secretary of Labor and 
the Administrator to reach conclusions as to the meaning and the 
application of provisions of the law in order to carry out their 
responsibilities of administration and enforcement (Skidmore v. Swift & 
Co., 323 U.S. 134 (1944)). In order that these positions may be made 
known to persons who may be affected by them, official interpretations 
and rulings are issued by the Administrator with the advice of the 
Solicitor of Labor, as authorized by the Secretary (Secretary's Order 
No. 16-75, Nov. 21, 1975, 40 FR 55913; Employment Standards Order No. 2-
76, Feb. 23, 1976, 41 FR 9016). These interpretations are a proper 
exercise of the Secretary's authority. Idaho Sheet Metal Works v. Wirtz, 
383 U.S. 190, 208 (1966), reh. den. 383 U.S. 963 (1966). References to 
pertinent legislative history, decisions of the Comptroller General and 
of the Attorney General, and Administrative Law Judges' decisions are 
also made in this part where it appears they will contribute to a better 
understanding of the stated interpretations and policies.
    (d) The interpretations of the law contained in this part are 
official interpretations which may be relied upon. The Supreme Court has 
recognized that such interpretations of the Act ``provide a practical 
guide to employers and employees as to how the office representing the 
public interest in its enforcement will seek to apply it'' and 
``constitute a body of experience and informed judgment to which courts 
and litigants may properly resort for guidance'' (Skidmore v. Swift & 
Co., 323 U.S. 134 (1944)). Interpretations of the agency charged with 
administering an Act are generally afforded deference by the courts. 
(Griggs v. Duke Power Co., 401 U.S. 424, 433-34 (1971); Udall v. 
Tallman, 380 U.S. 1 (1965).) Some of the interpretations in this part 
relating to the application of the Act are interpretations of provisions 
which appeared in the original Act before its amendments in 1972 and 
1976. Accordingly, the Department of Labor considers these 
interpretations to be correct, since there were no amendments of the 
statutory provisions which they interpret. (United States v. Davison 
Fuel & Dock Co., 371 F.2d 705, 711-12 (C.A. 4, 1967).)
    (e) The interpretations contained herein shall be in effect until 
they are modified, rescinded, or withdrawn. This part supersedes and 
replaces certain interpretations previously published in the Federal 
Register and Code of Federal Regulations as part 4 of this chapter. 
Prior opinions, rulings, and interpretations and prior enforcement 
policies which are not inconsistent

[[Page 52]]

with the interpretations in this part or with the Act as amended are 
continued in effect; all other opinions, rulings, interpretations, and 
enforcement policies on the subjects discussed in the interpretations in 
this part, to the extent they are inconsistent with the rules herein 
stated, are superseded, rescinded, and withdrawn.
    (f) Principles governing the application of the Act as set forth in 
this subpart are clarified or amplified in particular instances by 
illustrations and examples based on specific fact situations. Since such 
illustrations and examples cannot and are not intended to be exhaustive, 
or to provide guidance on every problem which may arise under the Act, 
no inference should be drawn from the fact that a subject or 
illustration is omitted.
    (g) It should not be assumed that the lack of discussion of a 
particular subject in this subpart indicates the adoption of any 
particular position by the Department of Labor with respect to such 
matter or to constitute an interpretation, practice, or enforcement 
policy. If doubt arises or a question exists, inquiries with respect to 
matters other than safety and health standards should be directed to the 
Administrator of the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, Washington, DC 20210, or to 
any regional office of the Wage and Hour Division. Safety and health 
inquiries should be addressed to the Assistant Secretary for 
Occupational Safety and Health, U.S. Department of Labor, Washington, DC 
20210, or to any OSHA regional office. A full description of the facts 
and any relevant documents should be submitted if an official ruling is 
desired.



Sec. 4.102  Administration of the Act.

    As provided by section 4 of the Act and under provisions of sections 
4 and 5 of the Walsh-Healey Public Contracts Act (49 Stat. 2036, 41 
U.S.C. 38, 39), which are made expressly applicable for the purpose, the 
Secretary of Labor is authorized and directed to administer and enforce 
the provisions of the McNamara-O'Hara Service Contract Act, to make 
rules and regulations, issue orders, make decisions, and take other 
appropriate action under the Act. The Secretary is also authorized to 
make reasonable limitations and to make rules and regulations allowing 
reasonable variations, tolerances, and exemptions to and from provisions 
of the Act (except section 10), but only in special circumstances where 
it is determined that such action is necessary and proper in the public 
interest or to avoid serious impairment of the conduct of Government 
business and is in accord with the remedial purposes of the Act to 
protect prevailing labor standards. The authority and enforcement powers 
of the Secretary under the Act are coextensive with the authority and 
powers under the Walsh-Healey Act. Curtiss Wright Corp. v. McLucas 364 
F. Supp. 750, 769 (D NJ 1973).



Sec. 4.103  The Act.

    The McNamara-O'Hara Service Contract Act of 1965 (Pub. L. 89-286, 79 
Stat. 1034, 41 U.S.C. 351 et seq.), hereinafter referred to as the Act, 
was approved by the President on October 22, 1965 (1 Weekly Compilation 
of Presidential Documents 428). It establishes standards for minimum 
compensation and safety and health protection of employees performing 
work for contractors and subcontractors on service contracts entered 
into with the Federal Government and the District of Columbia. It 
applies to contracts entered into pursuant to negotiations concluded or 
invitations for bids issued on or after January 20, 1966. It has been 
amended by Public Law 92-473, 86 Stat. 798; by Public Law 93-57, 87 
Stat. 140; and by Public Law 94-489, 90 Stat. 2358.



Sec. 4.104  What the Act provides, generally.

    The provisions of the Act apply to contracts, whether negotiated or 
advertised, the principal purpose of which is to furnish services in the 
United States through the use of service employees. Under its 
provisions, every contract subject to the Act (and any bid specification 
therefor) entered into by the United States or the District of Columbia 
in excess of $2,500 must contain stipulations as set forth in Sec. 4.6 
of this part requiring: (a) That specified minimum monetary wages and 
fringe benefits determined by the Secretary

[[Page 53]]

of Labor (based on wage rates and fringe benefits prevailing in the 
locality or, in specified circumstances, the wage rates and fringe 
benefits contained in a collective bargaining agreement applicable to 
employees who performed on a predecessor contract) be paid to service 
employees employed by the contractor or any subcontractor in performing 
the services contracted for; (b) that working conditions of such 
employees which are under the control of the contractor or subcontractor 
meet safety and health standards; and (c) that notice be given to such 
employees of the compensation due them under the minimum wage and fringe 
benefits provisions of the contract. Contractors performing work subject 
to the Act thus enter into competition to obtain Government business on 
terms of which they are fairly forewarned by inclusion in the contract. 
(Endicott Johnson Corp. v. Perkins, 317 U.S. 501, 507 (1943).) The Act's 
purpose is to impose obligations upon those favored with Government 
business by precluding the use of the purchasing power of the Federal 
Government in the unfair depression of wages and standards of 
employment. (See H.R. Rep. No. 948, 89th Cong., 1st Sess. 2-3 (1965); S. 
Rep. No. 798, 89th Cong., 1st Sess. 3-4 (1965).) The Act does not permit 
the monetary wage rates specified in such a contract to be less than the 
minimum wage specified under section 6(a)(1) of the Fair Labor Standards 
Act, as amended (29 U.S.C. 206(a)(1)). In addition, it is a violation of 
the Act for any contractor or subcontractor under a Federal contract 
subject to the Act, regardless of the amount of the contract, to pay any 
of his employees engaged in performing work on the contract less than 
such Fair Labor Standards Act minimum wage. Contracts of $2,500 or less 
are not, however, required to contain the stipulations described above. 
These provisions of the Service Contract Act are implemented by the 
regulations contained in this part 4 and are discussed in more detail in 
subsequent sections of subparts C, D, and E.



Sec. 4.105  The Act as amended.

    (a) The provisions of the Act (see Secs. 4.102-4.103) were amended, 
effective October 9, 1972, by Public Law 92-473, signed into law by the 
President on that date. By virtue of amendments made to paragraphs (1) 
and (2) of section 2(a) and the addition to section 4 of a new 
subsection (c), the compensation standards of the Act (see Secs. 4.159-
4.179) were revised to impose on successor contractors certain 
requirements (see Sec. 4.1b) with respect to payment of wage rates and 
fringe benefits based on those agreed upon for substantially the same 
services in the same locality in collective bargaining agreements 
entered into by their predecessor contractors (unless such agreed 
compensation is substantially at variance with that locally prevailing 
or the agreement was not negotiated at arm's length). The Secretary of 
Labor is to give effect to the provisions of such collective bargaining 
agreements in his wage determinations under section 2 of the Act. A new 
paragraph (5) added to section 2(a) of the Act requires a statement in 
the government service contract of the rates that would be paid by the 
contracting agency in the event of its direct employment of those 
classes of service employees to be employed on the contract work who, if 
directly employed by the agency, would receive wages determined as 
provided in 5 U.S.C. 5341. The Secretary of Labor is directed to give 
due consideration to such rates in determining prevailing monetary wages 
and fringe benefits under the Act's provisions. Other provisions of the 
1972 amendments include the addition of a new section 10 to the Act to 
insure that wage determinations are issued by the Secretary for 
substantially all service contracts subject to section 2(a) of the Act 
at the earliest administratively feasible time; an amendment to section 
4(b) of the Act to provide, in addition to the conditions previously 
specified for issuance of administrative limitations, variations, 
tolerances, and exemptions (see Sec. 4.123), that administrative action 
in this regard shall be taken only in special circumstances where the 
Secretary determines that it is in accord with the remedial purpose of 
the Act to protect prevailing labor standards; and a new subsection (d) 
added to section 4 of the Act providing for the award of service 
contracts for terms not more than 5

[[Page 54]]

years with provision for periodic adjustment of minimum wage rates and 
fringe benefits payable thereunder by the issuance of wage 
determinations by the Secretary of Labor during the term of the 
contract. A further amendment to section 5(a) of the Act requires the 
names of contractors found to have violated the Act to be submitted for 
the debarment list (see Sec. 4.188) not later than 90 days after the 
hearing examiner's finding of violation unless the Secretary recommends 
relief, and provides that such recommendations shall be made only 
because of unusual circumstances.
    (b) The provisions of the Act were amended by Public Law 93-57, 87 
Stat. 140, effective July 6, 1973, to extend the Act's coverage to 
Canton Island.
    (c) The provisions of the Act were amended by Public Law 94-489, 90 
Stat. 2358, approved October 13, 1976, to extend the Act's coverage to 
white collar workers. Accordingly, the minimum wage protection of the 
Act now extends to all workers, both blue collar and white collar, other 
than persons employed in a bona fide executive, administrative, or 
professional capacity as those terms are used in the Fair Labor 
Standards Act and in part 541 of title 29. Public Law 94-489 
accomplished this change by adding to section 2(a)(5) of the Act a 
reference to 5 U.S.C. 5332, which deals with white collar workers, and 
by amending the definition of service contract employee in section 8(b) 
of the Act.
    (d) Included in this part 4 and in parts 6 and 8 of this subtitle 
are provisions to give effect to the amendments mentioned in this 
section.



Sec. 4.106  [Reserved]

                 Agencies Whose Contracts May Be Covered



Sec. 4.107  Federal contracts.

    (a) Section 2(a) of the Act covers contracts (and any bid 
specification therefor) ``entered into by the United States'' and 
section 2(b) applies to contracts entered into ``with the Federal 
Government.'' Within the meaning of these provisions, contracts entered 
into by the United States and contracts with the Federal Government 
include generally all contracts to which any agency or instrumentality 
of the U.S. Government becomes a party pursuant to authority derived 
from the Constitution and laws of the United States. The Act does not 
authorize any distinction in this respect between such agencies and 
instrumentalities on the basis of their inclusion in or independence 
from the executive, legislative, or judicial branches of the Government, 
the fact that they may be corporate in form, or the fact that payment 
for the contract services is not made from appropriated funds. Thus, 
contracts of wholly owned Government corporations, such as the Postal 
Service, and those of nonappropriated fund instrumentalities under the 
jurisdiction of the Armed Forces, or of other Federal agencies, such as 
Federal Reserve Banks, are included among those subject to the general 
coverage of the Act. (Brinks, Inc. v. Board of Governors of the Federal 
Reserve System, 466 F. Supp. 116 (D DC 1979); 43 Atty. Gen. Ops. ______ 
(September 26, 1978).) Contracts with the Federal Government and 
contracts entered into ``by the United States'' within the meaning of 
the Act do not, however, include contracts for services entered into on 
their own behalf by agencies or instrumentalities of other Governments 
within the United States, such as those of the several States and their 
political subdivisions, or of Puerto Rico, the Virgin Islands, Guam, or 
American Samoa.
    (b) Where a Federal agency exercises its contracting authority to 
procure services desired by the Government, the method of procurement 
utilized by the contracting agency is not controlling in determining 
coverage of the contract as one entered into by the United States. Such 
contracts may be entered into by the United States either through a 
direct award by a Federal agency or through the exercise by another 
agency (whether governmental or private) of authority granted to it to 
procure services for or on behalf of a Federal agency. Thus, sometimes 
authority to enter into service contracts of the character described in 
the Act for and on behalf of the Government and on a cost-reimbursable 
basis may be delegated, for the convenience of the contracting agency, 
to a prime contractor which has the responsibility for

[[Page 55]]

all work to be done in connection with the operation and management of a 
Federal plant, installation, facility, or program, together with the 
legal authority to act as agency for and on behalf of the Government and 
to obligate Government funds in the procurement of all services and 
supplies necessary to carry out the entire program of operation. The 
contracts entered into by such a prime contractor with secondary 
contractors for and on behalf of the Federal agency pursuant to such 
delegated authority, which have such services as their principal 
purpose, are deemed to be contracts entered into by the United States 
and contracts with the Federal Government within the meaning of the Act. 
However, service contracts entered into by State or local public bodies 
with purveyors of services are not deemed to be entered into by the 
United States merely because such services are paid for with funds of 
the public body which have been received from the Federal Government as 
a grant under a Federal program. For example, a contract entered into by 
a municipal housing authority for tree trimming, tree removal, and 
landscaping for an urban renewal project financed by Federal funds is 
not a contract entered into by the United States and is not covered by 
the Service Contract Act. Similarly, contracts let under the Medicaid 
program which are financed by federally-assisted grants to the States, 
and contracts which provide for insurance benefits to a third party 
under the Medicare program are not subject to the Act.



Sec. 4.108  District of Columbia contracts.

    Section 2(a) of the Act covers contracts (and any bid specification 
therefor) in excess of $2,500 which are ``entered into by the * * * 
District of Columbia.'' The contracts of all agencies and 
instrumentalities which procure contract services for or on behalf of 
the District or under the authority of the District Government are 
contracts entered into by the District of Columbia within the meaning of 
this provision. Such contracts are also considered contracts entered 
into with the Federal Government or the United States within the meaning 
of section 2(b), section 5, and the other provisions of the Act. The 
legislative history indicates no intent to distinguish District of 
Columbia contracts from the other contracts made subject to the Act, and 
traditionally, under other statutes, District Government contracts have 
been made subject to the same labor standards provisions as contracts of 
agencies and instrumentalities of the United States.

[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]



Sec. 4.109  [Reserved]

                       Covered Contracts Generally



Sec. 4.110  What contracts are covered.

    The Act covers service contracts of the Federal agencies described 
in Secs. 4.107-4.108. Except as otherwise specifically provided (see 
Secs. 4.115 et seq.), all such contracts, the principal purpose of which 
is to furnish services in the United States through the use of service 
employees, are subject to its terms. This is true of contracts entered 
into by such agencies with States or their political subdivisions, as 
well as such contracts entered into with private employers. Contracts 
between a Federal or District of Columbia agency and another such agency 
are not within the purview of the Act; however, ``subcontracts'' awarded 
under ``prime contracts'' between the Small Business Administration and 
another Federal agency pursuant to various preferential set-aside 
programs, such as the 8(a) program, are covered by the Act. It makes no 
difference in the coverage of a contract whether the contract services 
are procured through negotiation or through advertising for bids. Also, 
the mere fact that an agreement is not reduced to writing does not mean 
that the contract is not within the coverage of the Act. The amount of 
the contract is not determinative of the Act's coverage, although the 
requirements are different for contracts in excess of $2,500 and for 
contracts of a lesser amount. The Act is applicable to the contract if 
the principal purpose of the contract is to furnish services, if such 
services are to be furnished in the United States, and if service 
employees will be used in providing such services.

[[Page 56]]

These elements of coverage will be discussed separately in the following 
sections.



Sec. 4.111  Contracts ``to furnish services.''

    (a) ``Principal purpose'' as criterion. Under its terms, the Act 
applies to a ``contract * * * the principal purpose of which is to 
furnish services * * *.'' If the principal purpose is to provide 
something other than services of the character contemplated by the Act 
and any such services which may be performed are only incidental to the 
performance of a contract for another purpose, the Act does not apply. 
However, as will be seen by examining the illustrative examples of 
covered contracts in Secs. 4.130 et seq., no hard and fast rule can be 
laid down as to the precise meaning of the term principal purpose. This 
remedial Act is intended to be applied to a wide variety of contracts, 
and the Act does not define or limit the types of services which may be 
contracted for under a contract the principal purpose of which is to 
furnish services. Further, the nomenclature, type, or particular form of 
contract used by procurement agencies is not determinative of coverage. 
Whether the principal purpose of a particular contract is the furnishing 
of services through the use of service employees is largely a question 
to be determined on the basis of all the facts in each particular case. 
Even where tangible items of substantial value are important elements of 
the subject matter of the contract, the facts may show that they are of 
secondary import to the furnishing of services in the particular case. 
This principle is illustrated by the examples set forth in Sec. 4.131.
    (b) Determining whether a contract is for ``services'', generally. 
Except indirectly through the definition of service employee the Act 
does not define, or limit, the types of services which may be contracted 
for under a contract ``the principal purpose of which is to furnish 
services''. As stated in the congressional committee reports on the 
legislation, the types of service contracts covered by its provisions 
are varied. Among the examples cited are contracts for laundry and dry 
cleaning, for transportation of the mail, for custodial, janitorial, or 
guard service, for packing and crating, for food service, and for 
miscellaneous housekeeping services. Covered contracts for services 
would also include those for other types of services which may be 
performed through the use of the various classes of service employees 
included in the definition in section 8(b) of the Act (see Sec. 4.113). 
Examples of some such contracts are set forth in Secs. 4.130 et seq. In 
determining questions of contract coverage, due regard must be given to 
the apparent legislative intent to include generally as contracts for 
services those contracts which have as their principal purpose the 
procurement of something other than the construction activity described 
in the Davis-Bacon Act or the materials, supplies, articles, and 
equipment described in the Walsh-Healey Act. The Committee reports in 
both the House and Senate, and statements made on the floor of the 
House, took note of the labor standards protections afforded by these 
two Acts to employees engaged in the performance of construction and 
supply contracts and observed: ``The service contract is now the only 
remaining category of Federal contracts to which no labor standards 
protections apply'' (H. Rept. 948, 89th Cong., 1st Sess., p. 1; see also 
S. Rept. 798, 89th Cong., 1st Sess., p. 1; daily Congressional Record, 
Sept. 20, 1965, p. 23497). A similar understanding of contracts 
principally for services as embracing contracts other than those for 
construction or supplies is reflected in the statement of President 
Johnson upon signing the Act (1 Weekly Compilation of Presidential 
Documents, p. 428).



Sec. 4.112  Contracts to furnish services ``in the United States.''

    (a) The Act and the provisions of this part apply to contract 
services furnished ``in the United States,'' including any State of the 
United States, the District of Columbia, Puerto Rico, the Virgin 
Islands, Outer Continental Shelf lands as defined in the Outer 
Continental Shelf Lands Act, American Samoa, Guam, the Commonwealth of 
the Northern Mariana Islands, Wake Island, and Johnston Island. The 
definition expressly excludes any other territory under the jurisdiction 
of the United States and any United States

[[Page 57]]

base or possession within a foreign country. Services to be performed 
exclusively on a vessel operating in international waters outside the 
geographic areas named in this paragraph would not be services furnished 
``in the United States'' within the meaning of the Act.
    (b) A service contract to be performed in its entirety outside the 
geographical limits of the United States as thus defined is not covered 
and is not subject to the labor standards of the Act. However, if a 
service contract is to be performed in part within and in part outside 
these geographic limits, the stipulations required by Sec. 4.6 or 
Sec. 4.7, as appropriate, must be included in the invitation for bids or 
negotiation documents and in the contract, and the labor standards must 
be observed with respect to that part of the contract services that is 
performed within these geographic limits. In such a case the 
requirements of the Act and of the contract clauses will not be 
applicable to the services furnished outside the United States.

[61 FR 68664, Dec. 30, 1996]



Sec. 4.113  Contracts to furnish services ``through the use of service employees.''

    (a) Use of ``service employees'' in a contract performance. (1) As 
indicated in Sec. 4.110, the Act covers service contracts only where 
``service employees'' will be used in performing the services which it 
is the purpose of the contract to procure. A contract principally for 
services ordinarily will meet this condition if any of the services will 
be furnished through the use of any service employee or employees. Where 
it is contemplated that the services (of the kind performed by service 
employees) will be performed individually by the contractor, and the 
contracting officer knows when advertising for bids or concluding 
negotiations that service employees will in no event be used by the 
contractor in providing the contract services, the Act will not be 
deemed applicable to the contract and the contract clauses required by 
Sec. 4.6 or Sec. 4.7 may be omitted. The fact that the required services 
will be performed by municipal employees or employees of a State would 
not remove the contract from the purview of the Act, as this Act does 
not contain any exemption for contracts performed by such employees. 
Also, as discussed in paragraph (a)(3) of this section, where the 
services the Government wants under the contract are of a type that will 
require the use of service employees as defined in section 8(b) of the 
Act, the contract is not taken out of the purview of the Act by the fact 
that the manner in which the services of such employees are performed 
will be subject to the continuing overall supervision of bona fide 
executive, administrative, or professional personnel to whom the Act 
does not apply.
    (2) The coverage of the Act does not extend to contracts for 
services to be performed exclusively by persons who are not service 
employees, i.e., persons who are bona fide executive, administrative or 
professional personnel as defined in part 541 of this title (see 
paragraph (b) of this section). A contract for medical services 
furnished by professional personnel is an example of such a contract.
    (3) In addition, the Department does not require application of the 
Act to any contract for services which is performed essentially by bona 
fide executive, administrative, or professional employees, with the use 
of service employees being only a minor factor in the performance of the 
contract. However, the Act would apply to a contract for services which 
may involve the use of service employees to a significant or substantial 
extent even though there is some use of bona fide executive, 
administrative, or professional employees in the performance of the 
contract. For example, contracts for drafting or data processing 
services are often performed by drafters, computer operators, or other 
service employees and are subject to the Act even though the work of 
such employees may be performed under the direction and supervision of 
bona fide professional employees.
    (4) In close cases involving a decision as to whether a contract 
will involve a significant use of service employees, the Department of 
Labor should be consulted, since such situations require consideration 
of other factors such as the nature of the contract work, the

[[Page 58]]

type of work performed by service employees, how necessary the work is 
to contract performance, the amount of contract work performed by 
service employees vis-a-vis professional employees, and the total number 
of service employees employed on the contract.
    (b) ``Service employees'' defined. In determining whether or not any 
of the contract services will be performed by service employees, the 
definition of service employee in section 8(b) of the Act is 
controlling. It provides:

    The term service employee means any person engaged in the 
performance of a contract entered into by the United States and not 
exempted under section 7, whether negotiated or advertised, the 
principal purpose of which is to furnish services in the United States 
(other than any person employed in a bona fide executive, 
administrative, or professional capacity, as those terms are defined in 
part 541 of title 29, Code of Federal Regulations, as of July 30, 1976, 
and any subsequent revision of those regulations); and shall include all 
such persons regardless of any contractual relationship that may be 
alleged to exist between a contractor or subcontractor and such persons.
It will be noted that the definition expressly excludes those employees 
who are employed in a bona fide executive, administrative, or 
professional capacity as defined in part 541 of this title and as 
discussed further in Sec. 4.156. Some of the specific types of service 
employees who may be employed on service contracts are noted in other 
sections which discuss the application of the Act to employees.

[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]



Sec. 4.114  Subcontracts.

    (a) ``Contractor'' as including ``subcontractor.'' Except where 
otherwise noted or where the term Government prime contractor is used, 
the term contractor as used in this part 4 shall be deemed to include a 
subcontractor. The term contractor as used in the contract clauses 
required by subpart A in any subcontract under a covered contract shall 
be deemed to refer to the subcontractor, or, if in a subcontract entered 
into by such a subcontractor, shall be deemed to refer to the lower 
level subcontractor. (See Sec. 4.1a(f).)
    (b) Liability of prime contractor. When a contractor undertakes a 
contract subject to the Act, the contractor agrees to assume the 
obligation that the Act's labor standards will be observed in furnishing 
the required services. This obligation may not be relieved by shifting 
all or part of the work to another, and the prime contractor is jointly 
and severally liable with any subcontractor for any underpayments on the 
part of a subcontractor which would constitute a violation of the prime 
contract. The prime contractor is required to include the prescribed 
contract clauses (Secs. 4.6--4.7) and applicable wage determination in 
all subcontracts. The appropriate enforcement sanctions provided under 
the Act may be invoked against both the prime contractor and the 
subcontractor in the event of failure to comply with any of the Act's 
requirements where appropriate under the circumstances of the case.

                           Specific Exclusions



Sec. 4.115  Exemptions and exceptions, generally.

    (a) The Act, in section 7, specifically excludes from its coverage 
certain contracts and work which might otherwise come within its terms 
as procurements the principal purpose of which is to furnish services 
through the use of service employees.
    (b) The statutory exemptions in section 7 of the Act are as follows:
    (1) Any contract of the United States or District of Columbia for 
construction, alteration, and/or repair, including painting and 
decorating of public buildings or public works;
    (2) Any work required to be done in accordance with the provisions 
of the Walsh-Healey Public Contracts Act (49 Stat. 2036);
    (3) Any contract for the carriage of freight or personnel by vessel, 
airplane, bus, truck, express, railway line, or oil or gas pipeline 
where published tariff rates are in effect;
    (4) Any contract for the furnishing of services by radio, telephone, 
telegraph, or cable companies, subject to the Communications Act of 
1934;
    (5) Any contract for public utility services, including electric 
light and power, water, steam, and gas;
    (6) Any employment contract providing for direct services to a 
Federal agency by an individual or individuals;

[[Page 59]]

    (7) Any contract with the Post Office Department, (now the U.S. 
Postal Service) the principal purpose of which is the operation of 
postal contract stations.



Sec. 4.116  Contracts for construction activity.

    (a) General scope of exemption. The Act, in paragraph (1) of section 
7, exempts from its provisions ``any contract of the United States or 
District of Columbia for construction, alteration and/or repair, 
including painting and decorating of public buildings or public works.'' 
This language corresponds to the language used in the Davis-Bacon Act to 
describe its coverage (40 U.S.C. 276a). The legislative history of the 
McNamara-O'Hara Service Contract Act indicates that the purpose of the 
provision is to avoid overlapping coverage of the two acts by excluding 
from the application of the McNamara-O'Hara Act those contracts to which 
the Davis-Bacon Act is applicable and in the performance of which the 
labor standards of that Act are intended to govern the compensation 
payable to the employees of contractors and subcontractors on the work. 
(See H. Rept. 798, pp. 2, 5, and H. Rept. 948, pp. 1, 5, also Hearing, 
Special Subcommittee on Labor, House Committee on Education and Labor, 
p. 9 (89th Cong., 1st sess.).) The intent of section 7(1) is simply to 
exclude from the provisions of the Act those construction contracts 
which involve the employment of persons whose wage rates and fringe 
benefits are determinable under the Davis-Bacon Act.
    (b) Contracts not within exemption. Section 7(1) does not exempt 
contracts which, for purposes of the Davis-Bacon Act, are not considered 
to be of the character described by the corresponding language in that 
Act, and to which the provisions of the Davis-Bacon Act are therefore 
not applied. Such contracts are accordingly subject to the McNamara-
O'Hara Act where their principal purpose is to furnish services in the 
United States through the use of service employees. For example, a 
contract for clearing timber or brush from land or for the demolition or 
dismantling of buildings or other structures located thereon may be a 
contract for construction activity subject to the Davis-Bacon Act where 
it appears that the clearing of the site is to be followed by the 
construction of a public building or public work at the same location. 
If, however, no further construction activity at the site is 
contemplated the Davis-Bacon Act is considered inapplicable to such 
clearing, demolition, or dismantling work. In such event, the exemption 
in section 7(1) of the McNamara-O'Hara Act has no application and the 
contract may be subject to the Act in accordance with its general 
coverage provisions. It should be noted that the fact that a contract 
may be labeled as one for the sale and removal of property, such as 
salvage material, does not negate coverage under the Act even though 
title to the removable property passes to the contractor. While the 
value of the property being sold in relation to the services performed 
under the contract is a factor to be considered in determining coverage, 
where the facts show that the principal purpose of removal, dismantling, 
and demolition contracts is to furnish services through the use of 
service employees, these contracts are subject to the Act. (See also 
Sec. 4.131.)
    (c) Partially exempt contracts. (1) Instances may arise in which, 
for the convenience of the Government, instead of awarding separate 
contracts for construction work subject to the Davis-Bacon Act and for 
services of a different type to be performed by service employees, the 
contracting officer may include separate specifications for each type of 
work in a single contract calling for the performance of both types of 
work. For example, a contracting agency may invite bids for the 
installation of a plumbing system or for the installation of a security 
alarm system in a public building and for the maintenance of the system 
for one year. In such a case, if the contract is principally for 
services, the exemption provided by section 7(1) will be deemed 
applicable only to that portion of the contract which calls for 
construction activity subject to the Davis-Bacon Act. The contract 
documents are required to contain the clauses prescribed by Sec. 4.6 for 
application to the contract obligation to furnish services through the 
use of service employees,

[[Page 60]]

and the provisions of the McNamara-O'Hara Act will apply to that portion 
of the contract.
    (2) Service or maintenance contracts involving construction work. 
The provisions of both the Davis-Bacon Act and the Service Contract Act 
would generally apply to contracts involving construction and service 
work where such contracts are principally for services. The Davis-Bacon 
Act, and thus the exemption provided by section 7(1) of the Act, would 
be applicable to construction contract work in such hybrid contracts 
where:
    (i) The contract contains specific requirements for substantial 
amounts of construction, reconstruction, alteration, or repair work 
(hereinafter referred to as construction) or it is ascertainable that a 
substantial amount of construction work will be necessary for the 
performance of the contract (the word ``substantial'' relates to the 
type and quantity of construction work to be performed and not merely to 
the total value of construction work (whether in absolute dollars or 
cost percentages) as compared to the total value of the contract); and
    (ii) The construction work is physically or functionally separate 
from, and as a practical matter is capable of being performed on a 
segregated basis from, the other work called for by the contract.

[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]



Sec. 4.117  Work subject to requirements of Walsh-Healey Act.

    (a) The Act, in paragraph (2) of section 7, exempts from its 
provisions ``any work required to be done in accordance with the 
provision of the Walsh-Healey Public Contracts Act'' (49 Stat. 2036, 41 
U.S.C. 35 et seq.). It will be noted that like the similar provision in 
the Contract Work Hours and Safety Standards Act (40 U.S.C. 329(b)), 
this is an exemption for ``work'', i.e., specifications or requirements, 
rather than for ``contracts'' subject to the Walsh-Healey Act. The 
purpose of the exemption was to eliminate possible overlapping of the 
differing labor standards of the two Acts, which otherwise might be 
applied to employees performing work on a contract covered by the 
Service Contract Act if such contract and their work under it should 
also be deemed to be covered by the Walsh-Healey Act. The Walsh-Healey 
Act applies to contracts in excess of $10,000 for the manufacture or 
furnishing of materials, supplies, articles or equipment. Thus, there is 
no overlap if the principal purpose of the contract is the manufacture 
or furnishing of such materials etc., rather than the furnishing of 
services of the character referred to in the Service Contract Act, for 
such a contract is not within the general coverage of the Service 
Contract Act. In such cases the exemption in section 7(2) is not 
pertinent. See, for example, the discussion in Secs. 4.131 and 4.132.
    (b) Further, contracts principally for remanufacturing of equipment 
which is so extensive as to be equivalent to manufacturing are subject 
to the Walsh-Healey Act. Remanufacturing shall be deemed to be 
manufacturing when the criteria in paragraph (b)(1) or (2) of this 
section are met.
    (1) Major overhaul of an item, piece of equipment, or materiel which 
is degraded or inoperable, and under which all of the following 
conditions exist:
    (i) The item or equipment is required to be completely or 
substantially torn down into individual components parts; and
    (ii) Substantially all of the parts are reworked, rehabilitated, 
altered and/or replaced; and
    (iii) The parts are reassembled so as to furnish a totally rebuilt 
item or piece of equipment; and
    (iv) Manufacturing processes similar to those which were used in the 
manufacturing of the item or piece of equipment are utilized; and
    (v) The disassembled componets, if usable (except for situations 
where the number of items or pieces of equipment involved are too few to 
make it practicable) are commingled with existing inventory and, as 
such, lose their identification with respect to a particular piece of 
equipment; and
    (vi) The items or equipment overhauled are restored to original life 
expectancy, or nearly so; and
    (vii) Such work is performed in a facility owned or operated by the 
contractor.

[[Page 61]]

    (2) Major modification of an item, piece of equipment, or materiel 
which is wholly or partially obsolete, and under which all of the 
following conditions exist:
    (i) The item or equipment is required to be completely or 
substantially torn down; and
    (ii) Outmoded parts are replaced; and
    (iii) The item or equipment is rebuilt or reassembled; and
    (iv) The contract work results in the furnishing of a substantially 
modified item in a usable and serviceable condition; and
    (v) The work is performed in a facility owned or operated by the 
contractor.
    (3) Remanufacturing does not include the repair of damaged or broken 
equipment which does not require a complete teardown, overhaul, and 
rebuild as described in paragraphs (b)(1) and (2) of this section, or 
the periodic and routine maintenance, preservation, care, adjustment, 
upkeep, or servicing of equipment to keep it in usable, serviceable, 
working order. Such contracts typically are billed on an hourly rate 
(labor plus materials and parts) basis. Any contract principally for the 
work described in this paragraph (b)(3) is subject to the Service 
Contract Act. Examples of such work include:
    (i) Repair of an automobile, truck, or other vehicle, construction 
equipment, tractor, crane, aerospace, air conditioning and refrigeration 
equipment, electric motors, and ground powered industrial or vehicular 
equipment;
    (ii) Repair of typewriters and other office equipment (see 
Sec. 4.123(e));
    (iii) Repair of appliances, radios television, calculators, and 
other electronic equipment;
    (iv) Inspecting, testing, calibration, painting, packaging, 
lubrication, tune-up, or replacement of internal parts of equipment 
listed in paragraphs (b)(3)(i), (ii), and (iii) of this section; and
    (v) Reupholstering, reconditioning, repair, and refinishing of 
furniture.
    (4) Application of the Service Contract Act or the Walsh-Healey Act 
to any similar type of contract not decided above will be decided on a 
case-by-case basis by the Administrator.



Sec. 4.118  Contracts for carriage subject to published tariff rates.

    The Act, in paragraph (3) of section 7, exempts from its provisions 
``any contract for the carriage of freight or personnel by vessel, 
airplane, bus, truck, express, railway line or oil or gas pipeline where 
published tariff rates are in effect''. In order for this exemption to 
be applicable, the contract must be for such carriage by a common 
carrier described by the terms used. It does not, for example, apply to 
contracts for taxicab or ambulance service, because taxicab and 
ambulance companies are not among the common carriers specified by the 
statute. Also, a contract for transportation service does not come 
within this exemption unless the service contracted for is actually 
governed by published tariff rates in effect pursuant to State or 
Federal law for such carriage. The contracts excluded from the reach of 
the Act by this exemption are typically those where there is on file 
with the Interstate Commerce Commission or an appropriate State or local 
regulatory body a tariff rate applicable to the transportation involved, 
and the transportation contract between the Government and the carrier 
is evidenced by a Government bill of lading citing the published tariff 
rate. An administrative exemption has been provided for certain 
contracts where such carriage is subject to rates covered by section 
10721 of the Interstate Commerce Act and is in accordance with 
applicable regulations governing such rates. See Sec. 4.123(d). However, 
only contracts principally for the carriage of ``freight or personnel'' 
are exempt. Thus, the exemption cannot apply where the principal purpose 
of the contract is packing, crating, handling, loading, and/or storage 
of goods prior to or following line-haul transportation. The fact that 
substantial local drayage to and from the contractor's establishment 
(such as a warehouse) may be required in such contracts does not alter 
the fact that their principal purpose is other than the carriage of 
freight. Also, this exemption does not exclude any contracts for the 
transportation of mail from the application of the Act, because the term 
freight does not include the mail. (For an administrative exemption of 
certain contracts

[[Page 62]]

with common carriers for carriage of mail, see Sec. 4.123(d).)



Sec. 4.119  Contracts for services of communications companies.

    The Act, in paragraph (4) of section 7, exempts from its provisions 
``any contract for the furnishing of services by radio, telephone, 
telegraph, or cable companies, subject to the Communications Act of 
1934.'' This exemption is applicable to contracts with such companies 
for communication services regulated under the Communications Act. It 
does not exempt from the Act any contracts with such companies to 
furnish any other kinds of services through the use of service 
employees.



Sec. 4.120  Contracts for public utility services.

    The Act, in paragraph (5) of section 7, exempts from its provisions 
``any contract for public utility services, including electric light and 
power, water, steam, and gas.'' This exemption is applicable to 
contracts for such services with companies whose rates therefor are 
regulated under State, local, or Federal law governing operations of 
public utility enterprises. Contracts entered into with public utility 
companies to furnish services through the use of service employees, 
other than those subject to such rate regulation, are not exempt from 
the Act. Among the contracts included in the exemption would be those 
between Federal electric power marketing agencies and investor-owned 
electric utilities, Rural Electrification Administration cooperatives, 
municipalities and State agencies engaged in the transmission and sale 
of electric power and energy.


(See H. Rept. No. 948, 89th Cong., 1st sess., p. 4)



Sec. 4.121  Contracts for individual services.

    The Act, in paragraph (6) of section 7, exempts from its provisions 
``any employment contract providing for direct services to a Federal 
agency by an individual or individuals.'' This exemption, which applies 
only to an ``employment contract'' for ``direct services,'' makes it 
clear that the Act's application to Federal contracts for services is 
intended to be limited to service contracts entered into with 
independent contractors. If a contract to furnish services (to be 
performed by a service employee as defined in the Act) provides that 
they will be furnished directly to the Federal agency by the individual 
under conditions or circumstances which will make him an employee of the 
agency in providing the contract service, the exemption applies and the 
contract will not be subject to the Act's provisions. The exemption does 
not exclude from the Act any contract for services of the kind performed 
by service employees which is entered into with an independent 
contractor whose individual services will be used in performing the 
contract, but as noted earlier in Sec. 4.113, such a contract would be 
outside the general coverage of the Act if only the contractor's 
individual services would be furnished and no service employee would in 
any event be used in its performance.



Sec. 4.122  Contracts for operation of postal contract stations.

    The Act, in paragraph (7) of section 7, exempts from its provisions 
``any contract with the Post Office Department, [now the U.S. Postal 
Service], the principal purpose of which is the operation of postal 
contract stations.'' The exemption is limited to postal service 
contracts having the operation of such stations as their principal 
purpose. A provision of the legislation which would also have exempted 
contracts with the U.S. Postal Service having as their principal purpose 
the transportation, handling, or delivery of the mails was eliminated 
from the bill during its consideration by the House Committee on 
Education and Labor (H. Rept. 948, 89th Cong., 1st sess., p. 1).



Sec. 4.123  Administrative limitations, variances, tolerances, and exemptions.

    (a) Authority of the Secretary. Section 4(b) of the Act as amended 
in 1972 authorizes the Secretary to ``provide such reasonable 
limitations'' and to ``make such rules and regulations allowing 
reasonable variations, tolerances, and exemptions to and from any or all 
provisions of this Act (other than Sec. 10), but

[[Page 63]]

only in special circumstances where he determines that such limitation, 
variation, tolerance, or exemption is necessary and proper in the public 
interest or to avoid the serious impairment of Government business, and 
is in accord with the remedial purpose of this Act to protect prevailing 
labor standards.'' This authority is similar to that vested in the 
Secretary under section 6 of the Walsh-Healey Public Contracts Act (41 
U.S.C. 40) and under section 105 of the Contract Work Hours and Safety 
Standards Act (40 U.S.C. 331).
    (b) Administrative action under section 4(b) of the Act. The 
authority conferred on the Secretary by section 4(b) of the Act will be 
exercised with due regard to the remedial purpose of the statute to 
protect prevailing labor standards and to avoid the undercutting of such 
standards which could result from the award of Government work to 
contractors who will not observe such standards, and whose saving in 
labor cost therefrom enables them to offer a lower price to the 
Government than can be offered by the fair employers who maintain the 
prevailing standards. Administrative action consistent with this 
statutory purpose may be taken under section 4(b) with or without a 
request therefor, when found necessary and proper in accordance with the 
statutory standards. No formal procedures have been prescribed for 
requesting such action. However, a request for exemption from the Act's 
provisions will be granted only upon a strong and affirmative showing 
that it is necessary and proper in the public interest or to avoid 
serious impairment of Government business, and is in accord with the 
remedial purpose of the Act to protect prevailing labor standards. If 
the request for administrative action under section 4(b) is not made by 
the headquarters office of the contracting agency to which the contract 
services are to be provided, theviews of such office on the matter 
should be obtained and submitted with the request or the contracting 
officer may forward such a request through channels to the agency 
headquarters for submission with the latter's views to the Administrator 
of the Wage and Hour Division, Department of Labor, whenever any wage 
payment issues are involved. Any request relating to an occupational 
safety or health issue shall be submitted to the Assistant Secretary for 
Occupational Safety and Health, Department of Labor.
    (c) Documentation of official action under section 4(b). All papers 
and documents made a part of the official record of administrative 
action pursuant to section 4(b) of the Act are available for public 
inspection in accordance with the regulations in 29 CFR part 70. 
Limitations, variations, tolerances and exemptions of general 
applicability and legal effect promulgated pursuant to such authority 
are published in the Federal Register and made a part of the rules 
incorporated in this part 4. For convenience in use of the rules, they 
are generally set forth in the sections of this part covering the 
subject matter to which they relate. (See, for example, Secs. 4.5(b), 
4.6(o), 4.112 and 4.113.) Any rules that are promulgated under section 
4(b) of the Act relating to subject matter not dealt with elsewhere in 
this part 4 will be set forth immediately following this paragraph.
    (d) In addition to the statutory exemptions in section 7 of the Act 
(see Sec. 4.115(b)), the following types of contracts have been exempted 
from all the provisions of the Service Contract Act of 1965, pursuant to 
section 4(b) of the Act, prior to its amendment by Public Law 92-473, 
which exemptions the Secretary of Labor found to be necessary and proper 
in the public interest or to avoid serious impairment of the conduct of 
Government business:
    (1) Contracts entered into by the United States with common carriers 
for the carriage of mail by rail, air (except air star routes), bus, and 
ocean vessel, where such carriage is performed on regularly scheduled 
runs of the trains, airplanes, buses, and vessels over regularly 
established routes and accounts for an insubstantial portion of the 
revenue therefrom;
    (2) Any contract entered into by the U.S. Postal Service with an 
individual owner-operator for mail service where it is not contemplated 
at the time the contract is made that such owner-operator will hire any 
service employee to

[[Page 64]]

perform the services under the contract except for short periods of 
vacation time or for unexpected contingencies or emergency situations 
such as illness, or accident; and
    (3) Contracts for the carriage of freight or personnel where such 
carriage is subject to rates covered by section 10721 of the Interstate 
Commerce Act.
    (e) The following types of contracts have been exempted from all the 
provisions of the Service Contract Act of 1965, pursuant to section 4(b) 
of the Act, which exemptions the Secretary of Labor found are necessary 
and proper in the public interest or to avoid serious impairment of the 
conduct of Government business, and are in accord with the remedial 
purpose of the Act to protect prevailing labor standards:
    (1)(i) Prime contracts or subcontracts principally for the 
maintenance, calibration, and/or repair of:
    (A) Automated data processing equipment and office information/word 
processing systems;
    (B) Scientific equipment and medical apparatus or equipment where 
the application of microelectronic circuitry or other technology of at 
least similar sophistication is an essential element (for example, 
Federal Supply Classification (FSC) Group 65, Class 6515, ``Medical 
Diagnostic Equipment''; Class 6525, ``X-Ray Equipment''; FSC Group 66, 
Class 6630, ``Chemical Analysis Instruments''; Class 6665, 
``Geographical and Astronomical Instruments'', are largely composed of 
the types of equipment exempted under this paragraph);
    (C) Office/business machines not otherwise exempt pursuant to 
paragraph (e)(1)(i)(A) of this section, where such services are 
performed by the manufacturer or supplier of the equipment.
    (ii) The exemptions set forth in this paragraph (e)(1) shall apply 
only under the following circumstances:
    (A) The items of equipment are commercial items which are used 
regularly for other than Government purposes, and are sold or traded by 
the contractor (or subcontractor in the case of an exempt subcontract) 
in substantial quantities to the general public in the course of normal 
business operations;
    (B) The prime contract or subcontract services are furnished at 
prices which are, or are based on, established catalog or market prices 
for the maintenance, calibration, and/or repair of such commercial 
items. An ``established catalog price'' is a price included in a 
catalog, price list, schedule, or other form that is regularly 
maintained by the manufacturer or the contractor, is either published or 
otherwise available for inspection by customers, and states prices at 
which sales currently, or were last, made to a significant number of 
buyers constituting the general public. An ``established market price'' 
is a current price, established in the usual course of trade between 
buyers and sellers free to bargain, which can be substantiated from 
sources independent of the manufacturer or contractor; and
    (C) The contractor utilizes the same compensation (wage and fringe 
benefits) plan for all service employees performing work under the 
contract as the contractor uses for these employees and equivalent 
employees servicing the same equipment of commercial customers;
    (D) The contractor certifies to the provisions in this paragraph 
(e)(1)(ii). Certification by the prime contractor as to its compliance 
with respect to the prime contract also constitutes its certification as 
to compliance by its subcontractor if it subcontracts out the exempt 
services. The certification shall be included in the prime contract or 
subcontract.
    (iii)(A) Determinations of the applicability of this exemption to 
prime contracts shall be made in the first instance by the contracting 
officer on or before contract award. In making a judgment that the 
exemption applies, the contracting officer shall consider all factors 
and make an affirmative determination that all of the conditions in 
paragraph (e)(1) of this section have been met.
    (B) Determinations of the applicability of this exemption to 
subcontracts shall be made by the prime contractor on or before 
subcontract award. In making a judgment that the exemption applies, the 
prime contractor shall consider all factors and make an affirmative 
determination

[[Page 65]]

that all of the conditions in paragraph (e)(1) have been met.
    (iv)(A) If the Administrator determines after award of the prime 
contract that any of the requirements in paragraph (e)(1) for exemption 
has not been met, the exemption will be deemed inapplicable, and the 
contract shall become subject to the Service Contract Act, effective as 
of the date of the Administrator's determination. In such case, the 
corrective procedures in Sec. 4.5(c)(2) shall be followed.
    (B) The prime contractor is responsible for compliance with the 
requirements of the Service Contract Act by its subcontractors, 
including compliance with all of the requirements of this exemption (see 
Sec. 4.114(b)). If the Administrator determines that any of the 
requirements in paragraph (e)(1) for exemption has not been met with 
respect to a subcontract, the exemption will be deemed inapplicable, and 
the prime contractor may be responsible for compliance with the Act 
effective as of the date of contract award.
    (2)(i) Prime contracts or subcontracts principally for the following 
services where the services under the contract or subcontract meet all 
of the criteria set forth in paragraph (e)(2)(ii) of this section and 
are not excluded by paragraph (e)(2)(iii):
    (A) Automobile or other vehicle (e.g., aircraft) maintenance 
services (other than contracts to operate a Government motor pool or 
similar facility);
    (B) Financial services involving the issuance and servicing of cards 
(including credit cards, debit cards, purchase cards, smart cards, and 
similar card services);
    (C) Contracts with hotels/motels for conferences, including lodging 
and/or meals which are part of the contract for the conference (which 
shall not include ongoing contracts for lodging on an as needed or 
continuing basis);
    (D) Maintenance, calibration, repair and/or installation (where the 
installation is not subject to the Davis-Bacon Act, as provided in 
Sec. 4.116(c)(2)) services for all types of equipment where the services 
are obtained from the manufacturer or supplier of the equipment under a 
contract awarded on a sole source basis;
    (E) Transportation by common carrier of persons by air, motor 
vehicle, rail, or marine vessel on regularly scheduled routes or via 
standard commercial services (not including charter services);
    (F) Real estate services, including real property appraisal 
services, related to housing federal agencies or disposing of real 
property owned by the Federal Government; and
    (G) Relocation services, including services of real estate brokers 
and appraisers, to assist federal employees or military personnel in 
buying and selling homes (which shall not include actual moving or 
storage of household goods and related services).
    (ii) The exemption set forth in this paragraph (e)(2) shall apply to 
the services listed in paragraph (e)(2)(i) only when all of the 
following criteria are met:
    (A) The services under the prime contract or subcontract are 
commercial--i.e., they are offered and sold regularly to non-
Governmental customers, and are provided by the contractor (or 
subcontractor in the case of an exempt subcontract) to the general 
public in substantial quantities in the course of normal business 
operations.
    (B) The prime contract or subcontract will be awarded on a sole 
source basis or the contractor or subcontractor will be selected for 
award on the basis of other factors in addition to price. In such cases, 
price must be equal to or less important than the combination of other 
non-price or cost factors in selecting the contractor.
    (C) The prime contract or subcontract services are furnished at 
prices which are, or are based on, established catalog or market prices. 
An established price is a price included in a catalog, price list, 
schedule, or other form that is regularly maintained by the contractor 
or subcontractor, is either published or otherwise available for 
inspection by customers, and states prices at which sales are currently, 
or were last, made to a significant number of buyers constituting the 
general public. An established market price is a current price, 
established in the usual course of trade between buyers and sellers free 
to bargain, which can

[[Page 66]]

be substantiated from sources independent of the manufacturer or 
contractor.
    (D) Each service employee who will perform services under the 
Government contract or subcontract will spend only a small portion of 
his or her time (a monthly average of less than 20 percent of the 
available hours on an annualized basis, or less than 20 percent of 
available hours during the contract period if the contract period is 
less than a month) servicing the government contract or subcontract.
    (E) The contractor utilizes the same compensation (wage and fringe 
benefits) plan for all service employees performing work under the 
contract or subcontract as the contractor uses for these employees and 
for equivalent employees servicing commercial customers.
    (F) The contracting officer (or prime contractor with respect to a 
subcontract) determines in advance, based on the nature of the contract 
requirements and knowledge of the practices of likely offerors, that all 
or nearly all offerors will meet the requirements in paragraph 
(e)(2)(ii) of this section. Where the services are currently being 
performed under contract, the contracting officer or prime contractor 
shall consider the practices of the existing contractor in making a 
determination regarding the requirements in paragraph (e)(2)(ii). If 
upon receipt of offers, the contracting officer finds that he or she did 
not correctly determine that all or nearly all offerors would meet the 
requirements, the Service Contract Act shall apply to the procurement, 
even if the successful offeror has certified in accordance with 
paragraph (e)(2)(ii)(G) of this section.
    (G) The contractor certifies in the prime contract or subcontract, 
as applicable, to the provisions in paragraph (e)(2)(ii)(A) and (C) 
through (E) of this section. Certification by the prime contractor as to 
its compliance with respect to the prime contract also constitutes its 
certification as to compliance by its subcontractor if it subcontracts 
out the exempt services. If the contracting officer or prime contractor 
has reason to doubt the validity of the certification, SCA stipulations 
shall be included in the prime contract or subcontract.
    (iii)(A) If the Administrator determines after award of the prime 
contract that any of the requirements in paragraph (e)(2) for exemption 
has not been met, the exemption will be deemed inapplicable, and the 
contract shall become subject to the Service Contract Act. In such case, 
the corrective procedures in Sec. 4.5(c)(2) shall be followed.
    (B) The prime contractor is responsible for compliance with the 
requirements of the Service Contract Act by its subcontractors, 
including compliance with all of the requirements of this exemption (see 
Sec. 4.114(b)). If the Department of Labor determines that any of the 
requirements in paragraph (e)(2) for exemption has not been met with 
respect to a subcontract, the exemption will be deemed inapplicable, and 
the prime contractor may be responsible for compliance with the Act, as 
of the date of contract award.
    (iv) The exemption set forth in this paragraph (e)(2) does not apply 
to solicitations and contracts:
    (A) Entered into under the Javits-Wagner-O'Day Act, 41 U.S.C. 47;
    (B) For the operation of a Government facility or portion thereof 
(but may be applicable to subcontracts for services set forth in 
paragraph (e)(2)(ii) that meet all of the criteria of paragraph 
(e)(2)(ii)); or
    (C) Subject to section 4(c) of the Service Contract Act, as well as 
any options or extensions under such contract.

[48 FR 49762, Oct. 27, 1983, as amended 66 FR 5134, Jan. 18, 2001]



Secs. 4.124--4.129  [Reserved]

         Particular Application of Contract Coverage Principles



Sec. 4.130  Types of covered service contracts illustrated.

    (a) The types of contracts, the principal purpose of which is to 
furnish services through the use of service employees, are too numerous 
and varied to permit an exhaustive listing. The following list is 
illustrative, however, of the types of services called for by such 
contracts that have been found to

[[Page 67]]

come within the coverage of the Act. Other examples of covered contracts 
are discussed in other sections of this subpart.
    (1) Aerial spraying.
    (2) Aerial reconnaissance for fire detection.
    (3) Ambulance service.
    (4) Barber and beauty shop services.
    (5) Cafeteria and food service.
    (6) Carpet laying (other than part of construction) and cleaning.
    (7) Cataloging services.
    (8) Chemical testing and analysis.
    (9) Clothing alteration and repair.
    (10) Computer services.
    (11) Concessionaire services.
    (12) Custodial, janitorial, and housekeeping services.
    (13) Data collection, processing, and/or analysis services.
    (14) Drafting and illustrating.
    (15) Electronic equipment maintenance and operation and engineering 
support services.
    (16) Exploratory drilling (other than part of construction).
    (17) Film processing.
    (18) Fire fighting and protection.
    (19) Fueling services.
    (20) Furniture repair and rehabilitation.
    (21) Geological field surveys and testing.
    (22) Grounds maintenance.
    (23) Guard and watchman security service.
    (24) Inventory services.
    (25) Keypunching and keyverifying contracts.
    (26) Laboratory analysis services.
    (27) Landscaping (other than part of construction).
    (28) Laundry and dry cleaning.
    (29) Linen supply services.
    (30) Lodging and/or meals.
    (31) Mail hauling.
    (32) Mailing and addressing services.
    (33) Maintenance and repair of all types of equipment, e.g., 
aircraft, engines, electrical motors, vehicles, and electronic, 
telecommunications, office and related business, and construction 
equipment (See Sec. 4.123(e).).
    (34) Mess attendant services.
    (35) Mortuary services.
    (36) Motor pool operation.
    (37) Nursing home services.
    (38) Operation, maintenance, or logistic support of a Federal 
facility.
    (39) Packing and crating.
    (40) Parking services.
    (41) Pest control.
    (42) Property management.
    (43) Snow removal.
    (44) Stenographic reporting.
    (45) Support services at military installations.
    (46) Surveying and mapping services (not directly related to 
construction).
    (47) Taxicab services.
    (48) Telephone and field interview services.
    (49) Tire and tube repairs.
    (50) Transporting property or personnel (except as explained in 
Sec. 4.118).
    (51) Trash and garbage removal.
    (52) Tree planting and thinning, clearing timber or brush, etc. (See 
also Secs. 4.116(b) and 4.131(f).).
    (53) Vending machine services.
    (54) Visual and graphic arts.
    (55) Warehousing or storage.



Sec. 4.131  Furnishing services involving more than use of labor.

    (a) If the principal purpose of a contract is to furnish services in 
the performance of which service employees will be used, the Act will 
apply to the contract, in the absence of an exemption, even though the 
use or furnishing of nonlabor items may be an important element in the 
furnishing of the services called for by its terms. The Act is concerned 
with protecting the labor standards of workers engaged in performing 
such contracts, and is applicable if the statutory coverage test is met, 
regardless of the form in which the contract is drafted. The proportion 
of the labor cost to the total cost of the contract and the necessity of 
furnishing or receiving tangible nonlabor items in performing the 
contract obligations will be considered but are not necessarily 
determinative. A procurement that requires tangible items to be supplied 
to the Government or the contractor as a part of the service furnished 
is covered by the Act so long as the facts show that the contract is 
chiefly for services, and that the furnishing of tangible items is of 
secondary importance.
    (b) Some examples of covered contracts illustrating these principles 
may be helpful. One such example is a contract for the maintenance and 
repair of

[[Page 68]]

typewriters. Such a contract may require the contractor to furnish 
typewriter parts, as the need arises, in performing the contract 
services. Since this does not change the principal purpose of the 
contract, which is to furnish the maintenance and repair services 
through the use of service employees, the contract remains subject to 
the Act.
    (c) Another example of the application of the above principle is a 
contract for the recurrent supply to a Government agency of freshly 
laundered items on a rental basis. It is plain from the legislative 
history that such a contract is typical of those intended to be covered 
by the Act. S. Rept. 798, 89th Cong., 1st Sess., p. 2; H. Rept. 948, 
89th Cong., 1st Sess., p. 2. Although tangible items owned by the 
contractor are provided on a rental basis for the use of the Government, 
the service furnished by the contractor in making them available for 
such use when and where they are needed, through the use of service 
employees who launder and deliver them, is the principal purpose of the 
contract.
    (d) Similarly, a contract in the form of rental of equipment with 
operators for the plowing and reseeding of a park area is a service 
contract. The Act applies to it because its principal purpose is the 
service of plowing and reseeding, which will be performed by service 
employees, although as a necessary incident the contractor is required 
to furnish equipment. For like reasons the contracts for aerial spraying 
and aerial reconnaissance listed in Sec. 4.130 are covered, even though 
the use of airplanes, an expensive item of equipment, is essential in 
performing such services. In general, contracts under which the 
contractor agrees to provide the Government with vehicles or equipment 
on a rental basis with drivers or operators for the purpose of 
furnishing services are covered by the Act. Such contracts are not 
considered contracts for furnishing equipment within the meaning of the 
Walsh-Healey Public Contracts Act. On the other hand, contracts under 
which the contractor provides equipment with operators for the purpose 
of construction of a public building or public work, such as road 
resurfacing or dike repair, even where the work is performed under the 
supervision of Government employees, would be within the exemption in 
section 7(1) of the Act as contracts for construction subject to the 
Davis-Bacon Act. (See Sec. 4.116.)
    (e) Contracts for data collection, surveys, computer services, and 
the like are within the general coverage of the Act even though the 
contractor may be required to furnish such tangible items as written 
reports or computer printouts, since items of this nature are considered 
to be of secondary importance to the services which it is the principal 
purpose of the contract to procure.
    (f) Contracts under which the contractor receives tangible items 
from the Government in return for furnishing services (which items are 
in lieu of or in addition to monetary consideration granted by either 
party) are covered by the Act where the facts show that the furnishing 
of such services is the principal purpose of the contracts. For example, 
property removal or disposal contracts which involve demolition of 
buildings or other structures are subject to the Act when their 
principal purpose is dismantling and removal (and no further 
construction activity at the site is contemplated). However, removal or 
dismantling contracts whose principal purpose is sales are not covered. 
So-called ``timber sales'' contracts generally are not subject to the 
Act because normally the services provided under such contracts are 
incidental to the principal purpose of the contracts. (See also 
Secs. 4.111(a) and 4.116(b).)



Sec. 4.132  Services and other items to be furnished under a single contract.

    If the principal purpose of a contract is to furnish services 
through the use of service employees within the meaning of the Act, the 
contract to furnish such services is not removed from the Act's coverage 
merely because, as a matter of convenience in procurement, the service 
specifications are combined in a single contract document with 
specifications for the procurement of different or unrelated items. In 
such case, the Act would apply to service specifications but would not 
apply to any specifications subject to the

[[Page 69]]

Walsh-Healey Act or to the Davis-Bacon Act. With respect to contracts 
which contain separate specifications for the furnishing of services and 
construction activity, see Sec. 4.116(c).



Sec. 4.133  Beneficiary of contract services.

    (a) The Act does not say to whom the services under a covered 
contract must be furnished. So far as its language is concerned, it is 
enough if the contract is ``entered into'' by and with the Government 
and if its principal purpose is ``to furnish services in the United 
States through the use of service employees''. It is clear that Congress 
intended to cover at least contracts for services of direct benefit to 
the Government, its property, or its civilian or military personnel for 
whose needs it is necessary or desirable for the Government to make 
provision for such services. For example, the legislative history makes 
specific reference to such contracts as those for furnishing food 
service and laundry and dry cleaning service for personnel at military 
installations. Furthermore, there is no limitation in the Act regarding 
the beneficiary of the services, nor is there any indication that only 
contracts for services of direct benefit to the Government, as 
distinguished from the general public, are subject to the Act. 
Therefore, where the principal purpose of the Government contract is to 
provide services through the use of service employees, the contract is 
covered by the Act, regardless of the direct beneficiary of the services 
or the source of the funds from which the contractor is paid for the 
service, and irrespective of whether the contractor performs the work in 
its own establishment, on a Government installation, or elsewhere. The 
fact that the contract requires or permits the contractor to provide the 
services directly to individual personnel as a concessionaire, rather 
than through the contracting agency, does not negate coverage by the 
Act.
    (b) The Department of Labor, pursuant to section 4(b) of the Act, 
exempts from the provisions of the Act certain kinds of concession 
contracts providing services to the general public, as provided herein. 
Specifically, concession contracts (such as those entered into by the 
National Park Service) principally for the furnishing of food, lodging, 
automobile fuel, souvenirs, newspaper stands, and recreational equipment 
to the general public, as distinguished from the United States 
Government or its personnel, are exempt. This exemption is necessary and 
proper in the public interest and is in accord with the remedial purpose 
of the Act. Where concession contracts, however, include substantial 
requirements for services other than those stated, those services are 
not exempt. The exemption provided does not affect a concession 
contractor's obligation to comply with the labor standards provisions of 
any other statutes such as the Contract Work Hours and Safety Standards 
Act (40 U.S.C. 327 et seq.), the Davis-Bacon Act (40 U.S.C. 276a et 
seq.; see part 5 of this title) and the Fair Labor Standards Act (29 
U.S.C. 201 et seq.).



Sec. 4.134  Contracts outside the Act's coverage.

    (a) Contracts entered into by agencies other than those of the 
Federal Government or the District of Columbia as described in 
Secs. 4.107-4.108 are not within the purview of the Act. Thus, the Act 
does not cover service contracts entered into with any agencies of 
Puerto Rico, the Virgin Islands, American Samoa, or Guam acting in 
behalf of their respective local governments. Similarly, it does not 
cover service contracts entered into by agencies of States or local 
public bodies, not acting as agents for or on behalf of the United 
States or the District of Columbia, even though Federal financial 
assistance may be provided for such contracts under Federal law or the 
terms and conditions specified in Federal law may govern the award and 
operation of the contract.
    (b) Further, as already noted in Secs. 4.111 through 4.113, the Act 
does not apply to Government contracts which do not have as their 
principal purpose the furnishing of services, or which call for no 
services to be furnished within the United States or through the use of 
service employees as those terms are defined in the Act. Clearly outside 
the Act's coverage for these reasons are

[[Page 70]]

such contracts as those for the purchase of tangible products which the 
Government needs (e.g. vehicles, office equipment, and supplies), for 
the logistic support of an air base in a foreign country, or for the 
services of a lawyer to examine the title to land. Similarly, where the 
Government contracts for a lease of building space for Government 
occupancy and the building owner furnishes general janitorial and other 
building services on an incidental basis through the use of service 
employees, the leasing of the space rather than the furnishing of the 
building services is the principal purpose of the contract, and the Act 
does not apply. Another type of contract which is outside the coverage 
of the Act because it is not for the principal purpose of furnishing 
services may be illustrated by a contract for the rental of parking 
space under which the Government agency is simply given a lease or 
license to use the contractor's real property. Such a contract is to be 
distinguished from contracts for the storage of vehicles which are 
delivered into the possession or custody of the contractor, who will 
provide the required services including the parking or retrieval of the 
vehicles.
    (c) There are a number of types of contracts which, while outside 
the Act's coverage in the usual case, may be subject to its provisions 
under the conditions and circumstances of a particular procurement, 
because these may be such as to require a different view of the 
principal purpose of the contract. Thus, the ordinary contract for the 
recapping of tires would have as its principal purpose the manufacture 
and furnishing of rebuilt tires for the Government rather than the 
furnishing of services through the use of service employees, and thus 
would be outside the Act's coverage. Similarly, contracts calling for 
printing, reproduction, and duplicating ordinarily would appear to have 
as their principal purpose the furnishing in quantity of printed, 
reproduced or duplicated written materials rather than the furnishing of 
reproduction services through the use of service employees. However, in 
a particular case, the terms, conditions, and circumstances of the 
procurement may be such that the facts would show its purpose to be 
chiefly the furnishing of services (e.g. repair services, typesetting, 
photocopying, editing, etc.), and where such services require the use of 
service employees the contract would be subject to the Act unless 
excluded therefrom for some other reason.



Secs. 4.135--4.139  [Reserved]

                     Determining Amount of Contract



Sec. 4.140  Significance of contract amount.

    As set forth in Sec. 4.104 and in the requirements of Secs. 4.6--
4.7, the obligations of a contractor with respect to labor standards 
differ in the case of a covered and nonexempt contract, depending on 
whether the contract is or is not in excess of $2,500. Rules for 
resolving questions that may arise as to whether a contract is or is not 
in excess of this figure are set forth in the following sections.



Sec. 4.141  General criteria for measuring amount.

    (a) In general, the contract amount is measured by the consideration 
agreed to be paid, whether in money or other valuable consideration, in 
return for the obligations assumed under the contract. Thus, even though 
a contractor, such as a wrecker entering into a contract with the 
Government to raze a building on a site which will remain vacant, may 
not be entitled to receive any money from the Government for such work 
under his contract or may even agree to pay the Government in return for 
the right to dispose of the salvaged materials, the contract will be 
deemed one in excess of $2,500 if the value of the property obtained by 
the contractor, less anything he might pay the Government, is in excess 
of such amount. In addition, concession contracts are considered to be 
contracts in excess of $2,500 if the contractor's gross receipts under 
the contract may exceed $2,500.
    (b) All bids from the same person on the same invitation for bids 
will constitute a single offer, and the total award to such person will 
determine the amount involved for purposes of the Act. Where the 
procurement is made without formal advertising, in

[[Page 71]]

arriving at the aggregate amount involved, there must be included all 
property and services which would properly be grouped together in a 
single transaction and which would be included in a single advertisement 
for bids if the procurement were being effected by formal advertising. 
Therefore, if an agency procures continuing services through the 
issuance of monthly purchase orders, the amount of the contract for 
purposes of application of the Act is not measured by the amount of an 
individual purchase order. In such cases, if the continuing services 
were procured through formal advertising, the contract term would 
typically be for one year, and the monthly purchase orders must be 
grouped together to determine whether the yearly amount may exceed 
$2,500. However, a purchase order for services which are not continuing 
but are performed on a one-time or sporadic basis and which are not 
performed under a requirements contract or under the terms of a basic 
ordering agreement or similar agreement need not be equated to a yearly 
amount. (See Sec. 4.142(b).) In addition, where an invitation is for 
services in an amount in excess of $2,500 and bidders are permitted to 
bid on a portion of the services not amounting to more than $2,500, the 
amounts of the contracts awarded separately to individual and unrelated 
bidders will be measured by the portions of the services covered by 
their respective contracts.
    (c) Where a contract is issued in an amount in excess of $2,500 this 
amount will govern for purposes of application of the Act even though 
penalty deductions, deductions for prompt payment, and similar 
deductions may reduce the amount actually expended by the Government to 
$2,500 or less.



Sec. 4.142  Contracts in an indefinite amount.

    (a) Every contract subject to this Act which is indefinite in amount 
is required to contain the clauses prescribed in Sec. 4.6 for contracts 
in excess of $2,500, unless the contracting officer has definite 
knowledge in advance that the contract will not exceed $2,500 in any 
event.
    (b) Where contracts or agreements between a Government agency and 
prospective purveyors of services are negotiated which provide terms and 
conditions under which services will be furnished through the use of 
service employees in response to individual purchase orders or calls, if 
any, which may be issued by the agency during the life of the agreement, 
these agreements would ordinarily constitute contracts within the 
intendment of the Act under principles judicially established in United 
Biscuit Co. v. Wirtz, 17 WH Cases 146 (C.A.D.C.), a case arising under 
the Walsh-Healey Public Contracts Act. Such a contract, which may be in 
the nature of a bilateral option contract or basic ordering agreement 
and not obligate the Government to order any services or the contractor 
to furnish any, nevertheless governs any procurement of services that 
may be made through purchase orders or calls issued under its terms. 
Since the amount of the contract is indefinite, it is subject to the 
rule stated in paragraph (a) of this section. The amount of the contract 
is not determined by the amount of any individual call or purchase 
order.

                      Changes in Contract Coverage



Sec. 4.143  Effects of changes or extensions of contracts, generally.

    (a) Sometimes an existing service contract is modified, amended, or 
extended in such a manner that the changed contract is considered to be 
a new contract for purposes of the application of the Act's provisions. 
The general rule with respect to such contracts is that, whenever 
changes affecting the labor requirements are made in the terms of the 
contract, the provisions of the Act and the regulations thereunder will 
apply to the changed contract in the same manner and to the same extent 
as they would to a wholly new contract. However, contract modifications 
or amendments (other than contract extensions) that are unrelated to the 
labor requirements of a contract will not be deemed to create a new 
contract for purposes of the Act. In addition, only significant changes 
related to labor requirements will be considered as creating new 
contracts. This limitation on the application of the Act has been found 
to be in accordance

[[Page 72]]

with the provisions of section 4(b) of the Act.
    (b) Also, whenever the term of an existing contract is extended, 
pursuant to an option clause or otherwise, so that the contractor 
furnishes services over an extended period of time, rather than being 
granted extra time to fulfill his original commitment, the contract 
extension is considered to be a new contract for purposes of the 
application of the Act's provisions. All such ``new'' contracts as 
discussed above require the insertion of a new or revised wage 
determination in the contract as provided in Sec. 4.5.



Sec. 4.144  Contract modifications affecting amount.

    Where a contract which was originally issued in an amount not in 
excess of $2,500 is later modified so that its amount may exceed that 
figure, all the provisions of section 2(a) of the Act, and the 
regulations thereunder are applicable from the date of modification to 
the date of contract completion. In the event of such modification, the 
contracting officer will immediately request a wage determination from 
the Department of Labor and insert the required contract clauses and any 
wage determination issued into the contract. In the event that a 
contract for services subject to the Act in excess of $2,500 is modified 
so that it cannot exceed $2,500, compliance with the provisions of 
section 2(a) of the Act and the contract clauses required thereunder 
ceases to be an obligation of the contractor when such modification 
becomes effective.



Sec. 4.145  Extended term contracts.

    (a) Sometimes service contracts are entered into for an extended 
term exceeding one year; however, their continuation in effect is 
subject to the appropriation by Congress of funds for each new fiscal 
year. In such event, for purposes of this Act, a contract shall be 
deemed entered into upon the contract anniversary date which occurs in 
each new fiscal year during which the terms of the original contract are 
made effective by an appropriation for that purpose. In other cases a 
service contract, entered into for a specified term by a Government 
agency, may contain a provision such as an option clause under which the 
agency may unilaterally extend the contract for a period of the same 
length or other stipulated period. Since the exercise of the option 
results in the rendition of services for a new or different period not 
included in the term for which the contractor is obligated to furnish 
services or for which the Government is obligated to pay under the 
original contract in the absence of such action to extend it, the 
contract for the additional period is a wholly new contract with respect 
to application of the Act's provisions and the regulations thereunder 
(see Sec. 4.143(b)).
    (b) With respect to multi-year service contracts which are not 
subject to annual appropriations (for example, concession contracts 
which are funded through the concessionaire's sales, certain operations 
and maintenance contracts which are funded with so-called ``no year 
money'' or contracts awarded by instrumentalities of the United States, 
such as the Federal Reserve Banks, which do not receive appropriated 
funds), section 4(d) of the Act allows such contracts to be awarded for 
a period of up to five years on the condition that the multi-year 
contracts will be amended no less often than once every two years to 
incorporate any new Service Contract Act wage determination which may be 
applicable. Accordingly, unless the contracting agency is notified to 
the contrary (see Sec. 4.4(d)), such contracts are treated as wholly new 
contracts for purposes of the application of the Act's provisions and 
regulations thereunder at the end of the second year and again at the 
end of the fourth year, etc. The two-year period is considered to begin 
on the date that the contractor commences performance on the contract 
(i.e., anniversary date) rather than on the date of contract award.

                           Period of Coverage



Sec. 4.146  Contract obligations after award, generally.

    A contractor's obligation to observe the provisions of the Act 
arises on the date the contractor is informed that award of the contract 
has been made,

[[Page 73]]

and not necessarily on the date of formal execution. However, the 
contractor is required to comply with the provisions of the Act and 
regulations thereunder only while the employees are performing on the 
contract, provided the contractor's records make clear the period of 
such performance. (See also Sec. 4.179.) If employees of the contractor 
are required by the contract to complete certain preliminary training or 
testing prior to the commencement of the contract services, or if there 
is a phase-in period which allows the new contractor's employees to 
familiarize themselves with the contract work so as to provide a smooth 
transition between contractors, the time spent by employees undertaking 
such training or phase-in work is considered to be hours worked on the 
contract and must be compensated for even though the principal contract 
services may not commence until a later date.



Secs. 4.147--4.149  [Reserved]

                      Employees Covered by the Act



Sec. 4.150  Employee coverage, generally.

    The Act, in section 2(b), makes it clear that its provisions apply 
generally to all service employees engaged in performing work on a 
covered contract entered into by the contractor with the Federal 
Government, regardless of whether they are the contractor's employees or 
those of any subcontractor under such contract. All service employees 
who, on or after the date of award, are engaged in working on or in 
connection with the contract, either in performing the specific services 
called for by its terms or in performing other duties necessary to the 
performance of the contract, are thus subject to the Act unless a 
specific exemption (see Secs. 4.115 et seq.) is applicable. All such 
employees must be paid wages at a rate not less than the minimum wage 
specified under section 6(a)(1) of the Fair Labor Standards Act (29 
U.S.C. 206(a)(1)), as amended. Payment of a higher minimum monetary wage 
and the furnishing of fringe benefits may be required under the 
contract, pursuant to the provisions of sections 2 (a)(1), (2), and 4(c) 
of the Act.



Sec. 4.151  Employees covered by provisions of section 2(a).

    The provisions of sections 2(a) and 4(c) of the Act prescribe labor 
standards requirements applicable, except as otherwise specifically 
provided, to every contract in excess of $2,500 which is entered into by 
the United States or the District of Columbia for the principal purpose 
of furnishing services in the United States through the use of service 
employees. These provisions apply to all service employees engaged in 
the performance of such a contract or any subcontract thereunder. The 
Act, in section 8(b) defines the term service employee. The general 
scope of the definition is considered in Sec. 4.113(b) of this subpart.



Sec. 4.152  Employees subject to prevailing compensation provisions of sections 2(a)(1) and (2) and 4(c).

    (a) Under sections 2(a)(1) and (2) and 4(c) of the Act, minimum 
monetary wages and fringe benefits to be paid or furnished the various 
classes of service employees performing such contract work are 
determined by the Secretary of Labor or his authorized representative in 
accordance with prevailing rates and fringe benefits for such employees 
in the locality or in accordance with the rates contained in a 
predecessor contractor's collective bargaining agreement, as 
appropriate, and are required to be specified in such contracts and 
subcontracts thereunder. All service employees of the classes who 
actually perform the specific services called for by the contract (e.g., 
janitors performing on a contract for office cleaning; stenographers 
performing on a contract for stenographic reporting) are covered by the 
provisions specifying such minimum monetary wages and fringe benefits 
for such classes of service employees and must be paid not less than the 
applicable rate established for the classification(s) of work performed. 
Pursuant to section 4.6(b)(2), conforming procedures are required to be 
observed for all such classes of service employees not listed in the 
wage determination incorporated in the contract.
    (b) The duties which an employee actually performs govern the 
classification and the rate of pay to which the

[[Page 74]]

employee is entitled under the applicable wage determination. Some job 
classifications listed in an applicable wage determination are 
descriptive by title and have commonly understood meanings (e.g., 
janitors, security guards, pilots, etc.). In such situations, detailed 
position descriptions may not be included in the wage determination. 
However, in cases where additional descriptive information is needed to 
inform users of the scope of duties included in the classification, the 
wage determination will generally contain detailed position descriptions 
based on the data source relied upon for the issuance of the wage 
determination.
    (c)(1) Some wage determinations will list a series of classes within 
a job classification family, e.g., Computer Operators, Class A, B, and 
C, or Electronic Technicians, Class A, B, and C, or Clerk Typist, Class 
A and B. Generally, the lowest level listed for a job classification 
family is considered to be the entry level and establishment of a lower 
level through conformance (Sec. 4.6(b)(2)) is not permissible. Further, 
trainee classifications cannot be conformed. Helpers in skilled 
maintenance trades (e.g., electricians, machinists, automobile 
mechanics, etc.) whose duties constitute, in fact, separate and distinct 
jobs, may also be used if listed on the wage determination, but cannot 
be conformed. Conformance may not be used to artificially split or 
subdivide classifications listed in the wage determination. However, 
conforming procedures may be used if the work which an employee performs 
under the contract is not within the scope of any classification listed 
on the wage determination, regardless of job title.
    (2) Subminimum rates for apprentices, student learners, and 
handicapped workers are permissible under the conditions discussed in 
Sec. 4.6 (o) and (p).



Sec. 4.153  Inapplicability of prevailing compensation provisions to some employees.

    There may be employees used by a contractor or subcontractor in 
performing a service contract in excess of $2,500 which is subject to 
the Act, whose services, although necessary to the performance of the 
contract, are not subject to minimum monetary wage or fringe benefit 
provisions contained in the contract pursuant to section 2(a) because 
such employees are not directly engaged in performing the specified 
contract services. An example might be a laundry contractor's billing 
clerk performing billing work with respect to the items laundered. In 
all such situations, the employees who are necessary to the performance 
of the contract but not directly engaged in the performance of the 
specified contract services, are nevertheless subject to the minimum 
wage provision of section 2(b) (see Sec. 4.150) requiring payment of not 
less than the minimum wage specified under section 6(a)(1) of the Fair 
Labor Standards Act to all employees working on a covered contract, 
unless specifically exempt. However, in situations where minimum 
monetary wages and fringe benefits for a particular class or classes of 
service employees actually performing the services called for by the 
contract have not been specified in the contract because the wage and 
fringe benefit determination applicable to the contract has been made 
only for other classes of service employees who will perform the 
contract work, the employer will be required to pay the monetary wages 
and fringe benefits which may be specified for such classes of employees 
pursuant to the conformance procedures provided in Sec. 4.6(b).



Sec. 4.154  Employees covered by sections 2(a)(3) and (4).

    The safety and health standards of section 2(a)(3) and the notice 
requirements of section 2(a)(4) of the Act (see Sec. 4.183) are 
applicable, in the absence of a specific exemption, to every service 
employee engaged by a contractor or subcontractor to furnish services 
under a contract subject to section 2(a) of the Act.



Sec. 4.155  Employee coverage does not depend on form of employment contract.

    The Act, in section 8(b), makes it plain that the coverage of 
service employees depends on whether their work for the contractor or 
subcontractor on a covered contract is that of a service employee as 
defined in section 8(b) and

[[Page 75]]

not on any contractual relationship that may be alleged to exist between 
the contractor or subcontractor and such persons. In other words, any 
person, except those discussed in Sec. 4.156 below, who performs work 
called for by a contract or that portion of a contract subject to the 
Act is, per se, a service employee. Thus, for example, a person's status 
as an ``owner-operator'' or an ``independent contractor'' is immaterial 
in determining coverage under the Act and all such persons performing 
the work of service employees must be compensated in accordance with the 
Act's requirements.



Sec. 4.156  Employees in bona fide executive, administrative, or professional capacity.

    The term service employee as defined in section 8(b) of the Act does 
not include persons employed in a bona fide executive, administrative, 
or professional capacity as those terms are defined in 29 CFR part 541. 
Employees within the definition of service employee who are employed in 
an executive, administrative, or professional capacity are not excluded 
from coverage, however, even though they are highly paid, if they fail 
to meet the tests set forth in 29 CFR part 541. Thus, such employees as 
laboratory technicians, draftsmen, and air ambulance pilots, though they 
require a high level of skill to perform their duties and may meet the 
salary requirements of the regulations in part 541 of this title, are 
ordinarily covered by the Act's provisions because they do not typically 
meet the other requirements of those regulations.



Secs. 4.157--4.158  [Reserved]



                    Subpart D--Compensation Standards



Sec. 4.159  General minimum wage.

    The Act, in section 2(b)(1), provides generally that no contractor 
or subcontractor under any Federal contract subject to the Act shall pay 
any employee engaged in performing work on such a contract less than the 
minimum wage specified under section 6(a)(1) of the Fair Labor Standards 
Act. Section 2(a)(1) provides that the minimum monetary wage specified 
in any such contract exceeding $2,500 shall in no case be lower than 
this Fair Labor Standards Act minimum wage. Section 2(b)(1) is a 
statutory provision which applies to the contractor or subcontractor 
without regard to whether it is incorporated in the contract; however, 
Secs. 4.6 and 4.7 provide for inclusion of its requirements in covered 
contracts and subcontracts. Because this statutory requirement specifies 
no fixed monetary wage rate and refers only to the minimum wage 
specified under section 6(a)(1) of the Fair Labor Standards Act, and 
because its application does not depend on provisions of the contract, 
any increase in such Fair Labor Standards Act minimum wage during the 
life of the contract is, on its effective date, also effective to 
increase the minimum wage payable under section 2(b)(1) to employees 
engaged in performing work on the contract. The minimum wage rate under 
section 6(a)(1) of the Fair Labor Standards Act is $3.10 per hour 
beginning January 1, 1980, and $3.35 per hour after December 31, 1980.



Sec. 4.160  Effect of section 6(e) of the Fair Labor Standards Act.

    Contractors and subcontractors performing work on contracts subject 
to the Service Contract Act are required to pay all employees, including 
those employees who are not performing work on or in connection with 
such contracts, not less than the general minimum wage standard provided 
in section 6(a)(1) of the Fair Labor Standards Act, as amended (Pub. L. 
95-151).



Sec. 4.161  Minimum monetary wages under contracts exceeding $2,500.

    The standards established pursuant to the Act for minimum monetary 
wages to be paid by contractors and subcontractors under service 
contracts in excess of $2,500 to service employees engaged in 
performance of the contract or subcontract are required to be specified 
in the contract and in all subcontracts (see Sec. 4.6). Pursuant to the 
statutory scheme provided by sections 2(a)(1) and 4(c) of the Act, every 
covered contract (and any bid specification therefor) which is in excess 
of $2,500 shall contain a provision specifying the minimum monetary 
wages to

[[Page 76]]

be paid the various classes of service employees engaged in the 
performance of the contract or any subcontract thereunder, as determined 
by the Secretary or his authorized representative in accordance with 
prevailing rates for such employees in the locality, or, where a 
collective bargaining agreement applied to the employees of a 
predecessor contractor in the same locality, in accordance with the 
rates for such employees provided for in such agreement, including 
prospective wage increases as provided in such agreement as a result of 
arm's-length negotiations. In no case may such wages be lower than the 
minimum wage specified under section 6(a)(1) of the Fair Labor Standards 
Act of 1938, as amended. (For a detailed discussion of the application 
of section 4(c) of the Act, see Sec. 4.163.) If some or all of the 
determined wages in a contract fall below the level of the Fair Labor 
Standards Act minimum by reason of a change in that rate by amendment of 
the law, these rates become obsolete and the employer is obligated under 
section 2(b)(1) of the Service Contract Act to pay the minimum wage rate 
established by the amendment as of the date it becomes effective. A 
change in the Fair Labor Standards Act minimum by operation of law would 
also have the same effect on advertised specifications or negotiations 
for covered service contracts, i.e., it would make ineffective and would 
supplant any lower rate or rates included in such specifications or 
negotiations whether or not determined. However, unless affected by such 
a change in the Fair Labor Standards Act minimum wage, by contract 
changes necessitating the insertion of new wage provisions (see 
Secs. 4.5(c) and 4.143-4.145) or by the requirements of section 4(c) of 
the Act (see Sec. 4.163), the minimum monetary wage rate specified in 
the contract for each of the classes of service employees for which wage 
determinations have been made under section 2(a)(1) will continue to 
apply throughout the period of contract performance. No change in the 
obligation of the contractor or subcontractor with respect to minimum 
monetary wages will result from the mere fact that higher or lower wage 
rates may be determined to be prevailing for such employees in the 
locality after the award and before completion of the contract. Such 
wage determinations are effective for contracts not yet awarded, as 
provided in Sec. 4.5(a).



Sec. 4.162  Fringe benefits under contracts exceeding $2,500.

    (a) Pursuant to the statutory scheme provided by sections 2(a)(2) 
and 4(c) of the Act, every covered contract in excess of $2,500 shall 
contain a provision specifying the fringe benefits to be furnished the 
various classes of service employees, engaged in the performance of the 
contract or any subcontract thereunder, as determined by the Secretary 
or his authorized representative to be prevailing for such employees in 
the locality or, where a collective bargaining agreement applied to the 
employees of a predecessor contractor in the same locality, the various 
classes of service employees engaged in the performance of the contract 
or any subcontract must be provided the fringe benefits, including 
prospective or accrued fringe benefit increases, provided for in such 
agreement as a result of arm's-length negotiations. (For a detailed 
discussion of section 4(c) of the Act, see Sec. 4.163.) As provided by 
section 2(a)(2) of the Act, fringe benefits include medical or hospital 
care, pensions on retirement or death, compensation for injuries or 
illness resulting from occupational activity, or insurance to provide 
any of the foregoing, unemployment benefits, life insurance, disability 
and sickness insurance, accident insurance, vacation and holiday pay, 
costs of apprenticeship or other similar programs and other bona fide 
fringe benefits not otherwise required by Federal, State, or local law 
to be provided by the contractor or subcontractor.
    (b) Under this provision, the fringe benefits, if any, which the 
contractor or subcontractor is required to furnish the service employees 
engaged in the performance of the contract are specified in the contract 
documents (see Sec. 4.6). How the contractor may satisfy this obligation 
is dealt with in Secs. 4.170 through 4.177 of this part. A change in the 
fringe benefits required by the contract provision will not result from 
the mere fact that other or additional

[[Page 77]]

fringe benefits are determined to be prevailing for such employees in 
the locality at a time subsequent to the award but before completion of 
the contract. Such fringe benefit determinations are effective for 
contracts not yet awarded (see Sec. 4.5(a)), or in the event that 
changes in an existing contract requiring their insertion for 
prospective application have occurred (see Secs. 4.143 through 4.145). 
However, none of the provisions of this paragraph may be construed as 
altering a successor contractor's obligations under section 4(c) of the 
Act. (See Sec. 4.163.)



Sec. 4.163  Section 4(c) of the Act.

    (a) Section 4(c) of the Act provides that no ``contractor or 
subcontractor under a contract, which succeeds a contract subject to 
this Act and under which substantially the same services are furnished, 
shall pay any service employee under such contract less than the wages 
and fringe benefits, including accrued wages and fringe benefits, and 
any prospective increases in wages and fringe benefits provided for in a 
collective-bargaining agreement as a result of arm's-length 
negotiations, to which such service employees would have been entitled 
if they were employed under the predecessor contract: Provided, That in 
any of the foregoing circumstances such obligations shall not apply if 
the Secretary finds after a hearing in accordance with regulations 
adopted by the Secretary that such wages and fringe benefits are 
substantially at variance with those which prevail for services of a 
character similar in the locality.'' Under this provision, the successor 
contractor's sole obligation is to insure that all service employees are 
paid no less than the wages and fringe benefits to which such employees 
would have been entitled if employed under the predecessor's collective 
bargaining agreement (i.e., irrespective of whether the successor's 
employees were or were not employed by the predecessor contractor). The 
obligation of the successor contractor is limited to the wage and fringe 
benefit requirements of the predecessor's collective bargaining 
agreement and does not extend to other items such as seniority, 
grievance procedures, work rules, overtime, etc.
    (b) Section 4(c) is self-executing. Under section 4(c), a successor 
contractor in the same locality as the predecessor contractor is 
statutorily obligated to pay no less than the wage rates and fringe 
benefits which were contained in the predecessor contractor's collective 
bargaining agreement. This is a direct statutory obligation and 
requirement placed on the successor contractor by section 4(c) and is 
not contingent or dependent upon the issuance or incorporation in the 
contract of a wage determination based on the predecessor contractor's 
collective bargaining agreement. Pursuant to section 4(b) of the Act, a 
variation has been granted which limits the self-executing application 
of section 4(c) in the circumstances and under the conditions described 
in Sec. 4.1b(b) of this part. It must be emphasized, however, that the 
variation in Sec. 4.1b(b) is applicable only if the contracting officer 
has given both the incumbent (predecessor) contractor and the employees' 
collective bargaining representative notification at least 30 days in 
advance of any estimated procurement date.
    (c) Variance hearings. The regulations and procedures for hearings 
pursuant to section 4(c) of the Act are contained in Sec. 4.10 of 
subpart A and parts 6 and 8 of this title. If, as the result of such 
hearing, some or all of the wage rate and/or fringe benefit provisions 
of a predecessor contractor's collective bargaining agreement are found 
to be substantially at variance with the wage rates and/or fringe 
benefits prevailing in the locality, the Administrator will cause a new 
wage determination to be issued in accordance with the decision of the 
Administrative Law Judge or the Administrative Review Board, as 
appropriate. Since ``it was the clear intent of Congress that any 
revised wage determinations resulting from a section 4(c) proceeding 
were to have validity with respect to the procurement involved'' (53 
Comp. Gen. 401, 402, 1973), the solicitation, or the contract if already 
awarded, must be amended to incorporate the newly issued wage 
determination. Such new wage determination shall be made applicable to 
the contract as of the date of the Administrative Law Judge's decision 
or, where

[[Page 78]]

the decision is reviewed by the Administrative Review Board, the date of 
that decision. The legislative history of the 1972 Amendments makes 
clear that the collectively bargained ``wages and fringe benefits shall 
continue to be honored * * * unless and until the Secretary finds, after 
a hearing, that such wages and fringe benefits are substantially at 
variance with those prevailing in the locality for like services'' (S. 
Rept. 92-1131, 92nd Cong., 2d Sess. 5). Thus, variance decisions do not 
have application retroactive to the commencement of the contract.
    (d) Sections 2(a) and 4(c) must be read in conjunction. The Senate 
report accompanying the bill which amended the Act in 1972 states that 
``Sections 2(a)(1), 2(a)(2), and 4(c) must be read in harmony to reflect 
the statutory scheme.'' (S. Rept. 92-1131, 92nd Cong., 2nd Sess. 4.) 
Therefore, since section 4(c) refers only to the predecessor 
contractor's collective bargaining agreement, the reference to 
collective bargaining agreements in sections 2(a)(1) and 2(a)(2) can 
only be read to mean a predecessor contractor's collective bargaining 
agreement. The fact that a successor contractor may have its own 
collective bargaining agreement does not negate the clear mandate of the 
statute that the wages and fringe benefits called for by the predecessor 
contractor's collective bargaining agreement shall be the minimum 
payable under a new (successor) contract nor does it negate the 
application of a prevailing wage determination issued pursuant to 
section 2(a) where there was no applicable predecessor collective 
bargaining agreement. 48 Comp. Gen. 22, 23-24 (1968). In addition, 
because section 2(a) only applies to covered contracts in excess of 
$2,500, the requirements of section 4(c) likewise apply only to 
successor contracts which may be in excess of $2,500. However, if the 
successor contract is in excess of $2,500, section 4(c) applies 
regardless of the amount of the predecessor contract. (See Secs. 4.141-
4.142 for determining contract amount.)
    (e) The operative words of section 4(c) refer to ``contract'' not 
``contractor''. Section 4(c) begins with the language, ``[n]o contractor 
or subcontractor under a contract, which succeeds a contract subject to 
this Act'' (emphasis supplied). Thus, the statute is applicable by its 
terms to a successor contract without regard to whether the successor 
contractor was also the predecessor contractor. A contractor may become 
its own successor because it was the successful bidder on a 
recompetition of an existing contract, or because the contracting agency 
exercises an option or otherwise extends the term of the existing 
contract, etc. (See Secs. 4.143-4.145.) Further, since sections 2(a) and 
4(c) must be read in harmony to reflect the statutory scheme, it is 
clear that the provisions of section 4(c) apply whenever the Act or the 
regulations require that a new wage determination be incorporated into 
the contract (53 Comp. Gen. 401, 404-6 (1973)).
    (f) Collective bargaining agreement must be applicable to work 
performed on the predecessor contract. Section 4(c) will be operative 
only if the employees who worked on the predecessor contract were 
actually paid in accordance with the wage and fringe benefit provisions 
of a predecessor contractor's collective bargaining agreement. Thus, for 
example, section 4(c) would not apply if the predecessor contractor 
entered into a collective bargaining agreement for the first time, which 
did not become effective until after the expiration of the predecessor 
contract. Likewise, the requirements of section 4(c) would not apply if 
the predecessor contractor's collective bargaining agreement applied 
only to other employees of the firm and not to the employees working on 
the contract.
    (g) Contract reconfigurations. As a result of changing priorities, 
mission requirements, or other considerations, contracting agencies may 
decide to restructure their support contracts. Thus, specific contract 
requirements from one contract may be broken out and placed in a new 
contract or combined with requirements from other contracts into a 
consolidated contract. The protections afforded service employees under 
section 4(c) are not lost or negated because of such contract 
reconfigurations, and the predecessor contractor's collectively 
bargained rates follow identifiable contract work requirements into new 
or consolidated contracts, provided that the new or

[[Page 79]]

consolidated contract is for services which were furnished in the same 
locality under a predecessor contract. See Sec. 4.163(i). However, where 
there is more than one predecessor contract to the new or consolidated 
contract, and where the predecessor contracts involve the same or 
similar function(s) of work, using substantially the same job 
classifications, the predecessor contract which covers the greater 
portion of the work in such function(s) shall be deemed to be the 
predecessor contract for purposes of section 4(c), and the collectively 
bargained wages and fringe benefits under that contract, if any, shall 
be applicable to such function(s). This limitation on the application of 
section 4(c) is necessary and proper in the public interest and is in 
accord with the remedial purpose of the Act to protect prevailing labor 
standards.
    (h) Interruption of contract services. Other than the requirement 
that substantially the same services be furnished, the requirement for 
arm's-length negotiations and the provision for variance hearings, the 
Act does not impose any other restrictions on the application of section 
4(c). Thus, the application of section 4(c) is not negated because the 
contracting authority may change and the successor contract is awarded 
by a different contracting agency. Also, there is no requirement that 
the successor contract commence immediately after the completion or 
termination of the predecessor contract, and an interruption of contract 
services does not negate the application of section 4(c). Contract 
services may be interrupted because the Government facility is 
temporarily closed for renovation, or because a predecessor defaulted on 
the contract or because a bid protest has halted a contract award 
requiring the Government to perform the services with its own employees. 
In all such cases, the requirements of section 4(c) would apply to any 
successor contract which may be awarded after the temporary interruption 
or hiatus. The basic principle in all of the preceding examples is that 
successorship provisions of section 4(c) apply to the full term 
successor contract. Therefore, temporary interim contracts, which allow 
a contracting agency sufficient time to solicit bids for a full term 
contract, also do not negate the application of section 4(c) to a full 
term successor contract.
    (i) Place of performance. The successorship requirements of section 
4(c) apply to all contracts for substantially the same services as were 
furnished under a predecessor contract in the same locality. As stated 
in Sec. 4.4(a)(2), a wage determination incorporated in the contract 
shall be applicable thereto regardless of whether the successful 
contractor subsequently changes the place(s) of contract performance. 
Similarly, the application of section 4(c) (and any wage determination 
issued pursuant to section 4(c) and included in the contract) is not 
negated by the fact that a successor prime contractor subsequently 
changes the place(s) of contract performance or subcontracts any part of 
the contract work to a firm which performs the work in a different 
locality.
    (j) Interpretation of wage and fringe benefit provisions of wage 
determinations issued pursuant to sections 2(a) and 4(c). Wage 
determinations which are issued for successor contracts subject to 
section 4(c) are intended to accurately reflect the rates and fringe 
benefits set forth in the predecessor's collective bargaining agreement. 
However, failure to include in the wage determination any job 
classification, wage rate, or fringe benefit encompassed in the 
collective bargaining agreement does not relieve the successor 
contractor of the statutory requirement to comply at a minimum with the 
terms of the collective bargaining agreement insofar as wages and fringe 
benefits are concerned. Since the successor's obligations are governed 
by the terms of the collective bargaining agreement, any interpretation 
of the wage and fringe benefit provisions of the collective bargaining 
agreement where its provisions are unclear must be based on the intent 
of the parties to the collective bargaining agreement, provided that 
such interpretation is not violative of law. Therefore, some of the 
principles discussed in Secs. 4.170 through 4.177 regarding specific 
interpretations of the fringe benefit provisions of prevailing wage 
determinations may not be applicable to wage determinations

[[Page 80]]

issued pursuant to section 4(c). As provided in section 2(a)(2), a 
contractor may satisfy its fringe benefit obligations under any wage 
determination ``by furnishing any equivalent combinations of fringe 
benefits or by making equivalent or differential payments in cash'' in 
accordance with the rules and regulations set forth in Sec. 4.177 of 
this subpart.
    (k) No provision of this section shall be construed as permitting a 
successor contractor to pay its employees less than the wages and fringe 
benefits to which such employees would have been entitled under the 
predecessor contractor's collective bargaining agreement. Thus, some of 
the principles discussed in Sec. 4.167 may not be applicable in section 
4(c) successorship situations. For example, unless the predecessor 
contractor's collective bargaining agreement allowed the deduction from 
employees' wages of the reasonable cost or fair value for providing 
board, lodging, or other facilities, the successor may not include such 
costs as part of the applicable minimum wage specified in the wage 
determination. Likewise, unless the predecessor contractor's agreement 
allowed a tip credit (Sec. 4.6(q)), the successor contractor may not 
take a tip credit toward satisfying the minimum wage requirements under 
sections 2(a)(1) and 4(c).



Sec. 4.164  [Reserved]

                 Compliance with Compensation Standards



Sec. 4.165  Wage payments and fringe benefits--in general.

    (a)(1) Monetary wages specified under the Act shall be paid to the 
employees to whom they are due promptly and in no event later than one 
pay period following the end of the pay period in which they are earned. 
No deduction, rebate, or refund is permitted, except as hereinafter 
stated. The same rules apply to cash payments authorized to be paid with 
the statutory monetary wages as equivalents of determined fringe 
benefits (see Sec. 4.177).
    (2) The Act makes no distinction, with respect to its compensation 
provisions, between temporary, part-time, and full-time employees, and 
the wage and fringe benefit determinations apply, in the absence of an 
express limitation, equally to all such service employees engaged in 
work subject to the Act's provisions. (See Sec. 4.176 regarding fringe 
benefit payments to temporary and part-time employees.)
    (b) The Act does not prescribe the length of the pay period. 
However, for purposes of administration of the Act, and to conform with 
practices required under other statutes that may be applicable to the 
employment, wages and hours worked must be calculated on the basis of a 
fixed and regularly recurring workweek of seven consecutive 24-hour 
workday periods, and the records must be kept on this basis. It is 
appropriate to use this workweek for the pay period. A bi-weekly or 
semimonthly, pay period may, however, be used if advance notification is 
given to the affected employees. A pay period longer than semimonthly is 
not recognized as appropriate for service employees and wage payments at 
greater intervals will not be considered as constituting proper payments 
in compliance with the Act.
    (c) The prevailing rate established by a wage determination under 
the Act is a minimum rate. A contractor is not precluded from paying 
wage rates in excess of those determined to be prevailing in the 
particular locality. Nor does the Act affect or require the changing of 
any provisions of union contracts specifying higher monetary wages or 
fringe benefits than those contained in an applicable determination. 
However, if an applicable wage determination contains a wage or fringe 
benefit provision for a class of service employees which is higher than 
that specified in an existing union agreement, the determination's 
provision must be observed for any work performed on a contract subject 
to that determination.



Sec. 4.166  Wage payments--unit of payment.

    The standard by which monetary wage payments are measured under the 
Act is the wage rate per hour. An hourly wage rate is not, however, the 
only unit for payment of wages that may be used for employees subject to 
the Act. Employees may be paid on a daily, weekly, or other time basis, 
or by piece

[[Page 81]]

or task rates, so long as the measure of work and compensation used, 
when translated or reduced by computation to an hourly basis each 
workweek, will provide a rate per hour that will fulfill the statutory 
requirement. Whatever system of payment is used, however, must ensure 
that each hour of work in performance of the contract is compensated at 
not less than the required minimum rate. Failure to pay for certain 
hours at the required rate cannot be transformed into compliance with 
the Act by reallocating portions of payments made for other hours which 
are in excess of the specified minimum.



Sec. 4.167  Wage payments--medium of payment.

    The wage payment requirements under the Act for monetary wages 
specified under its provisions will be satisfied by the timely payment 
of such wages to the employee either in cash or negotiable instrument 
payable at par. Such payment must be made finally and unconditionally 
and ``free and clear.'' Scrip, tokens, credit cards, ``dope checks'', 
coupons, salvage material, and similar devices which permit the employer 
to retain and prevent the employee from acquiring control of money due 
for the work until some time after the pay day for the period in which 
it was earned, are not proper mediums of payment under the Act. If, as 
is permissible, they are used as a convenient device for measuring 
earnings or allowable deductions during a single pay period, the 
employee cannot be charged with the loss or destruction of any of them 
and the employer may not, because the employee has not actually redeemed 
them, credit itself with any which remain outstanding on the pay day in 
determining whether it has met the requirements of the Act. The employer 
may not include the cost of fringe benefits or equivalents furnished as 
required under section 2(a)(2) of the Act, as a credit toward the 
monetary wages it is required to pay under section 2(a)(1) or 2(b) of 
the Act (see Sec. 4.170). However, the employer may generally include, 
as a part of the applicable minimum wage which it is required to pay 
under the Act, the reasonable cost or fair value, as determined by the 
Administrator, of furnishing an employee with ``board, lodging, or other 
facilities,'' as defined in part 531 of this title, in situations where 
such facilities are customarily furnished to employees, for the 
convenience of the employees, not primarily for the benefit of the 
employer, and the employees' acceptance of them is voluntary and 
uncoerced. (See also Sec. 4.163(k).) The determination of reasonable 
cost or fair value will be in accordance with the Administrator's 
regulations under the Fair Labor Standards Act, contained in such part 
531 of this title. While employment on contracts subject to the Act 
would not ordinarily involve situations in which service employees would 
receive tips from third persons, the treatment of tips for wage purposes 
in the situations where this may occur should be understood. For 
purposes of this Act, tips may generally be included in wages in 
accordance with the regulations under the Fair Labor Standards Act, 
contained in part 531. (See also Sec. 4.6(q) and Sec. 4.163(k).) The 
general rule under that Act is that the amount paid a tipped employee by 
his employer is deemed to be increased on account of tips by an amount 
determined by the employer, not in excess of 40 percent of the minimum 
wage applicable under section 6 of that Act, effective January 1, 1980. 
Thus, the tip credit taken by an employer subject to the Service 
Contract Act may not exceed $1.34 per hour after December 31, 1980. (See 
Sec. 4.163(k) for exceptions in section 4(c) situations.) In no event 
shall the sum credited be in excess of the value of tips actually 
received by the employee.

[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983]



Sec. 4.168  Wage payments--deductions from wages paid.

    (a) The wage requirements of the Act will not be met where 
unauthorized deductions, rebates, or refunds reduce the wage payment 
made to the employee below the minimum amounts required under the 
provisions of the Act and the regulations thereunder, or where the 
employee fails to receive such amounts free and clear because he ``kicks 
back'' directly or indirectly to the employer or to another person for 
the employer's benefit the whole or part of the wage

[[Page 82]]

delivered to him. Authorized deductions are limited to those required by 
law, such as taxes payable by employees required to be withheld by the 
employer and amounts due employees which the employer is required by 
court order to pay to another; deductions allowable for the reasonable 
cost or fair value of board, lodging, and facilities furnished as set 
forth in Sec. 4.167; and deductions of amounts which are authorized to 
be paid to third persons for the employee's account and benefit pursuant 
to his voluntary assignment or order or a collective bargaining 
agreement with bona fide representatives of employees which is 
applicable to the employer. Deductions for amounts paid to third persons 
on the employee's account which are not so authorized or are contrary to 
law or from which the contractor, subcontractor or any affiliated person 
derives any payment, rebate, commission, profit, or benefit directly or 
indirectly, may not be made if they cut into the wage required to be 
paid under the Act. The principles applied in determining the 
permissibility of deductions for payments made to third persons are 
explained in more detail in Secs. 531.38-531.40 of this title.
    (b) Cost of maintaining and furnishing uniforms. (1) If the 
employees are required to wear uniforms either by the employer, the 
nature of the job, or the Government contract, then the cost of 
furnishing and maintaining the uniforms is deemed to be a business 
expense of the employer and such cost may not be borne by the employees 
to the extent that to do so would reduce the employees' compensation 
below that required by the Act. Since it may be administratively 
difficult and burdensome for employers to determine the actual cost 
incurred by all employees for maintaining their own uniforms, payment in 
accordance with the following standards is considered sufficient for the 
contractor to satisfy its wage obligations under the Act:
    (i) The contractor furnishes all employees with an adequate number 
of uniforms without cost to the employees or reimburses employees for 
the actual cost of the uniforms.
    (ii) Where uniform cleaning and maintenance is made the 
responsibility of the employee, the contractor reimburses all employees 
for such cleaning and maintenance at the rate of $3.35 a week (or 67 
cents a day). Since employees are generally required to wear a clean 
uniform each day regardless of the number of hours the employee may work 
that day, the preceding weekly amount generally may be reduced to the 
stated daily equivalent but not to an hourly equivalent. A contractor 
may reimburse employees at a different rate if the contractor furnishes 
affirmative proof as to the actual cost to the employees of maintaining 
their uniforms or if a different rate is provided for in a bona fide 
collective bargaining agreement covering the employees working on the 
contract.
    (2) However, there generally is no requirement that employees be 
reimbursed for uniform maintenance costs in those instances where the 
uniforms furnished are made of ``wash and wear'' materials which may be 
routinely washed and dried with other personal garments, and do not 
generally require daily washing, dry cleaning, commercial laundering, or 
any other special treatment because of heavy soiling in work usage or in 
order to meet the cleanliness or appearance standards set by the terms 
of the Government contract, by the contractor, by law, or by the nature 
of the work. This limitation does not apply where a different provision 
has been set forth on the applicable wage determination. In the case of 
wage determinations issued under section 4(c) of the Act for successor 
contracts, the amount established by the parties to the predecessor 
collective bargaining agreement is deemed to be the cost of laundering 
wash and wear uniforms.
    (c) Stipends, allowances or other payments made directly to an 
employee by a party other than the employer (such as a stipend for 
training paid by the Veterans Administration) are not part of ``wages'' 
and the employer may not claim credit for such payments toward its 
monetary obligations under the Act.



Sec. 4.169  Wage payments--work subject to different rates.

    If an employee during a workweek works in different capacities in 
the

[[Page 83]]

performance of the contract and two or more rates of compensation under 
section 2 of the Act are applicable to the classes of work which he or 
she performs, the employee must be paid the highest of such rates for 
all hours worked in the workweek unless it appears from the employer's 
records or other affirmative proof which of such hours were included in 
the periods spent in each class of work. The rule is the same where such 
an employee is employed for a portion of the workweek in work not 
subject to the Act, for which compensation at a lower rate would be 
proper if the employer by his records or other affirmative proof, 
segregated the worktime thus spent.



Sec. 4.170  Furnishing fringe benefits or equivalents.

    (a) General. Fringe benefits required under the Act shall be 
furnished, separate from and in addition to the specified monetary 
wages, by the contractor or subcontractor to the employees engaged in 
performance of the contract, as specified in the determination of the 
Secretary or his authorized representative and prescribed in the 
contract documents. Section 2(a)(2) of the Act provides that the 
obligation to furnish the specified benefits ``may be discharged by 
furnishing any equivalent combinations of fringe benefits or by making 
equivalent or differential payments in cash under rules and regulations 
established by the Secretary.'' The governing rules and regulations for 
furnishing such equivalents are set forth in Sec. 4.177 of this subpart. 
An employer cannot offset an amount of monetary wages paid in excess of 
the wages required under the determination in order to satisfy his 
fringe benefit obligations under the Act, and must keep appropriate 
records separately showing amounts paid for wages and amounts paid for 
fringe benefits.
    (b) Meeting the requirement, in general. The various fringe benefits 
listed in the Act and in Sec. 4.162(a) are illustrative of those which 
may be found to be prevailing for service employees in a particular 
locality. The benefits which an employer will be required to furnish 
employees performing on a particular contract will be specified in the 
contract documents. A contractor may dispose of certain of the fringe 
benefit obligations which may be required by an applicable fringe 
benefit determination, such as pension, retirement, or health insurance, 
by irrevocably paying the specified contributions for fringe benefits to 
an independent trustee or other third person pursuant to an existing 
``bona fide'' fund, plan, or program on behalf of employees engaged in 
work subject to the Act's provisions. Where such a plan or fund does not 
exist, a contractor must discharge his obligation relating to fringe 
benefits by furnishing either an equivalent combination of ``bona fide'' 
fringe benefits or by making equivalent payments in cash to the 
employee, in accordance with the regulations in Sec. 4.177.



Sec. 4.171  ``Bona fide'' fringe benefits.

    (a) To be considered a ``bona fide'' fringe benefit for purposes of 
the Act, a fringe benefit plan, fund, or program must constitute a 
legally enforceable obligation which meets the following criteria:
    (1) The provisions of a plan, fund, or program adopted by the 
contractor, or by contract as a result of collective bargaining, must be 
specified in writing, and must be communicated in writing to the 
affected employees. Contributions must be made pursuant to the terms of 
such plan, fund, or program. The plan may be either contractor-financed 
or a joint contractor-employee contributory plan. For example, employer 
contributions to Individual Retirement Accounts (IRAs) approved by IRS 
are permissible. However, any contributions made by employees must be 
voluntary, and if such contributions are made through payroll 
deductions, such deductions must be made in accordance with Sec. 4.168. 
No contribution toward fringe benefits made by the employees themselves, 
or fringe benefits provided from monies deducted from the employee's 
wages may be included or used by an employer in satisfying any part of 
any fringe benefit obligation under the Act.
    (2) The primary purpose of the plan must be to provide 
systematically for the payment of benefits to employees

[[Page 84]]

on account of death, disability, advanced age, retirement, illness, 
medical expenses, hospitalization, supplemental unemployment benefits, 
and the like.
    (3) The plan must contain a definite formula for determining the 
amount to be contributed by the contractor and a definite formula for 
determining the benefits for each of the employees participating in the 
plan.
    (4) Except as provided in paragraph (b), the contractor's 
contributions must be paid irrevocably to a trustee or third person 
pursuant to an insurance agreement, trust or other funded arrangement. 
The trustee must assume the usual fiduciary responsibilities imposed 
upon trustees by applicable law. The trust or fund must be set up in 
such a way that the contractor will not be able to recapture any of the 
contributions paid in nor in any way divert the funds to its own use or 
benefit.
    (5) Benefit plans or trusts of the types listed in 26 U.S.C. 401(a) 
which are disapproved by the Internal Revenue Service as not satisfying 
the requirements of section 401(a) of the Internal Revenue Code or which 
do not meet the requirements of the Employee Retirement Income Security 
Act of 1974, 29 U.S.C. 1001, et seq. and regulations thereunder, are not 
deemed to be ``bona fide'' plans for purposes of the Service Contract 
Act.
    (6) It should also be noted that such plans must meet certain other 
criteria as set forth in Sec. 778.215 of 29 CFR part 778 in order for 
any contributions to be excluded from computation of the regular rate of 
pay for overtime purposes under the Fair Labor Standards Act 
(Secs. 4.180-4.182).
    (b)(1) Unfunded self-insured fringe benefit plans (other than fringe 
benefits such as vacations and holidays which by their nature are 
normally unfunded) under which contractors allegedly make ``out of 
pocket'' payments to provide benefits as expenses may arise, rather than 
making irrevocable contributions to a trust or other funded arrangement 
as required under Sec. 4.171(a)(4), are not normally considered ``bona 
fide'' plans or equivalent benefits for purposes of the Act.
    (2) A contractor may request approval by the Administrator of an 
unfunded self-insured plan in order to allow credit for payments under 
the plan to meet the fringe benefit requirements of the Act. In 
considering whether such a plan is bona fide, the Administrator will 
consider such factors as whether it could be reasonably anticipated to 
provide the prescribed benefits, whether it represents a legally 
enforceable commitment to provide such benefits, whether it is carried 
out under a financially responsible program, and whether the plan has 
been communicated to the employees in writing. The Administrator in his/
her discretion may direct that assets be set aside and preserved in an 
escrow account or that other protections be afforded to meet the plan's 
future obligation.
    (c) No benefit required by any other Federal law or by any State or 
local law, such as unemployment compensation, workers' compensation, or 
social security, is a fringe benefit for purposes of the Act.
    (d) The furnishing to an employee of board, lodging, or other 
facilities under the circumstances described in Sec. 4.167, the cost or 
value of which is creditable toward the monetary wages specified under 
the Act, may not be used to offset any fringe benefit obligations, as 
such items and facilities are not fringe benefits or equivalent benefits 
for purposes of the Act.
    (e) The furnishing of facilities which are primarily for the benefit 
or convenience of the contractor or the cost of which is properly a 
business expense of the contractor is not the furnishing of a ``bona 
fide'' fringe benefit or equivalent benefit or the payment of wages. 
This would be true of such items, for example, as relocation expenses, 
travel and transportation expenses incident to employment, incentive or 
suggestion awards, and recruitment bonuses, as well as tools and other 
materials and services incidental to the employer's performance of the 
contract and the carrying on of his business, and the cost of 
furnishing, laundering, and maintaining uniforms and/or related apparel 
or equipment where employees are required by the contractor, by the 
contractor's Government contract, by law, or by the nature of the work 
to wear such items. See also Sec. 4.168.

[[Page 85]]

    (f) Contributions by contractors for such items as social functions 
or parties for employees, flowers, cards, or gifts on employee 
birthdays, anniversaries, etc. (sunshine funds), employee rest or 
recreation rooms, paid coffee breaks, magazine subscriptions, and 
professional association or club dues, may not be used to offset any 
wages or fringe benefits specified in the contract, as such items are 
not ``bona fide'' wages or fringe benefits or equivalent benefits for 
purposes of the Act.



Sec. 4.172  Meeting requirements for particular fringe benefits--in general.

    Where a fringe benefit determination specifies the amount of the 
employer's contribution to provide the benefit, the amount specified is 
the actual minimum cash amount that must be provided by the employer for 
the employee. No deduction from the specified amount may be made to 
cover any administrative costs which may be incurred by the contractor 
in providing the benefits, as such costs are properly a business expense 
of the employer. If prevailing fringe benefits for insurance or 
retirement are determined in a stated amount, and the employer provides 
such benefits through contribution in a lesser amount, he will be 
required to furnish the employee with the difference between the amount 
stated in the determination and the actual cost of the benefits which he 
provides. Unless otherwise specified in the particular wage 
determination, such as one reflecting collectively bargained fringe 
benefit requirements, issued pursuant to section 4(c) of the Act, every 
employee performing on a covered contract must be furnished the fringe 
benefits required by that determination for all hours spent working on 
that contract up to a maximum of 40 hours per week and 2,080 (i.e., 52 
weeks of 40 hours each) per year, as these are the typical number of 
nonovertime hours of work in a week, and in a year, respectively. Since 
the Act's fringe benefit requirements are applicable on a contract-by-
contract basis, employees performing on more than one contract subject 
to the Act must be furnished the full amount of fringe benefits to which 
they are entitled under each contract and applicable wage determination. 
Where a fringe benefit determination has been made requiring employer 
contributions for a specified fringe benefit in a stated amount per 
hour, a contractor employing employees part of the time on contract work 
and part of the time on other work, may only credit against the hourly 
amount required for the hours spent on the contract work, the 
corresponding proportionate part of a weekly, monthly, or other amount 
contributed by him for such fringe benefits or equivalent benefits for 
such employees. If, for example, the determination requires health and 
welfare benefits in the amount of 30 cents an hour and the employer 
provides hospitalization insurance for such employees at a cost of 
$10.00 a week, the employer may credit 25 cents an hour ($10.00  
40) toward his fringe benefit obligation for such employees. If an 
employee works 25 hours on the contract work and 15 hours on other work, 
the employer cannot allocate the entire $10.00 to the 25 hours spent on 
contract work and take credit for 30 cents per hour in that manner, but 
must spread the cost over the full forty hours.



Sec. 4.173  Meeting requirements for vacation fringe benefits.

    (a) Determining length of service for vacation eligibility. It has 
been found that for many types of service contracts performed at Federal 
facilities a successor contractor will utilize the employees of the 
previous contractor in the performance of the contract. The employees 
typically work at the same location providing the same services to the 
same clientele over a period of years, with periodic, often annual, 
changes of employer. The incumbent contractor, when bidding on a 
contract, must consider his liability for vacation benefits for those 
workers in his employ. If prospective contractors who plan to employ the 
same personnel were not required to furnish these employees with the 
same prevailing vacation benefits, it would place the incumbent 
contractor at a distinct competitive disadvantage as well as denying 
such employees entitlement to prevailing vacation benefits.
    (1) Accordingly, most vacation fringe benefit determinations issued 
under

[[Page 86]]

the Act require an employer to furnish to employees working on the 
contract a specified amount of paid vacation upon completion of a 
specified length of service with a contractor or successor. This 
requirement may be stated in the determination, for example, as ``one 
week paid vacation after one year of service with a contractor or 
successor'' or by a determination which calls for ``one week's paid 
vacation after one year of service''. Unless specified otherwise in an 
applicable fringe benefit determination, an employer must take the 
following two factors into consideration in determining when an employee 
has completed the required length of service to be eligible for vacation 
benefits:
    (i) The total length of time spent by an employee in any capacity in 
the continuous service of the present (successor) contractor, including 
both the time spent in performing on regular commercial work and the 
time spent in performing on the Government contract itself, and
    (ii) Where applicable, the total length of time spent in any 
capacity as an employee in the continuous service of any predecessor 
contractor(s) who carried out similar contract functions at the same 
Federal facility.
    (2) The application of these principles may be illustrated by the 
example given above of a fringe benefit determination calling for ``one 
week paid vacation after one year of service with a contractor or 
successor''. In that example, if a contractor has an employee who has 
worked for him for 18 months on regular commercial work and only for 6 
months on a Government service contract, that employee would be eligible 
for the one week vacation since his total service with the employer adds 
up to more than 1 year. Similarly, if a contractor has an employee who 
worked for 16 months under a janitorial service contract at a particular 
Federal base for two different predecessor contractors, and only 8 
months with the present employer, that employee would also be considered 
as meeting the ``after one year of service'' test and would thus be 
eligible for the specified vacation.
    (3) The ``contractor or successor'' requirement set forth in 
paragraph (a)(1) of this section is not affected by the fact that a 
different contracting agency may have contracted for the services 
previously or by the agency's dividing and/or combining the contract 
services. However, prior service as a Federal employee is not counted 
toward an employee's eligibility for vacation benefits under fringe 
benefit determinations issued pursuant to the Act.
    (4) Some fringe benefit determinations may require an employer to 
furnish a specified amount of paid vacation upon completion of a 
specified length of service with the employer, for example, ``one week 
paid vacation after one year of service with an employer''. Under such 
determinations, only the time spent in performing on commercial work and 
on Government contract work in the employment of the present contractor 
need be considered in computing the length of service for purposes of 
determining vacation eligibility.
    (5) Whether or not the predecessor contract(s) was covered by a 
fringe benefit determination is immaterial in determining whether the 
one year of service test has been met. This qualification refers to work 
performed before, as well as after, an applicable fringe benefit 
determination is incorporated into a contract. Also, the fact that the 
labor standards in predecessor service contract(s) were only those 
required under the Fair Labor Standards Act has no effect on the 
applicable fringe benefit determination contained in a current contract.
    (b) Eligibility requirement--continuous service. Under the 
principles set forth above, if an employee's total length of service 
adds up to at least one year, the employee is eligible for vacation with 
pay. However, such service must have been rendered continuously for a 
period of not less than one year for vacation eligibility. The term 
``continuous service'' does not require the combination of two entirely 
separate periods of employment. Whether or not there is a break in the 
continuity of service so as to make an employee ineligible for a 
vacation benefit is dependent upon all the facts in the particular case. 
No fixed time period has been established for determining

[[Page 87]]

whether an employee has a break in service. Rather, as illustrated 
below, the reason(s) for an employee's absence from work is the primary 
factor in determining whether a break in service occurred.
    (1) In cases where employees have been granted leave with or without 
pay by their employer, or are otherwise absent with permission for such 
reasons as sickness or injury, or otherwise perform no work on the 
contract because of reasons beyond their control, there would not be a 
break in service. Likewise, the absence from work for a few days, with 
or without notice, does not constitute a break in service, without a 
formal termination of employment. The following specific examples are 
illustrative situations where it has been determined that a break in 
service did not occur:
    (i) An employee absent for five months due to illness but employed 
continuously for three years.
    (ii) A strike after which employees returned to work.
    (iii) An interim period of three months between contracts caused by 
delays in the procurement process during which time personnel hired 
directly by the Government performed the necessary services. However, 
the successor contractor in this case was not held liable for vacation 
benefits for those employees who had anniversary dates of employment 
during the interim period because no employment relationship existed 
during such period.
    (iv) A mess hall closed three months for renovation. Contractor 
employees were considered to be on temporary layoff during the 
renovation period and did not have a break in service.
    (2) Where an employee quits, is fired for cause, or is otherwise 
terminated (except for temporary layoffs), there would be a break in 
service even if the employee were rehired at a later date. However, an 
employee may not be discharged and rehired as a subterfuge to evade the 
vacation requirement.
    (c) Vesting and payment of vacation benefits. (1) In the example 
given in paragraph (a)(1) of this section of a fringe benefit 
determination calling for ``one week paid vacation after 1 year of 
service with a contractor or successor'', an employee who renders the 
``one year of service'' continuously becomes eligible for the ``one week 
paid vacation'' (i.e., 40 hours of paid vacation, unless otherwise 
specified in an applicable wage determination) upon his anniversary date 
of employment and upon each succeeding anniversary date thereafter. 
However, there is no accrual or vesting of vacation eligibility before 
the employee's anniversary date of employment, and no segment of time 
smaller than one year need be considered in computing the employer's 
vacation liability, unless specifically provided for in a particular 
fringe benefit determination. For example, an employee who has worked 13 
months for an employer subject to such stipulations and is separated 
without receiving any vacation benefit is entitled only to one full 
week's (40 hours) paid vacation. He would not be entitled to the 
additional fraction of one-twelfth of one week's paid vacation for the 
month he worked in the second year unless otherwise stated in the 
applicable wage determination. An employee who has not met the ``one 
year of service'' requirement would not be entitled to any portion of 
the ``one week paid vacation''.
    (2) Eligibility for vacation benefits specified in a particular wage 
determination is based on completion of the stated period of past 
service. The individual employee's anniversary date (and each annual 
anniversary date of employment thereafter) is the reference point for 
vesting of vacation eligibility, but does not necessarily mean that the 
employee must be given the vacation or paid for it on the date on which 
it is vested. The vacation may be scheduled according to a reasonable 
plan mutually agreed to and communicated to the employees. A 
``reasonable'' plan may be interpreted to be a plan which allows the 
employer to maintain uninterrupted contract services but allows the 
employee some choice, by seniority or similar factor, in the scheduling 
of vacations. However, the required vacation must be given or payment 
made in lieu thereof before the next anniversary date, before completion 
of the current contract, or before the employee terminates employment, 
whichever occurs first.

[[Page 88]]

    (d) Contractor liability for vacation benefits. (1) The liability 
for an employee's vacation is not prorated among contractors unless 
specifically provided for under a particular fringe benefit 
determination. The contractor by whom a person is employed at the time 
the vacation right vests, i.e., on the employee's anniversary date of 
employment, must provide the full benefit required by the determination 
which is applicable on that date. For example, an employee, who had not 
previously performed similar contract work at the same facility, was 
first hired by a predecessor contractor on July 1, 1978. July 1 is the 
employee's anniversary date. The predecessor's contract ended June 30, 
1979, but the employee continued working on the contract for the 
successor. Since the employee did not have an anniversary date of 
employment during the predecessor's contract, the predecessor would not 
have any vacation liability with respect to this employee. However, on 
July 1, 1979 the employee's entitlement to the full vacation benefit 
vested and the successor contractor would be liable for the full amount 
of the employee's vacation benefit.
    (2) The requirements for furnishing data relative to employee hiring 
dates in situations where such employees worked for ``predecessor'' 
contractors are set forth in Sec. 4.6. However, a contractor is not 
relieved from any obligation to provide vacation benefits because of any 
difficulty in obtaining such data.
    (e) Rate applicable to computation of vacation benefits. (1) If an 
applicable wage determination requires that the hourly wage rate be 
increased during the period of the contract, the rate applicable to the 
computation of any required vacation benefits is the hourly rate in 
effect in the workweek in which the actual paid vacation is provided or 
the equivalent is paid, as the case may be, and would not be the average 
of the two hourly rates. This rule would not apply to situations where a 
wage determination specified the method of computation and the rate to 
be used.
    (2) As set forth in Sec. 4.172, unless specified otherwise in an 
applicable fringe benefit determination, service employees must be 
furnished the required amount of fringe benefits for all hours paid for 
up to a maximum of 40 hours per week and 2,080 hours per year. Thus, an 
employee on paid vacation leave would accrue and must be compensated for 
any other applicable fringe benefits specified in the fringe benefit 
determination, and if any of the other benefits are furnished in the 
form of cash equivalents, such equivalents must be included with the 
applicable hourly wage rate in computing vacation benefits or a cash 
equivalent therefor. The rules and regulations for computing cash 
equivalents are set forth in Sec. 4.177.



Sec. 4.174  Meeting requirements for holiday fringe benefits.

    (a) Determining eligibility for holiday benefits--in general. (1) 
Most fringe benefit determinations list a specific number of named 
holidays for which payment is required. Unless specified otherwise in an 
applicable determination, an employee who performs any work during the 
workweek in which a named holiday occurs is entitled to the holiday 
benefit, regardless of whether the named holiday falls on a Sunday, 
another day during the workweek on which the employee is not normally 
scheduled to work, or on the employee's day off. In addition, holiday 
benefits cannot be denied because the employee has not been employed by 
the contractor for a designated period prior to the named holiday or 
because the employee did not work the day before or the day after the 
holiday, unless such qualifications are specifically included in the 
determination.
    (2) An employee who performs no work during the workweek in which a 
named holiday occurs is generally not entitled to the holiday benefit. 
However, an employee who performs no work during the workweek because he 
is on paid vacation or sick leave in accordance with the terms of the 
applicable fringe benefit determination is entitled to holiday pay or 
another day off with pay to substitute for the named holiday. In 
addition, an employee who performs no work during the workweek because 
of a layoff does not forfeit his entitlement to holiday benefits if the 
layoff is merely a subterfuge by the

[[Page 89]]

contractor to avoid the payment of such benefits.
    (3) The obligation to furnish holiday pay for the named holiday may 
be discharged if the contractor furnishes another day off with pay in 
accordance with a plan communicated to the employees involved. However, 
in such instances the holidays named in the fringe benefit determination 
are the reference points for determining whether an employee is eligible 
to receive holiday benefits. In other words, if an employee worked in a 
workweek in which a listed holiday occurred, the employee is entitled to 
pay for that holiday. Some determinations may provide for a specific 
number of holidays without naming them. In such instances the contractor 
is free to select the holidays to be taken in accordance with a plan 
communicated to the employees involved, and the agreed-upon holidays are 
the reference points for determining whether an employee is eligible to 
receive holiday benefits.
    (b) Determining eligibility for holiday benefits--newly hired 
employees. The contractor generally is not required to compensate a 
newly hired employee for the holiday occurring prior to the hiring of 
the employee. However, in the one situation where a named holiday falls 
in the first week of a contract, all employees who work during the first 
week would be entitled to holiday pay for that day. For example, if a 
contract to provide services for the period January 1 through December 
31 contained a fringe benefit determination listing New Year's Day as a 
named holiday, and if New Year's Day were officially celebrated on 
January 2 in the year in question because January 1 fell on a Sunday, 
employees hired to begin work on January 3 would be entitled to holiday 
pay for New Year's Day.
    (c) Payment of holiday benefits. (1) A full-time employee who is 
eligible to receive payment for a named holiday must receive a full 
day's pay up to 8 hours unless a different standard is used in the 
fringe benefit determination, such as one reflecting collectively 
bargained holiday benefit requirements issued pursuant to section 4(c) 
of the Act or a different historic practice in an industry or locality. 
Thus, for example, a contractor must furnish 7 hours of holiday pay to a 
full-time employee whose scheduled workday consists of 7 hours. An 
employee whose scheduled workday is 10 hours would be entitled to a 
holiday payment of 8 hours unless a different standard is used in the 
determination. As discussed in Sec. 4.172, such holiday pay must include 
the full amount of other fringe benefits to which the employee is 
entitled.
    (2) Unless a different standard is used in the wage determination, a 
full-time employee who works on the day designated as a holiday must be 
paid, in addition to the amount he ordinarily would be entitled to for 
that day's work, the cash equivalent of a full-day's pay up to 8 hours 
or be furnished another day off with pay.
    (3) If the fringe benefit determination lists the employee's 
birthday as a paid holiday and that day coincides with another listed 
holiday, the contractor may discharge his obligation to furnish payment 
for the second holiday by either substituting another day off with pay 
with the consent of the employee, furnishing holiday benefits of an 
extra day's pay, or if the employee works on the holiday in question, 
furnish holiday benefits of two extra days' pay.
    (4) As stated in paragraph (a)(1) of this section, an employee's 
entitlement to holiday pay fully vests by working in the workweek in 
which the named holiday occurs. Accordingly, any employee who is 
terminated before receiving the full amount of holiday benefits due him 
must be paid the holiday benefits as a final cash payment.
    (5) The rules and regulations for furnishing holiday pay to 
temporary and part-time employees are discussed in Sec. 4.176.
    (6) The rules and regulations for furnishing equivalent fringe 
benefits or cash equivalents in lieu of holiday pay are discussed in 
Sec. 4.177.



Sec. 4.175  Meeting requirements for health, welfare, and/or pension benefits.

    (a) Determining the required amount of benefits. (1) Most fringe 
benefit determinations containing health and welfare and/or pension 
requirements specify a fixed payment per hour on behalf

[[Page 90]]

of each service employee. These payments are usually also stated as 
weekly or monthly amounts. As set forth in Sec. 4.172, unless specified 
otherwise in the applicable determination such payments are due for all 
hours paid for, including paid vacation, sick leave, and holiday hours, 
up to a maximum of 40 hours per week and 2,080 hours per year on each 
contract. The application of this rule can be illustrated by the 
following examples:
    (i) An employee who works 4 days a week, 10 hours a day is entitled 
to 40 hours of health and welfare and/or pension fringe benefits. If an 
employee works 3 days a week, 12 hours a day, then such employee is 
entitled to 36 hours of these benefits.
    (ii) An employee who works 32 hours in a workweek and also receives 
8 hours of holiday pay is entitled to the maximum of 40 hours of health 
and welfare and/or pension payments in that workweek. If the employee 
works more than 32 hours and also received 8 hours of holiday pay, the 
employee is still only entitled to the maximum of 40 hours of health and 
welfare and/or pension payments.
    (iii) If an employee is off work for two weeks on vacation and 
received 80 hours of vacation pay, the employee must also receive 
payment for the 80 hours of health and welfare and/or pension benefits 
which accrue during the vacation period.
    (iv) An employee entitled to two weeks paid vacation who instead 
works the full 52 weeks in the year, receiving the full 2,080 hours 
worth of health and welfare and/or pension benefits, would be due an 
extra 80 hours of vacation pay in lieu of actually taking the vacation; 
however, such an employee would not be entitled to have an additional 80 
hours of health and welfare and/or pension benefits included in his 
vacation pay.
    (2) A fringe benefit determination calling for a specified benefit 
such as health insurance contemplates a fixed and definite contribution 
to a ``bona fide'' plan (as that term is defined in Sec. 4.171) by an 
employer on behalf of each employee, based on the monetary cost to the 
employer rather than on the level of benefits provided. Therefore, in 
determining compliance with an applicable fringe benefit determination, 
the amount of the employer's contribution on behalf of each individual 
employee governs. Thus, as set forth in Sec. 4.172, if a determination 
should require a contribution to a plan providing a specified fringe 
benefit and that benefit can be obtained for less than the required 
contribution, it would be necessary for the employer to make up the 
difference in cash to the employee, or furnish equivalent benefits, or a 
combination thereof. The following illustrates the application of this 
principle: A fringe benefit determination requires a rate of $36.40 per 
month per employee for a health insurance plan. The employer obtains the 
health insurance coverage specified at a rate of $20.45 per month for a 
single employee, $30.60 for an employee with spouse, and $40.90 for an 
employee with a family. The employer is required to make up the 
difference in cash or equivalent benefits to the first two classes of 
employees in order to satisfy the determination, notwithstanding that 
coverage for an employee would be automatically changed by the employer 
if the employee's status should change (e.g., single to married) and 
notwithstanding that the employer's average contribution per employee 
may be equal to or in excess of $36.40 per month.
    (3) In determining eligibility for benefits under certain wage 
determinations containing hours or length of service requirements (such 
as having to work 40 hours in the preceding month), the contractor must 
take into account time spent by employees on commercial work as well as 
time spent on the Government contract.
    (b) Some fringe benefit determinations specifically provide for 
health and welfare and/or pension benefits in terms of average cost. 
Under this concept, a contractor's contributions per employee to a 
``bona fide'' fringe benefit plan are permitted to vary depending upon 
the individual employee's marital or employment status. However, the 
firm's total contributions for all service employees enrolled in the 
plan must average at least the fringe benefit determination requirement 
per hour per service employee. If the contractor's contributions average 
less

[[Page 91]]

than the amount required by the determination, then the firm must make 
up the deficiency by making cash equivalent payments or equivalent 
fringe benefit payments to all service employees in the plan who worked 
on the contract during the payment period. Where such deficiencies are 
made up by means of cash equivalent payments, the payments must be made 
promptly on the following payday. The following illustrates the 
application of this principle: The determination requires an average 
contribution of $0.84 an hour. The contractor makes payments to bona 
fide fringe benefit plans on a monthly basis. During a month the firm 
contributes $15,000 for the service employees employed on the contract 
who are enrolled in the plan, and a total of 20,000 man-hours had been 
worked by all service employees during the month. Accordingly, the 
firm's average cost would have been $15,00020,000 hours or $0.75 
per hour, resulting in a deficiency of $0.09 per hour. Therefore, the 
contractor owes the service employees in the plan who worked on the 
contract during the month an additional $0.09 an hour for each hour 
worked on the contract, payable on the next regular payday for wages. 
Unless otherwise provided in the applicable wage determination, 
contributions made by the employer for non-service employees may not be 
credited toward meeting Service Contract Act fringe benefit obligations.
    (c) Employees not enrolled in or excluded from participating in 
fringe benefit plans. (1) Some health and welfare and pension plans 
contain eligibility exclusions for certain employees. For example, 
temporary and part-time employees may be excluded from participating in 
such plans. Also, employees receiving benefits through participation in 
plans of an employer other than the Government contractor or by a 
spouse's employer may be prevented from receiving benefits from the 
contractor's plan because of prohibitions against ``double coverage''. 
While such exclusions do not invalidate an otherwise bona fide insurance 
plan, employer contributions to such a plan cannot be considered to be 
made on behalf of the excluded employees. Accordingly, under fringe 
benefit determination requirements as described in paragraph (a)(2) of 
this section, the employees excluded from participation in the health 
insurance plan must be furnished equivalent bona fide fringe benefits or 
be paid a cash equivalent payment during the period that they are not 
eligible to participate in the plan.
    (2) It is not required that all employees participating in a fringe 
benefit plan be entitled to receive benefits from that plan at all 
times. For example, under some plans, newly hired employees who are 
eligible to participate in an insurance plan from their first day of 
employment may be prohibited from receiving benefits from the plan 
during a specified ``waiting period''. Contributions made on behalf of 
such employees would serve to discharge the contractor's obligation to 
furnish the fringe benefit. However, if no contributions are made for 
such employees, no credit may be taken toward the contractor's fringe 
benefit obligations.
    (d) Payment of health and welfare and pension benefits. (1) Health 
and welfare and/or pension payments to a ``bona fide'' insurance plan or 
trust program may be made on a periodic payment basis which is not less 
often than quarterly. However, where fringe benefit determinations 
contemplate a fixed contribution on behalf of each employee, and a 
contractor exercises his option to make hourly cash equivalent or 
differential payments, such payments must be made promptly on the 
regular payday for wages. (See Sec. 4.165.)
    (2) The rules and regulations for furnishing health and welfare and 
pension benefits to temporary and part-time employees are discussed in 
Sec. 4.176.
    (3) The rules and regulations for furnishing equivalent fringe 
benefits or cash equivalents in lieu of health and welfare and pension 
benefits are discussed in Sec. 4.177.



Sec. 4.176  Payment of fringe benefits to temporary and part-time employees.

    (a) As set forth in Sec. 4.165(a)(2), the Act makes no distinction, 
with respect to its compensation provisions, between temporary, part-
time, and full-time employees. Accordingly, in the absence of express 
limitations, the provisions of

[[Page 92]]

an applicable fringe benefit determination apply to all temporary and 
part-time service employees engaged in covered work. However, in 
general, such temporary and part-time employees are only entitled to an 
amount of the fringe benefits specified in an applicable determination 
which is proportionate to the amount of time spent in covered work. The 
application of these principles may be illustrated by the following 
examples:
    (1) Assuming the paid vacation for full-time employees is one week 
of 40 hours, a part-time employee working a regularly scheduled workweek 
of 16 hours is entitled to 16 hours of paid vacation time or its 
equivalent each year, if all other qualifications are met.
    (2) In the case of holidays, a part-time employee working a 
regularly scheduled workweek of 16 hours would be entitled to two-fifths 
of the holiday pay due full-time employees. It is immaterial whether or 
not the holiday falls on a normal workday of the part-time employee. 
Except as provided in Sec. 4.174(b), a temporary or casual employee 
hired during a holiday week, but after the holiday, would be due no 
holiday benefits for that week.
    (3) Holiday or vacation pay obligations to temporary and part-time 
employees working an irregular schedule of hours may be discharged by 
paying such employees a proportion of the holiday or vacation benefits 
due full-time employees based on the number of hours each such employee 
worked in the workweek prior to the workweek in which the holiday occurs 
or, with respect to vacations, the number of hours which the employee 
worked in the year preceding the employee's anniversary date of 
employment. For example:
    (i) An employee works 10 hours during the week preceding July 4, a 
designated holiday. The employee is entitled to 10/40 of the holiday pay 
to which a full-time employee is entitled (i.e., 10/40 times 8=2 hours 
holiday pay).
    (ii) A part-time employee works 520 hours during the 12 months 
preceding the employee's anniversary date. Since the typical number of 
nonovertime hours in a year of work is 2,080, if a full-time employee 
would be entitled to one week (40 hours) paid vacation under the 
applicable fringe benefit determination, then the part-time employee 
would be entitled to 520/2,080 times 40=10 hours paid vacation.
    (4) A part-time employee working a regularly scheduled workweek of 
20 hours would be entitled to one-half of the health and welfare and/or 
pension benefits specified in the applicable fringe benefit 
determination. Thus, if the determination requires $36.40 per month for 
health insurance, the contractor could discharge his obligation towards 
the employee in question by providing a health insurance policy costing 
$18.20 per month.
    (b) A contractor's obligation to furnish the specified fringe 
benefits to temporary and part-time employees may be discharged by 
furnishing equivalent benefits, cash equivalents, or a combination 
thereof in accordance with the rules and regulations set forth in 
Sec. 4.177.



Sec. 4.177  Discharging fringe benefit obligations by equivalent means.

    (a) In general. (1) Section 2(a)(2) of the Act, which provides for 
fringe benefits that are separate from and in addition to the monetary 
compensation required under section 2(a)(1), permits an employer to 
discharge his obligation to furnish the fringe benefits specified in an 
applicable fringe benefit determination by furnishing any equivalent 
combinations of ``bona fide'' fringe benefits or by making equivalent or 
differential payments in cash. However, credit for such payments is 
limited to the employer's fringe benefit obligations under section 
2(a)(2), since the Act does not authorize any part of the monetary wage 
required by section 2(a)(1) and specified in the wage determination and 
the contract, to be offset by the fringe benefit payments or equivalents 
which are furnished or paid pursuant to section 2(a)(2).
    (2) When a contractor substitutes fringe benefits not specified in 
the fringe benefit determination contained in the contract for fringe 
benefits which are so specified, the substituted fringe benefits, like 
those for which the contract provisions are prescribed, must be ``bona 
fide'' fringe benefits, as that term is defined in Sec. 4.171.
    (3) When a contractor discharges his fringe benefit obligation by 
furnishing,

[[Page 93]]

in lieu of those benefits specified in the applicable fringe benefit 
determination, other ``bona fide'' fringe benefits, cash payments, or a 
combination thereof, the substituted fringe benefits and/or cash 
payments must be ``equivalent'' to the benefits specified in the 
determination. As used in this subpart, the terms equivalent fringe 
benefit and cash equivalent mean equal in terms of monetary cost to the 
contractor. Thus, as set forth in Sec. 4.172, if an applicable fringe 
benefit determination calls for a particular fringe benefit in a stated 
amount and the contractor furnished this benefit through contributions 
in a lesser amount, the contractor must furnish the employee with the 
difference between the amount stated in the determination and the actual 
cost of the benefit which the contractor provides. This principle may be 
illustrated by the example given in Sec. 4.175(a)(2).
    (b) Furnishing equivalent fringe benefits. (1) A contractor's 
obligation to furnish fringe benefits which are stated in a specified 
cash amount may be discharged by furnishing any combination of ``bona 
fide'' fringe benefits costing an equal amount. Thus, if an applicable 
determination specifies that 20 cents per hour is to be paid into a 
pension fund, this fringe benefit obligation will be deemed to be met 
if, instead, hospitalization benefits costing not less than 20 cents per 
hour are provided. The same obligation will be met if hospitalization 
benefits costing 10 cents an hour and life insurance benefits costing 10 
cents an hour are provided. As set forth in Sec. 4.171(c), no benefit 
required to be furnished the employee by any other law, such as workers' 
compensation, may be credited toward satisfying the fringe benefit 
requirements of the Act.
    (2) A contractor who wishes to furnish equivalent fringe benefits in 
lieu of those benefits which are not stated in a specified cash amount, 
such as ``one week paid vacation'', must first determine the equivalent 
cash value of such benefits in accordance with the rules set forth in 
paragraph (c) of this section.
    (c) Furnishing cash equivalents. (1) Fringe benefit obligations may 
be discharged by paying to the employee on his regular payday, in 
addition to the monetary wage required, a cash amount per hour in lieu 
of the specified fringe benefits, provided such amount is equivalent to 
the cost of the fringe benefits required. If, for example, an employee's 
monetary rate under an applicable determination is $4.50 an hour, and 
the fringe benefits to be furnished are hospitalization benefits costing 
20 cents an hour and retirement benefits costing 20 cents an hour, the 
fringe benefit obligation is discharged if instead of furnishing the 
required fringe benefits, the employer pays the employee, in cash, 40 
cents per hour as the cash equivalent of the fringe benefits in addition 
to the $4.50 per hour wage rate required under the applicable wage 
determination.
    (2) The hourly cash equivalent of those fringe benefits which are 
not stated in the applicable determination in terms of hourly cash 
amounts may be obtained by mathematical computation through the use of 
pertinent factors such as the monetary wages paid the employee and the 
hours of work attributable to the period, if any, by which fringe 
benefits are measured in the determination. If the employee's regular 
rate of pay is greater than the minimum monetary wage specified in the 
wage determination and the contract, the former must be used for this 
computation, and if the fringe benefit determination does not specify 
any daily or weekly hours of work by which benefits are to be measured, 
a standard 8-hour day and 40-hour week will be considered applicable. 
The application of these rules in typical situations is illustrated in 
paragraphs (c)(3) through (7) of this section.
    (3) Where fringe benefits are stated as a percentage of the monetary 
rate, the hourly cash equivalent is determined by multiplying the stated 
percentage by the employees' regular or basic (i.e., wage determination) 
rate of pay, whichever is greater. For example, if the determination 
calls for a 5 percent pension fund payment and the employee is paid a 
monetary rate of $4.50 an hour, or if the employee earns $4.50 an hour 
on a piece-work basis in a particular workweek, the cash equivalent of 
that payment would be 22\1/2\ cents an hour.

[[Page 94]]

    (4) If the determination lists a particular fringe benefit in such 
terms as $8 a week, the hourly cash equivalent is determined by dividing 
the amount stated in the determination by the number of working hours to 
which the amount is attributable. For example, if a determination lists 
a fringe benefit as ``pension--$8 a week'', and does not specify weekly 
hours, the hourly cash equivalent is 20 cents per hour, i.e., $8 divided 
by 40, the standard number of non-overtime working hours in a week.
    (5) In determining the hourly cash equivalent of those fringe 
benefits which are not stated in the determination in terms of a cash 
amount, but are stated, for example, as ``nine paid holidays per year'' 
or ``1 week paid vacation after one year of service'', the employee's 
hourly monetary rate of pay is multiplied by the number of hours making 
up the paid holidays or vacation. Unless the hours contemplated in the 
fringe benefit are specified in the determination, a standard 8-hour day 
and 40-hour week is considered applicable. The total annual cost so 
determined is divided by 2,080, the standard number of non-overtime 
hours in a year of work, to arrive at the hourly cash equivalent. This 
principle may be illustrated by the following examples:
    (i) If a particular determination lists as a fringe benefit ``nine 
holidays per year'' and the employee's hourly rate of pay is $4.50, the 
$4.50 is multiplied by 72 (9 days of 8 hours each) and the result, $324, 
is then divided by 2,080 to arrive at the hourly cash equivalent, 
$0.1557 an hour. See Sec. 4.174(c)(4).
    (ii) If the determination requires ``one week paid vacation after 
one year of service'', and the employee's hourly rate of pay is $4.50, 
the $4.50 is multiplied by 40 and the result, $180.00, is then divided 
by 2,080 to arrive at the hourly cash equivalent, $0.0865 an hour.
    (6) Where an employer elects to pay an hourly cash equivalent in 
lieu of a paid vacation, which is computed in accordance with paragraph 
(c)(5) of this section, such payments need commence only after the 
employee has satisfied the ``after one year of service'' requirement. 
However, should the employee terminate employment for any reason before 
receiving the full amount of vested vacation benefits due, the employee 
must be paid the full amount of any difference remaining as the final 
cash payment. For example, an employee becomes eligible for a week's 
vacation pay on March 1. The employer elects to pay this employee an 
hourly cash equivalent beginning that date; the employee terminates 
employment on March 31. Accordingly, as this employee has received only 
\1/12\ of the vacation pay to which he/she is entitled, the employee is 
due the remaining \11/12\ upon termination. As set forth in 
Sec. 4.173(e), the rate applicable to the computation of cash 
equivalents for vacation benefits is the hourly wage rate in effect at 
the time such equivalent payments are actually made.
    (d) Furnishing a combination of equivalent fringe benefits and cash 
payments. Fringe benefit obligations may be discharged by furnishing any 
combination of cash or fringe benefits as illustrated in the preceding 
paragraphs of this section, in monetary amounts the total of which is 
equivalent, under the rules therein stated, to the determined fringe 
benefits specified in the contract. For example, if an applicable 
determination specifies that 20 cents per hour is to be paid into a 
pension fund, this fringe benefit obligation will be deemed to be met if 
instead, hospitalization benefits costing 15 cents an hour and a cash 
equivalent payment of 5 cents an hour are provided.
    (e) Effect of equivalents in computing overtime pay. Section 6 of 
the Act excludes from the regular or basic hourly rate of an employee, 
for purposes of determining the overtime pay to which the employee is 
entitled under any other Federal law, those fringe benefit payments 
computed under the Act which are excluded from the regular rate under 
the Fair Labor Standards Act by provisions of section 7(e) (formerly 
designated as section 7(d)) of that Act (29 U.S.C. 207(e)). Fringe 
benefit payments which qualify for such exclusion are described in 
subpart C of Regulations, 29 CFR part 778. When such fringe benefits are 
required to be furnished to service employees engaged in contract 
performance, the right to compute overtime pay in accordance with the 
above rule is not lost to a contractor or subcontractor because it 
discharges its obligation under this Act to

[[Page 95]]

furnish such fringe benefits through alternative equivalents as provided 
in this section. If it furnishes equivalent benefits or makes cash 
payments, or both, to such an employee as authorized herein, the amounts 
thereof, which discharge the employer's obligation to furnish such 
specified fringe benefits, may be excluded pursuant to this Act from the 
employee's regular or basic rate of pay in computing any overtime pay 
due the employee under any other Federal law. No such exclusion can 
operate, however, to reduce an employee's regular or basic rate of pay 
below the monetary wage rate specified as the applicable minimum wage 
rates under sections 2(a)(1), 2(b), or 4(c) of this Act or under other 
law or an employment contract.



Sec. 4.178  Computation of hours worked.

    Since employees subject to the Act are entitled to the minimum 
compensation specified under its provisions for each hour worked in 
performance of a covered contract, a computation of their hours worked 
in each workweek when such work under the contract is performed is 
essential. Determinations of hours worked will be made in accordance 
with the principles applied under the Fair Labor Standards Act as set 
forth in part 785 of this title which is incorporated herein by 
reference. In general, the hours worked by an employee include all 
periods in which the employee is suffered or permitted to work whether 
or not required to do so, and all time during which the employee is 
required to be on duty or to be on the employer's premises or to be at a 
prescribed workplace. The hours worked which are subject to the 
compensation provisions of the Act are those in which the employee is 
engaged in performing work on contracts subject to the Act. However, 
unless such hours are adequately segregated, as indicated in Sec. 4.179, 
compensation in accordance with the Act will be required for all hours 
of work in any workweek in which the employee performs any work in 
connection with the contract, in the absence of affirmative proof to the 
contrary that such work did not continue throughout the workweek.



Sec. 4.179  Identification of contract work.

    Contractors and subcontractors under contracts subject to the Act 
are required to comply with its compensation requirements throughout the 
period of performance on the contract and to do so with respect to all 
employees who in any workweek are engaged in performing work on such 
contracts. If such a contractor during any workweek is not exclusively 
engaged in performing such contracts, or if while so engaged it has 
employees who spend a portion but not all of their worktime in the 
workweek in performing work on such contracts, it is necessary for the 
contractor to identify accurately in its records, or by other means, 
those periods in each such workweek when the contractor and each such 
employee performed work on such contracts. In cases where contractors 
are not exclusively engaged in Government contract work, and there are 
adequate records segregating the periods in which work was performed on 
contracts subject to the Act from periods in which other work was 
performed, the compensation specified under the Act need not be paid for 
hours spent on non-contract work. However, in the absence of records 
adequately segregating non-covered work from the work performed on or in 
connection with the contract, all employees working in the establishment 
or department where such covered work is performed shall be presumed to 
have worked on or in connection with the contract during the period of 
its performance, unless affirmative proof establishing the contrary is 
presented. Similarly, in the absence of such records, an employee 
performing any work on or in connection with the contract in a workweek 
shall be presumed to have continued to perform such work throughout the 
workweek, unless affirmative proof establishing the contrary is 
presented. Even where a contractor can segregate Government from non-
Government work, it is necessary that the contractor comply with the 
requirements of section 6(e) of the FLSA discussed in Sec. 4.160.

[[Page 96]]

                    Overtime Pay of Covered Employees



Sec. 4.180  Overtime pay--in general.

    The Act does not provide for compensation of covered employees at 
premium rates for overtime hours of work. Section 6 recognizes, however, 
that other Federal laws may require such compensation to be paid to 
employees working on or in connection with contracts subject to the Act 
(see Sec. 4.181) and prescribes, for purposes of such laws, the manner 
in which fringe benefits furnished pursuant to the Act shall be treated 
in computing such overtime compensation as follows: ``In determining any 
overtime pay to which such service employees are entitled under any 
Federal law, the regular or basic hourly rate of such an employee shall 
not include any fringe benefit payments computed hereunder which are 
excluded from the regular rate under the Fair Labor Standards Act by 
provisions of section 7(d) [now section 7(e)] thereof.'' Fringe benefit 
payments which qualify for such exclusion are described in part 778, 
subpart C of this title. The interpretations there set forth will be 
applied in determining the overtime pay to which covered service 
employees are entitled under other Federal statutes. The effect of 
section 6 of the Act in situations where equivalent fringe benefits or 
cash payments are provided in lieu of the specified fringe benefits is 
stated in Sec. 4.177(e) of this part, and illustrated in Sec. 4.182.



Sec. 4.181  Overtime pay provisions of other Acts.

    (a) Fair Labor Standards Act. Although provision has not been made 
for insertion in Government contracts of stipulations requiring 
compliance with the overtime provisions of the Fair Labor Standards Act, 
contractors and subcontractors performing contracts subject to the 
McNamara-O'Hara Service Contract Act may be required to compensate their 
employees working on or in connection with such contracts for overtime 
work pursuant to the overtime pay standards of the Fair Labor Standards 
Act. This is true with respect to employees engaged in interstate or 
foreign commerce or in the production of goods for such commerce 
(including occupations and processes closely related and directly 
essential to such production) and employees employed in enterprises 
which are so engaged, subject to the definitions and exceptions provided 
in such Act. Such employees, except as otherwise specifically provided 
in such Act, must receive overtime compensation at a rate of not less 
than 1\1/2\ times their regular rate of pay for all hours worked in 
excess of the applicable standard in a workweek. See part 778 of this 
title. However, the Fair Labor Standards Act provides no overtime pay 
requirements for employees, not within such interstate commerce coverage 
of the Act, who are subject to its minimum wage provisions only by 
virtue of the provisions of section 6(e), as explained in Sec. 4.180.
    (b) Contract Work Hours and Safety Standards Act. (1) The Contract 
Work Hours and Safety Standards Act (40 U.S.C. 327-332) applies 
generally to Government contracts, including service contracts in excess 
of $100,000, which may require or involve the employment of laborers and 
mechanics. Guards, watchmen, and many other classes of service employees 
are laborers or mechanics within the meaning of such Act. However, 
employees rendering only professional services, seamen, and as a general 
rule those whose work is only clerical or supervisory or nonmanual in 
nature, are not deemed laborers or mechanics for purposes of the Act. 
The wages of every laborer and mechanic for performance of work on such 
contracts must include compensation at a rate not less than 1\1/2\ times 
the employees' basic rate of pay for all hours worked in any workweek in 
excess of 40. Exemptions are provided for certain transportation and 
communications contracts, contracts for the purchase of supplies 
ordinarily available in the open market, and work, required to be done 
in accordance with the provisions of the Walsh-Healey Act.
    (2) Regulations concerning this Act are contained in 29 CFR part 5 
which permit overtime pay to be computed in the same manner as under the 
Fair Labor Standards Act.
    (c) Walsh-Healey Public Contracts Act. As pointed out in Sec. 4.117, 
while some Government contracts may be subject

[[Page 97]]

both to the McNamara-O'Hara Service Contract Act and to the Walsh-Healey 
Public Contracts Act, the employees performing work on the contract 
which is subject to the latter Act are, when so engaged, exempt from the 
provisions of the former. They are, however, subject to the overtime 
provisions of the Walsh-Healey Act if, in any workweek, any of the work 
performed for the employer is subject to such Act and if, in such 
workweek, the total hours worked by the employee for the employer 
(whether wholly or only partly on such work) exceed 40 hours in the 
workweek. In any such workweek the Walsh-Healey Act requires payment of 
overtime compensation at a rate not less than 1\1/2\ times the 
employee's basic rate for such weekly overtime hours. The overtime pay 
provisions of the Walsh-Healey Act are discussed in greater detail in 41 
CFR part 50-201.

[48 FR 49762, Oct. 27, 1983, as amended at 51 FR 12265, Apr. 9, 1986; 61 
FR 40716, Aug. 5, 1996]



Sec. 4.182  Overtime pay of service employees entitled to fringe benefits.

    Reference is made in Sec. 4.180 to the rules prescribed by section 6 
of the Act which permit exclusion of certain fringe benefits and 
equivalents provided pursuant to section 2(a)(2) of the Act from the 
regular or basic rate of pay when computing overtime compensation of a 
service employee under the provisions of any other Federal law. As 
provided in Sec. 4.177, not only those fringe benefits excludable under 
section 6 as benefits determined and specified under section 2(a)(2), 
but also equivalent fringe benefits and cash payments furnished in lieu 
of the specified benefits may be excluded from the regular or basic rate 
of such an employee. The application of this rule may be illustrated by 
the following examples:
    (a) The A company pays a service employee $4.50 an hour in cash 
under a wage determination which requires a monetary rate of not less 
than $4 and a fringe benefit contribution of 50 cents which would 
qualify for exclusion from the regular rate under section 7(e) of the 
Fair Labor Standards Act. The contractor pays the 50 cents in cash 
because he made no contributions for fringe benefits specified in the 
determination and the contract. Overtime compensation in this case would 
be computed on a regular or basic rate of $4 an hour.
    (b) The B company has for some time been paying $4.25 an hour to a 
service employee as his basic cash wage plus 25 cents an hour as a 
contribution to a welfare and pension plan, which contribution qualifies 
for exclusion from the regular rate under the Fair Labor Standards Act. 
For performance of work under a contract subject to the Act a monetary 
rate of $4 and a fringe benefit contribution of 50 cents (also 
qualifying for such exclusion) are specified because they are found to 
be prevailing for such employees in the locality. The contractor may 
credit the 25 cent welfare and pension contribution toward the discharge 
of his fringe benefit obligation under the contract but must also make 
an additional contribution of 25 cents for the specified or equivalent 
fringe benefits or pay the employee an additional 25 cents in cash. 
These contributions or equivalent payments may be excluded from the 
employee's regular rate which remains $4.25, the rate agreed upon as the 
basic cash wage.
    (c) The C company has been paying $4 an hour as its basic cash wage 
on which the firm has been computing overtime compensation. For 
performance of work on a contract subject to the Act the same rate of 
monetary wages and a fringe benefit contribution of 50 cents an hour 
(qualifying for exclusion from the regular rate under the Fair Labor 
Standards Act) are specified in accordance with a determination that 
these are the monetary wages and fringe benefits prevailing for such 
employees in the locality. The contractor is required to continue to pay 
at least $4 an hour in monetary wages and at least this amount must be 
included in the employee's regular or basic rate for overtime purposes 
under applicable Federal law. The fringe benefit obligation under the 
contract would be discharged if 50 cents of the contributions for fringe 
benefits were for the fringe benefits specified in the contract or 
equivalent benefits as defined in Sec. 4.177. The company may exclude 
such fringe benefit contributions from the regular or

[[Page 98]]

basic rate of pay of the service employee in computing overtime pay due.

                           Notice to Employees



Sec. 4.183  Employees must be notified of compensation required.

    The Act, in section 2(a)(4), and the regulations thereunder in 
Sec. 4.6(e), require all contracts subject to the Act which are in 
excess of $2,500 to contain a clause requiring the contractor or 
subcontractor to notify each employee commencing work on a contract to 
which the Act applies of the compensation required to be paid such 
employee under section 2(a)(1) and the fringe benefits required to be 
furnished under section 2(a)(2). A notice form (WH Publication 1313 and 
any applicable wage determination) provided by the Wage and Hour 
Division is to be used for this purpose. It may be delivered to the 
employee or posted as stated in Sec. 4.184.



Sec. 4.184  Posting of notice.

    Posting of the notice provided by the Wage and Hour Division shall 
be in a prominent and accessible place at the worksite, as required by 
Sec. 4.6(e). The display of the notice in a place where it may be seen 
by employees performing on the contract will satisfy the requirement 
that it be in a ``prominent and accessible place''. Should display be 
necessary at more than one site, in order to assure that it is seen by 
such employees, additional copies of the poster may be obtained without 
cost from the Division. The contractor or subcontractor is required to 
notify each employee of the compensation due or attach to the poster any 
applicable wage determination specified in the contract listing all 
minimum monetary wages and fringe benefits to be paid or furnished to 
the classes of service employees performing on the contract.

                                 Records



Sec. 4.185  Recordkeeping requirements.

    The records which a contractor or subcontractor is required to keep 
concerning employment of employees subject to the Act are specified in 
Sec. 4.6(g) of subpart A of this part. They are required to be 
maintained for 3 years from the completion of the work, and must be made 
available for inspection and transcription by authorized representatives 
of the Administrator. Such records must be kept for each service 
employee performing work under the contract, for each workweek during 
the performance of the contract. If the required records are not 
separately kept for the service employees performing on the contract, it 
will be presumed, in the absence of affirmative proof to the contrary, 
that all service employees in the department or establishment where the 
contract was performed were engaged in covered work during the period of 
performance. (See Sec. 4.179.)



Sec. 4.186  [Reserved]



                         Subpart E--Enforcement



Sec. 4.187  Recovery of underpayments.

    (a) The Act, in section 3(a), provides that any violations of any of 
the contract stipulations required by sections 2(a)(1), 2(a)(2), or 2(b) 
of the Act, shall render the party responsible liable for the amount of 
any deductions, rebates, refunds, or underpayments (which includes non-
payment) of compensation due to any employee engaged in the performance 
of the contract. So much of the accrued payments due either on the 
contract or on any other contract (whether subject to the Service 
Contract Act or not) between the same contractor and the Government may 
be withheld in a deposit fund as is necessary to pay the employees. In 
the case of requirements-type contracts, it is the contracting agency, 
and not the using agencies, which has the responsibility for complying 
with a withholding request by the Secretary or authorized 
representative. The Act further provides that on order of the Secretary 
(or authorized representatives), any compensation which the head of the 
Federal agency or the Secretary has found to be due shall be paid 
directly to the underpaid employees from any accrued payments withheld. 
In order to effectuate the efficient administration of this provision of 
the Act, such withheld funds shall be transferred to the Department of 
Labor for

[[Page 99]]

disbursement to the underpaid employees on order of the Secretary or his 
or her authorized representatives, an Administrative Law Judge, or the 
Administrative Review Board, and are not paid directly to such employees 
by the contracting agency without the express prior consent of the 
Department of Labor. (See Decision of the Comptroller General, B-170784, 
February 17, 1971.) It is mandatory for a contracting officer to adhere 
to a request from the Department of Labor to withhold funds where such 
funds are available. (See Decision of the Comptroller General, B-109257, 
October 14, 1952, arising under the Walsh-Healey Act.) Contract funds 
which are or may become due a contractor under any contract with the 
United States may be withheld prior to the institution of administrative 
proceedings by the Secretary. (McCasland v. U.S. Postal Service, 82 CCH 
Labor Cases para. 33,607 (N.D. N.Y. 1977); G & H Machinery Co. v. 
Donovan, 96 CCH Labor Cases para.34,354 (S.D. Ill. 1982).)
    (b) Priority to withheld funds. The Comptroller General has afforded 
employee wage claims priority over an Internal Revenue Service levy for 
unpaid taxes. (See Decisions of the Comptroller General, B-170784, 
February 17, 1971; B-189137, August 1, 1977; 56 Comp. Gen. 499 (1977); 
55 Comp. Gen. 744 (1976), arising under the Davis-Bacon Act; B-178198, 
August 30, 1973; B-161460, May 25, 1967.)
    (1) As the Comptroller General has stated, ``[t]he legislative 
histories of these labor statutes [Service Contract Act and Contract 
Work Hours and Safety Standards Act, 41 U.S.C. 327, et seq.] disclose a 
progressive tendency to extend a more liberal interpretation and 
construction in successive enactments with regard to worker's benefits, 
recovery and repayment of wage underpayments. Further, as remedial 
legislation, it is axiomatic that they are to be liberally construed''. 
(Decision of the Comptroller General, B-170784, February 17, 1971.)
    (2) Since section 3(a) of the Act provides that accrued contract 
funds withheld to pay employees wages must be held in a deposit fund, it 
is the position of the Department of Labor that monies so held may not 
be used or set aside for agency reprocurement costs. To hold otherwise 
would be inequitable and contrary to public policy, since the employees 
have performed work from which the Government has received the benefit 
(see National Surety Corporation v. U.S., 132 Ct. Cl. 724, 728, 135 F. 
Supp. 381 (1955), cert. denied, 350 U.S. 902), and to give contracting 
agency reprocurement claims priority would be to require employees to 
pay for the breach of contract between the employer and the agency. The 
Comptroller General has sanctioned priority being afforded wage 
underpayments over the reprocurement costs of the contracting agency 
following a contractor's default or termination for cause. Decision of 
the Comptroller General, B-167000, June 26, 1969; B-178198, August 30, 
1973; and B-189137, August 1, 1977.
    (3) Wage claims have priority over reprocurement costs and tax liens 
without regard to when the competing claims were raised. See Decisions 
of the Comptroller General, B-161460, May 25, 1967; B-189137, August 1, 
1977.
    (4) Wages due workers underpaid on the contract have priority over 
any assignee of the contractor, including assignments made under the 
Assignment of Claims Act, 31 U.S.C. 203, 41 U.S.C. 15, to funds withheld 
under the contract, since an assignee can acquire no greater rights to 
withheld funds than the assignor has in the absence of an assignment. 
See Modern Industrial Bank v. U.S., 101 Ct. Cl. 808 (1944); Royal 
Indemnity Co. v. United States, 178 Ct. Cl. 46, 371 F. 2d 462 (1967), 
cert. denied, 389 U.S. 833; Newark Insurance Co. v. U.S., 149 Ct. Cl. 
170, 181 F. Supp. 246 (1960); Henningsen v. United States Fidelity and 
Guaranty Company, 208 U.S. 404 (1908). Where employees have been 
underpaid, the assignor has no right to assign funds since the assignor 
has no property rights to amounts withheld from the contract to cover 
underpayments of workers which constitute a violation of the law and the 
terms, conditions, and obligations under the contract. (Decision of the 
Comptroller General, B-164881, August 14, 1968; B-178198, August 30, 
1973; 56 Comp. Gen. 499 (1977); 55 Comp. Gen. 744 (1976); The National 
City Bank of Evansville v. United States, 143 Ct. Cl. 154, 163 F. Supp. 
846 (1958); National Surety Corporation v. United

[[Page 100]]

States, 132 Ct. Cl. 724, 135 F. Supp. 381 (1955), cert. denied, 350 U.S. 
902.)
    (5) The Comptroller General, recognizing that unpaid laborers have 
an equitable right to be paid from contract retainages, has also held 
that wage underpayments under the Act have priority over any claim by 
the trustee in bankruptcy. 56 Comp. Gen. 499 (1977), citing Pearlman v. 
Reliance Insurance Company, 371 U.S. 132 (1962); Hadden v. United 
States, 132 Ct. Cl. 529 (1955), in which the courts gave priority to 
sureties who had paid unpaid laborers over the trustee in bankruptcy.
    (c) Section 5(b) of the Act provides that if the accrued payments 
withheld under the terms of the contract are insufficient to reimburse 
all service employees with respect to whom there has been a failure to 
pay the compensation required pursuant to the Act, the United States may 
bring action against the contractor, subcontractor, or any sureties in 
any court of competent jurisdiction to recover the remaining amount of 
underpayments. The Service Contract Act is not subject to the statute of 
limitations in the Portal to Portal Act, 29 U.S.C. 255, and contains no 
prescribed period within which such an action must be instituted; it has 
therefore been held that the general period of six years prescribed by 
28 U.S.C. 2415 applies to such actions, United States of America v. 
Deluxe Cleaners and Laundry, Inc., 511 F. 2d 929 (C.A. 4, 1975). Any 
sums thus recovered by the United States shall be held in the deposit 
fund and shall be paid, on the order of the Secretary, directly to the 
underpaid employees. Any sum not paid to an employee because of 
inability to do so within 3 years shall be covered into the Treasury of 
the United States as miscellaneous receipts.
    (d) Releases or waivers executed by employees for unpaid wages and 
fringe benefits due them are without legal effect. As stated by the 
Supreme Court in Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 704, 
(1945), arising under the Fair Labor Standards Act:

    ``Where a private right is granted in the public interest to 
effectuate a legislative policy, waiver of a right so charged or colored 
with the public interest will not be allowed where it would thwart the 
legislative policy which it was designed to effectuate.''


See also Schulte, Inc. v. Gangi, 328 U.S. 108 (1946); United States v. 
Morley Construction Company, 98 F. 2d 781 (C.A. 2, 1938), cert. denied, 
305 U.S. 651.

Further, as noted above, monies not paid to employees to whom they are 
due because of violation are covered into the U.S. Treasury as provided 
by section 5(b) of the Act.
    (e)(1) The term party responsible for violations in section 3(a) of 
the Act is the same term as contained in the Walsh-Healey Public 
Contracts Act, and therefore, the same principles are applied under both 
Acts. An officer of a corporation who actively directs and supervises 
the contract performance, including employment policies and practices 
and the work of the employees working on the contract, is a party 
responsible and liable for the violations, individually and jointly with 
the company (S & G Coal Sales, Inc., Decision of the Hearing Examiner, 
PC-946, January 21, 1965, affirmed by the Administrator June 8, 1965; 
Tennessee Processing Co., Inc., Decision of the Hearing Examiner, PC-
790, September 28, 1965).
    (2) The failure to perform a statutory public duty under the Service 
Contract Act is not only a corporate liability but also the personal 
liability of each officer charged by reason of his or her corporate 
office while performing that duty. United States v. Sancolmar 
Industries, Inc., 347 F. Supp. 404, 408 (E.D. N.Y. 1972). Accordingly, 
it has been held by administrative decisions and by the courts that the 
term party responsible, as used in section 3(a) of the Act, imposes 
personal liability for violations of any of the contract stipulations 
required by sections 2(a)(1) and (2) and 2(b) of the Act on corporate 
officers who control, or are responsible for control of, the corporate 
entity, as they, individually, have an obligation to assure compliance 
with the requirements of the Act, the regulations, and the contracts. 
See, for example, Waite, Inc., Decision of the ALJ, SCA 530-566, October 
19, 1976, Spruce-Up Corp., Decision of the Administrator SCA 368-370, 
August 19, 1976, Ventilation and Cleaning Engineers, Inc., Decision of 
the ALJ, SCA 176, August 23, 1973, Assistant Secretary, May 17, 1974, 
Secretary, September 27, 1974; Fred Van Elk, Decision

[[Page 101]]

of the ALJ, SCA 254-58, May 28, 1974, Administrator, November 25, 1974; 
Murcole, Inc., Decision of the ALJ, SCA 195-198, April 11, 1974; Emile 
J. Bouchet, Decision of the ALJ, SCA 38, February 24, 1970; Darwyn L. 
Grover, Decision of the ALJ, SCA 485, August 15, 1976; United States v. 
Islip Machine Works, Inc., 179 F. Supp. 585 (E.D. N.Y. 1959); United 
States v. Sancolmar Industries, Inc., 347 F. Supp. 404 (E.D. N.Y. 1972).
    (3) In essence, individual liability attaches to the corporate 
official who is responsible for, and therefore causes or permits, the 
violation of the contract stipulations required by the Act, i.e., 
corporate officers who control the day-to-day operations and management 
policy are personally liable for underpayments because they cause or 
permit violations of the Act.
    (4) It has also been held that the personal responsibility and 
liability of individuals for violations of the Act is not limited to the 
officers of a contracting firm or to signatories to the Government 
contract who are bound by and accept responsibility for compliance with 
the Act and imposition of its sanctions set forth in the contract 
clauses in Sec. 4.6, but includes all persons, irrespective of 
proprietary interest, who exercise control, supervision, or management 
over the performance of the contract, including the labor policy or 
employment conditions regarding the employees engaged in contract 
performance, and who, by action or inaction, cause or permit a contract 
to be breached. U.S. v. Islip Machine Works, Inc., 179 F. Supp. 585 
(E.D. N.Y. 1959); U.S. v. Sancolmar Industries, Inc., 347 F. Supp. 404 
(E.D. N.Y. 1972); Oscar Hestrom Corp., Decision of the Administrator, 
PC-257, May 7, 1946, affirmed, U.S. v. Hedstrom, 8 Wage Hour Cases 302 
(N.D. Ill. 1948); Craddock-Terry Shoe Corp., Decision of the 
Administrator, PC-330, October 3, 1947; Reynolds Research Corp., 
Decision of the Administrator, PC-381, October 24, 1951; Etowah Garment 
Co., Inc., Decision of the Hearing Examiner, PC-632, August 9, 1957, 
Decision of the Administrator, April 29, 1958; Cardinal Fuel and Supply 
Co., Decision of the Hearing Examiner, PC-890, June 17, 1963.
    (5) Reliance on advice from contracting agency officials (or 
Department of Labor officials without the authority to issue rulings 
under the Act) is not a defense against a contractor's liability for 
back wages under the Act. Standard Fabrication Ltd., Decision of the 
Secretary, PC-297, August 3, 1948; Airport Machining Corp., Decision of 
the ALJ, PC-1177, June 15, 1973; James D. West, Decision of the ALJ, SCA 
397-398, November 17, 1975; Metropolitan Rehabilitation Corp., WAB Case 
No. 78-25, August 2, 1979; Fry Brothers Corp., WAB Case No. 76-6, June 
14, 1977.
    (f) The procedures for a contractor or subcontractor to dispute 
findings regarding violations of the Act, including back wage liability 
or the disposition of funds withheld by the agency for such liability, 
are contained in parts 6 and 8 of this title. Appeals in such matters 
have not been delegated to the contracting agencies and such matters 
cannot be appealed under the disputes clause in the contractor's 
contract.
    (g) While the Act provides that action may be brought against a 
surety to recover underpayments of compensation, there is no statutory 
provision requiring that contractors furnish either payment or 
performance bonds before an award can be made. The courts have held, 
however, that when such a bond has been given, including one denominated 
as a performance rather than payment bond, and such a bond guarantees 
that the principal shall fulfill ``all the undertakings, covenants, 
terms, conditions, and agreements'' of the contract, or similar words to 
the same effect, the surety-guarantor is jointly liable for 
underpayments by the contractor of the wages and fringe benefits 
required by the Act up to the amount of the bond. U.S. v. Powers 
Building Maintenance Co., 366 F. Supp. 819 (W.D. Okla. 1972); U.S. v. 
Gillespie, 72 CCH Labor Cases para. 33,986 (C.D. Cal. 1973) U.S. v. 
Glens Falls Insurance Co., 279 F. Supp. 236 (E.D. Tenn. 1967); United 
States v. Hudgins-Dize Co., 83 F. Supp. 593 (E.D. Va. 1949); U.S. v. 
Continental Casualty Company, 85 F. Supp. 573 (E.D. Pa. 1949), affirmed 
per curiam, 182 F.2d 941 (3rd Cir. 1950).

[[Page 102]]



Sec. 4.188  Ineligibility for further contracts when violations occur.

    (a) Section 5 of the Act provides that any person or firm found by 
the Secretary or the Federal agencies to have violated the Act shall be 
declared ineligible to receive further Federal contracts unless the 
Secretary recommends otherwise because of unusual circumstances. It also 
directs the Comptroller General to distribute a list to all agencies of 
the Government giving the names of persons or firms that have been 
declared ineligible. No contract of the United States or the District of 
Columbia (whether or not subject to the Act) shall be awarded to the 
persons or firms appearing on this list or to any firm, corporation, 
partnership, or association in which such persons or firms have a 
substantial interest until 3 years have elapsed from the date of 
publication of the list containing the names of such persons or firms. 
This prohibition against the award of a contract to an ineligible 
contractor applies to the contractor in its capacity as either a prime 
contractor or a subcontractor. Because the Act contains no provision 
authorizing removal from the list of the names of such persons or firms 
prior to the expiration of the three-year statutory period, the 
Secretary is without authority to accomplish such removal (other than in 
situations involving mistake or legal error). On the other hand, there 
may be situations in which persons or firms already on the list are 
found in a subsequent administrative proceeding to have again violated 
the Act and their debarment ordered. In such circumstances, a new, 
three-year debarment term will commence with the republication of such 
names on the list.
    (b)(1) The term unusual circumstances is not defined in the Act. 
Accordingly, the determination must be made on a case-by-case basis in 
accordance with the particular facts present. It is clear, however, that 
the effect of the 1972 Amendments is to limit the Secretary's discretion 
to relieve violators from the debarred list (H. Rept. 92-1251, 92d 
Cong., 2d Sess. 5; S. Rept. 92-1131, 92d Cong., 2d Sess. 3-4) and that 
the violator of the Act has the burden of establishing the existence of 
unusual circumstances to warrant relief from the debarment sanction, 
Ventilation and Cleaning Engineers, Inc., SCA-176, Administrative Law 
Judge, August 23, 1973, Assistant Secretary, May 22, 1974, Secretary, 
October 2, 1974. It is also clear that unusual circumstances do not 
include any circumstances which would have been insufficient to relieve 
a contractor from the ineligible list prior to the 1972 amendments, or 
those circumstances which commonly exist in cases where violations are 
found, such as negligent or willful disregard of the contract 
requirements and of the Act and regulations, including a contractor's 
plea of ignorance of the Act's requirements where the obligation to 
comply with the Act is plain from the contract, failure to keep 
necessary records and the like. Emerald Maintenance Inc., Supplemental 
Decision of the ALJ, SCA-153, April 5, 1973.
    (2) The Subcommittee report following the oversight hearings 
conducted just prior to the 1972 amendments makes it plain that the 
limitation of the Secretary's discretion through the unusual 
circumstances language was designed in part to prevent the Secretary 
from relieving a contractor from the ineligible list provisions merely 
because the contractor paid what he was required by his contract to pay 
in the first place and promised to comply with the Act in the future. 
See, House Committee on Education and Labor, Special Subcommittee on 
Labor, The Plight of Service Workers under Government Contracts 12-13 
(Comm. Print 1971). As Congressman O'Hara stated: ``Restoration * * * 
[of wages and benefits] is not in and of itself a penalty. The penalty 
for violation is the suspension from the right to bid on Government 
contracts * * *. The authority [to relieve from blacklisting] was 
intended to be used in situations where the violation was a minor one, 
or an inadvertent one, or one in which disbarment * * * would have been 
wholly disproportionate to the offense.'' House Committee on Education 
and Labor, Special Subcommittee on Labor, Hearings on H.R. 6244 and H.R. 
6245, 92d Cong., 1st Sess. 3 (1971).
    (3)(i) The Department of Labor has developed criteria for 
determining when there are unusual circumstances

[[Page 103]]

within the meaning of the Act. See, e.g., Washington Moving & Storage 
Co., Decision of the Assistant Secretary, SCA 68, August 16, 1973, 
Secretary, March 12, 1974; Quality Maintenance Co., Decision of the 
Assistant Secretary, SCA 119, January 11, 1974. Thus, where the 
respondent's conduct in causing or permitting violations of the Service 
Contract Act provisions of the contract is willful, deliberate or of an 
aggravated nature or where the violations are a result of culpable 
conduct such as culpable neglect to ascertain whether practices are in 
violation, culpable disregard of whether they were in violation or not, 
or culpable failure to comply with recordkeeping requirements (such as 
falsification of records), relief from the debarment sanction cannot be 
in order. Furthermore, relief from debarment cannot be in order where a 
contractor has a history of similar violations, where a contractor has 
repeatedly violated the provisions of the Act, or where previous 
violations were serious in nature.
    (ii) A good compliance history, cooperation in the investigation, 
repayment of moneys due, and sufficient assurances of future compliance 
are generally prerequisites to relief. Where these prerequisites are 
present and none of the aggravated circumstances in the preceding 
paragraph exist, a variety of factors must still be considered, 
including whether the contractor has previously been investigated for 
violations of the Act, whether the contractor has committed 
recordkeeping violations which impeded the investigation, whether 
liability was dependent upon resolution of a bona fide legal issue of 
doubtful certainty, the contractor's efforts to ensure compliance, the 
nature, extent, and seriousness of any past or present violations, 
including the impact of violations on unpaid employees, and whether the 
sums due were promptly paid.
    (4) A contractor has an affirmative obligation to ensure that its 
pay practices are in compliance with the Act, and cannot itself resolve 
questions which arise, but rather must seek advice from the Department 
of Labor. Murcole, Inc., Decision of the ALJ, SCA 195-198, April 10, 
1974; McLaughlin Storage, Inc., Decision of the ALJ, SCA 362-365, 
November 5, 1975, Administrator, March 25, 1976; Able Building & 
Maintenance & Service Co., Decision of the ALJ, SCA 389-390, May 29, 
1975, Assistant Secretary, January 13, 1976; Aarid Van Lines, Inc., 
Decision of the Administrator, SCA 423-425, May 13, 1977.
    (5) Furthermore, a contractor cannot be relieved from debarment by 
attempting to shift his/her responsibility to subordinate employees. 
Security Systems, Inc., Decision of the ALJ, SCA 774-775, April 10, 
1978; Ventilation & Cleaning Engineers, Inc., Decision of the Secretary, 
SCA 176, September 27, 1974; Ernest Roman, Decision of the Secretary, 
SCA 275, May 6, 1977. As the Comptroller General has stated in 
considering debarment under the Davis-Bacon Act, ``[n]egligence of the 
employer to instruct his employees as to the proper method of performing 
his work or to see that the employee obeys his instructions renders the 
employer liable for injuries to third parties resulting therefrom. * * * 
The employer will be liable for acts of his employee within the scope of 
the employment regardless of whether the acts were expressly or 
impliedly authorized. * * * Willful and malicious acts of the employee 
are imputable to the employer under the doctrine of respondeat superior 
although they might not have been consented to or expressly authorized 
or ratified by the employer.'' (Decision of the Comptroller General, B-
145608, August 1, 1961.)
    (6) Negligence per se does not constitute unusual circumstances. 
Relief on no basis other than negligence would render the effect of 
section 5(a) a nullity, since it was intended that only responsible 
bidders be awarded Government contracts. Greenwood's Transfer & Storage, 
Inc., Decision of the Secretary, SCA 321-326, June 1, 1976; Ventilation 
& Cleaning Engineers, Inc., Decision of the Secretary, SCA 176, 
September 27, 1974.
    (c) Similarly, the term substantial interest is not defined in the 
Act. Accordingly, this determination, too, must be made on a case-by-
case basis in light of the particular facts, and cognizant of the 
legislative intent ``to provide to service employees safeguards similar 
to those given to employees covered by the Walsh-Healey Public Contracts

[[Page 104]]

Act''. Federal Food Services, Inc., Decision of the ALJ, SCA 585-592, 
November 22, 1977. Thus, guidance can be obtained from cases arising 
under the Walsh-Healey Act, which uses the concept ``controlling 
interest''. See Regal Mfg. Co., Decision of the Administrator, PC-245, 
March 1, 1946; Acme Sportswear Co., Decision of the Hearing Examiner, 
PC-275, May 8, 1946; Gearcraft, Inc., Decision of the ALJ, PCX-1, May 3, 
1972. In a supplemental decision of February 23, 1979, in Federal Food 
Services, Inc. the Judge ruled as a matter of law that the term ``does 
not preclude every employment or financial relationship between a party 
under sanction and another * * * [and that] it is necessary to look 
behind titles, payments, and arrangements and examine the existing 
circumstances before reaching a conclusion in this matter.''
    (1) Where a person or firm has a direct or beneficial ownership or 
control of more than 5 percent of any firm, corporation, partnership, or 
association, a ``substantial interest'' will be deemed to exist. 
Similarly, where a person is an officer or director in a firm or the 
debarred firm shares common management with another firm, a 
``substantial interest'' will be deemed to exist. Furthermore, wherever 
a firm is an affiliate as defined in Sec. 4.1a(g) of subpart A, a 
``substantial interest'' will be deemed to exist, or where a debarred 
person forms or participates in another firm in which he/she has 
comparable authority, he/she will be deemed to have a ``substantial 
interest'' in the new firm and such new firm would also be debarred 
(Etowah Garment Co., Inc., Decision of the Hearing Examiner, PC-632, 
August 9, 1957).
    (2) Nor is interest determined by ownership alone. A debarred person 
will also be deemed to have a ``substantial interest'' in a firm if such 
person has participated in contract negotiations, is a signatory to a 
contract, or has the authority to establish, control, or manage the 
contract performance and/or the labor policies of a firm. A 
``substantial interest'' may also be deemed to exist, in other 
circumstances, after consideration of the facts of the individual case. 
Factors to be examined include, among others, sharing of common premises 
or facilities, occupying any position such as manager, supervisor, or 
consultant to, any such entity, whether compensated on a salary, bonus, 
fee, dividend, profit-sharing, or other basis of remuneration, including 
indirect compensation by virtue of family relationships or otherwise. A 
firm will be particularly closely examined where there has been an 
attempt to sever an association with a debarred firm or where the firm 
was formed by a person previously affiliated with the debarred firm or a 
relative of the debarred person.
    (3) Firms with such identity of interest with a debarred person or 
firm will be placed on the debarred bidders list after the determination 
is made pursuant to procedures in Sec. 4.12 and parts 6 and 8 of this 
title. Where a determination of such ``substantial interest'' is made 
after the initiation of the debarment period, contracting agencies are 
to terminate any contract with such firm entered into after the 
initiation of the original debarment period since all persons or firms 
in which the debarred person or firm has a substantial interest were 
also ineligible to receive Government contracts from the date of 
publication of the violating person's or firm's name on the debarred 
bidders list.



Sec. 4.189  Administrative proceedings relating to enforcement of labor standards.

    The Secretary is authorized pursuant to the provisions of section 
4(a) of the Act to hold hearings and make decisions based upon findings 
of fact as are deemed to be necessary to enforce the provisions of the 
Act. Pursuant to section 4(a) of the Act, the Secretary's findings of 
fact after notice and hearing are conclusive upon all agencies of the 
United States and, if supported by the preponderance of the evidence, 
conclusive in any court of the United States, without a trial de novo. 
United States v. Powers Building Maintenance Co., 336 F. Supp. 819 (W.D. 
Okla. 1972). Rules of practice for administrative proceedings are set 
forth in parts 6 and 8 of this title.



Sec. 4.190  Contract cancellation.

    (a) As provided in section 3 of the Act, where a violation is found 
of any

[[Page 105]]

contract stipulation, the contract is subject upon written notice to 
cancellation by the contracting agency, whereupon the United States may 
enter into other contracts or arrangements for the completion of the 
original contract, charging any additional cost to the original 
contractor.
    (b) Every contractor shall certify pursuant to Sec. 4.6(n) of 
subpart A that it is not disqualified for the award of a contract by 
virtue of its name appearing on the debarred bidders list or because any 
such currently listed person or firm has a substantial interest in said 
contractor, as described in Sec. 4.188. Upon discovery of such false 
certification or determination of substantial interest in a firm 
performing on a Government contract, as the case may be, the contract is 
similarly subject upon written notice to immediate cancellation by the 
contracting agency and any additional cost for the completion of the 
contract charged to the original contractor as specified in paragraph 
(a). Such contract is without warrant of law and has no force and effect 
and is void ab initio, 33 Comp Gen. 63; Decision of the Comptroller 
General, B-115051, August 6, 1953. Furthermore, any profit derived from 
said illegal contract is forfeited (Paisner v. U.S., 138 Ct. Cl. 420, 
150 F. Supp. 835 (1957), cert. denied, 355 U.S. 941).



Sec. 4.191  Complaints and compliance assistance.

    (a) Any employer, employee, labor or trade organization, contracting 
agency, or other interested person or organization may report to any 
office of the Wage and Hour Division (or to any office of the 
Occupational Safety and Health Administration, in instances involving 
the safety and health provisions), a violation, or apparent violation, 
of the Act, or of any of the rules or regulations prescribed thereunder. 
Such offices are also available to assist or provide information to 
contractors or subcontractors desiring to insure that their practices 
are in compliance with the Act. Information furnished is treated 
confidentially. It is the policy of the Department of Labor to protect 
the identity of its confidential sources and to prevent an unwarranted 
invasion of personal privacy. Accordingly, the identity of an employee 
who makes a confidential written or oral statement as a complaint or in 
the course of an investigation, as well as portions of the statement 
which would reveal his identity, will not be disclosed without the prior 
consent of the employee. Disclosure of employee statements shall be 
governed by the provisions of the ``Freedom of Information Act'' (5 
U.S.C. 552, see 29 CFR part 70) and the ``Privacy Act of 1974'' (5 
U.S.C. 552a).
    (b) A report of breach or violation relating solely to safety and 
health requirements may be in writing and addressed to the Regional 
Administrator of an Occupational Safety and Health Administration 
Regional Office, U.S. Department of Labor, or to the Assistant Secretary 
for Occupational Safety and Health, U.S. Department of Labor, 
Washington, DC 20210.
    (c) Any other report of breach or violation may be in writing and 
addressed to the Assistant Regional Administrator of a Wage and Hour 
Division's regional office, U.S. Department of Labor, or to the 
Administrator of the Wage and Hour Division, U.S. Department of Labor, 
Washington, DC 20210.
    (d) In the event that an Assistant Regional Administrator for the 
Wage and Hour Division, Employment Standards Administration, is notified 
of a breach or violation which also involves safety and health 
standards, the Regional Administrator of the Employment Standards 
Administration shall notify the appropriate Regional Administrator of 
the Occupational Safety and Health Administration who shall with respect 
to the safety and health violation take action commensurate with his 
responsibilities pertaining to safety and health standards.
    (e) Any report should contain the following:
    (1) The full name and address of the person or organization 
reporting the breach or violations.
    (2) The full name and address of the person against whom the report 
is made.
    (3) A clear and concise statement of the facts constituting the 
alleged breach or violation of any of the provisions of the McNamara-
O'Hara Service Contract Act, or of any of the rules or regulations 
prescribed thereunder.

[[Page 106]]



PART 5--LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS COVERING FEDERALLY FINANCED AND ASSISTED CONSTRUCTION (ALSO LABOR STANDARDS PROVISIONS APPLICABLE TO 

NONCONSTRUCTION CONTRACTS SUBJECT TO THE CONTRACT WORK HOURS AND SAFETY STANDARDS ACT)--Table of Contents




    Subpart A--Davis-Bacon and Related Acts Provisions and Procedures

Sec.
5.1  Purpose and scope.
5.2  Definitions.
5.3--5.4  [Reserved]
5.5  Contract provisions and related matters.
5.6  Enforcement.
5.7  Reports to the Secretary of Labor.
5.8  Liquidated damages under the Contract Work Hours and Safety 
          Standards Act.
5.9  Suspension of funds.
5.10  Restitution, criminal action.
5.11  Disputes concerning payment of wages.
5.12  Debarment proceedings.
5.13  Rulings and interpretations.
5.14  Variations, tolerances, and exemptions from parts 1 and 3 of this 
          subtitle and this part.
5.15  Limitations, variations, tolerances, and exemptions under the 
          Contract Work Hours and Safety Standards Act.
5.16  Training plans approved or recognized by the Department of Labor 
          prior to August 20, 1975.
5.17  Withdrawal of approval of a training program.

   Subpart B--Interpretation of the Fringe Benefits Provisions of the 
                             Davis-Bacon Act

5.20  Scope and significance of this subpart.
5.21  [Reserved]
5.22  Effect of the Davis-Bacon fringe benefits provisions.
5.23  The statutory provisions.
5.24  The basic hourly rate of pay.
5.25  Rate of contribution or cost for fringe benefits.
5.26  ``* * * contribution irrevocably made * * * to a trustee or to a 
          third person''.
5.27  ``* * * fund, plan, or program.''
5.28  Unfunded plans.
5.29  Specific fringe benefits.
5.30  Types of wage determinations.
5.31  Meeting wage determination obligations.
5.32  Overtime payments.

    Authority: 40 U.S.C. 276a-276a-7; 40 U.S.C. 276c; 40 U.S.C. 327-332; 
Reorganization Plan No. 14 of 1950, 5 U.S.C. Appendix; 5 U.S.C. 301; 29 
U.S.C. 259; and the statutes listed in Sec. 5.1(a) of this part.

    Source: 48 FR l9541, Apr. 29, 1983, unless otherwise noted.



    Subpart A--Davis-Bacon and Related Acts Provisions and Procedures

    Source: 48 FR 19540, Apr. 29, 1983, unless otherwise noted.

    Editorial Note: Nomenclature changes to Subpart A appear at 61 FR 
19984, May 3, 1996.



Sec. 5.1  Purpose and scope.

    (a) The regulations contained in this part are promulgated under the 
authority conferred upon the Secretary of Labor by Reorganization Plan 
No. 14 of 1950 and the Copeland Act in order to coordinate the 
administration and enforcement of the labor standards provisions of each 
of the following acts by the Federal agencies responsible for their 
administration and of such additional statutes as may from time to time 
confer upon the Secretary of Labor additional duties and 
responsibilities similar to those conferred upon the Secretary of Labor 
under Reorganization Plan No. 14 of 1950:

    1. The Davis-Bacon Act (sec. 1-7, 46 Stat. 1949, as amended; Pub. L. 
74-403, 40 U.S.C. 276a-276a-7).
    2. Copeland Act (40 U.S.C. 276c).
    3. The Contract Work Hours and Safety Standards Act (40 U.S.C. 327-
332).
    4. National Housing Act (sec. 212 added to c. 847, 48 Stat. 1246, by 
sec. 14, 53 Stat. 807; 12 U.S.C. 1715c and repeatedly amended).
    5. Housing Act of 1950 (college housing) (amended by Housing Act of 
1959 to add labor provisions, 73 Stat. 681; 12 U.S.C. 1749a(f)).
    6. Housing Act of 1959 (sec. 401(f) of the Housing Act of 1950 as 
amended by Pub. L. 86-372, 73 Stat. 681; 12 U.S.C. 1701q(c)(3)).
    7. Commercial Fisheries Research and Development Act of 1964 (sec. 
7, 78 Stat. 199; 16 U.S.C. 779e(b)).
    8. Library Services and Construction Act (sec. 7(a), 78 Stat. 13; 20 
U.S.C. 355c(a)(4), as amended).
    9. National Technical Institute for the Deaf Act (sec. 5(b)(5), 79 
Stat. 126; 20 U.S.C. 684(b)(5)).
    10. National Foundation on the Arts and Humanities Act of 1965 (sec. 
5(k), 79 Stat. 846 as amended; 20 U.S.C. 954(j)).
    11. Elementary and Secondary Education Act of 1965 as amended by 
Elementary and Secondary and other Education Amendments

[[Page 107]]

of 1969 (sec. 423 as added by Pub. L. 91-230, title IV, sec. 401(a)(10), 
84 Stat. 169, and renumbered sec. 433, by Pub. L. 92-318; title III, 
sec. 301(a)(1), 86 Stat. 326; 20 U.S.C. 1232(b)). Under the amendment 
coverage is extended to all programs administered by the Commissioner of 
Education.
    12. The Federal-Aid Highway Acts (72 Stat. 895, as amended by 82 
Stat. 821; 23 U.S.C. 113, as amended by the Surface Transportation 
Assistance Act of 1982, Pub. L. 97-424).
    13. Indian Self-Determination and Education Assistance Act (sec. 7, 
88 Stat. 2205; 25 U.S.C. 450e).
    14. Indian Health Care Improvement Act (sec. 303(b), 90 Stat. 1407; 
25 U.S.C. 1633(b)).
    15. Rehabilitation Act of 1973 (sec. 306(b)(5) 87 Stat. 384, 29 
U.S.C. 776(b)(5)).
    16. Comprehensive Employment and Training Act of 1973 (sec. 606, 87 
Stat. 880, renumbered sec. 706 by 88 Stat. 1845; 29 U.S.C. 986; also 
sec. 604, 88 Stat. 1846; 29 U.S.C. 964(b)(3)).
    17. State and Local Fiscal Assistance Act of 1972 (sec. 123(a)(6), 
86 Stat. 933; 31 U.S.C. 1246(a)(6)).
    18. Federal Water Pollution Control Act (sec. 513 of sec. 2, 86 
Stat. 894; 33 U.S.C. 1372).
    19. Veterans Nursing Home Care Act of 1964 (78 Stat. 502, as 
amended; 38 U.S.C. 5035(a)(8)).
    20. Postal Reorganization Act (sec. 410(b)(4)(C); 84 Stat. 726 as 
amended; 39 U.S.C. 410(b)(4)(C)).
    21. National Visitors Center Facilities Act of 1966 (sec. 110, 32 
Stat. 45; 40 U.S.C. 808).
    22. Appalachian Regional Development Act of 1965 (sec. 402, 79 Stat. 
21; 40 U.S.C. App. 402).
    23. Health Services Research, Health Statistics, and Medical 
Libraries Act of 1974 (sec. 107, see sec. 308(h)(2) thereof, 88 Stat. 
370, as amended by 90 Stat. 378; 42 U.S.C. 242m(h)(2)).
    24. Hospital Survey and Construction Act, as amended by the Hospital 
and Medical Facilities Amendments of 1964 (sec. 605(a)(5), 78 Stat. 453; 
42 U.S.C. 291e(a)(5)).
    25. Health Professions Educational Assistance Act (sec. 303(b), 90 
Stat. 2254; 42 U.S.C. 293a(g)(1)(C); also sec. 308a, 90 Stat. 2258, 42 
U.S.C. 293a(c)(7)).
    26. Nurse Training Act of 1964 (sec. 941(a)(1)(C), 89 Stat. 384; 42 
U.S.C. 296a(b)(5)).
    27. Heart Disease, Cancer, and Stroke Amendments of 1965 (sec. 904, 
as added by sec. 2, 79 Stat. 928; 42 U.S.C. 299d(b)(4)).
    28. Safe Drinking Water Act (sec. 2(a) see sec. 1450e thereof, 88 
Stat. 1691; 42 U.S.C. 300j-9(e)).
    29. National Health Planning and Resources Act (sec. 4, see sec. 
1604(b)(1)(H), 88 Stat. 2261, 42 U.S.C. 300o-3(b)(1)(H)).
    30. U.S. Housing Act of 1937, as amended and recodified (88 Stat. 
667; 42 U.S.C. 1437j).
    31. Demonstration Cities and Metropolitan Development Act of 1966 
(secs. 110, 311, 503, 1003, 80 Stat. 1259, 1270, 1277, 1284; 42 U.S.C. 
3310; 12 U.S.C. 1715c; 42 U.S.C. 1437j).
    32. Slum clearance program: Housing Act of 1949 (sec. 109, 63 Stat. 
419, as amended; 42 U.S.C. 1459).
    33. Farm housing: Housing Act of 1964 (adds sec. 516(f) to Housing 
Act of 1949 by sec. 503, 78 Stat. 797; 42 U.S.C. 1486(f)).
    34. Housing Act of 1961 (sec. 707, added by sec. 907, 79 Stat. 496, 
as amended; 42 U.S.C. 1500c-3).
    35. Defense Housing and Community Facilities and Services Act of 
1951 (sec. 310, 65 Stat. 307; 42 U.S.C. 1592i).
    36. Special Health Revenue Sharing Act of 1975 (sec. 303, see sec. 
222(a)(5) thereof, 89 Stat. 324; 42 U.S.C. 2689j(a)(5)).
    37. Economic Opportunity Act of 1964 (sec. 607, 78 Stat. 532; 42 
U.S.C. 2947).
    38. Headstart, Economic Opportunity, and Community Partnership Act 
of 1974 (sec. 11, see sec. 811 thereof, 88 Stat. 2327; 42 U.S.C. 2992a).
    39. Housing and Urban Development Act of 1965 (sec. 707, 79 Stat. 
492 as amended; 42 U.S.C. 3107).
    40. Older Americans Act of 1965 (sec. 502, Pub. L. 89-73, as amended 
by sec. 501, Pub. L. 93-29; 87 Stat. 50; 42 U.S.C. 3041a(a)(4)).
    41. Public Works and Economic Development Act of 1965 (sec. 712; 79 
Stat. 575 as amended; 42 U.S.C. 3222).
    42. Juvenile Delinquency Prevention Act (sec. 1, 86 Stat. 536; 42 
U.S.C. 3884).
    43. New Communities Act of 1968 (sec. 410, 82 Stat. 516; 42 U.S.C. 
3909).
    44. Urban Growth and New Community Development Act of 1970 (sec. 
727(f), 84 Stat. 1803; 42 U.S.C. 4529).
    45. Domestic Volunteer Service Act of 1973 (sec. 406, 87 Stat. 410; 
42 U.S.C. 5046).
    46. Housing and Community Development Act of 1974 (secs. 110, 
802(g), 88 Stat. 649, 724; 42 U.S.C. 5310, 1440(g)).
    47. Developmentally Disabled Assistance and Bill of Rights Act (sec. 
126(4), 89 Stat. 488; 42 U.S.C. 6042(4); title I, sec. 111, 89 Stat. 
491; 42 U.S.C. 6063(b)(19)).
    48. National Energy Conservation Policy Act (sec. 312, 92 Stat. 
3254; 42 U.S.C. 6371j).
    49. Public Works Employment Act of 1976 (sec. 109, 90 Stat. 1001; 42 
U.S.C. 6708; also sec. 208, 90 Stat. 1008; 42 U.S.C. 6728).
    50. Energy Conservation and Production Act (sec. 451(h), 90 Stat. 
1168; 42 U.S.C. 6881(h)).
    51. Solid Waste Disposal Act (sec. 2, 90 Stat. 2823; 42 U.S.C. 
6979).
    52. Rail Passenger Service Act of 1970 (sec. 405d, 84 Stat. 1337; 45 
U.S.C. 565(d)).
    53. Urban Mass Transportation Act of 1964 (sec. 10, 78 Stat. 307; 
renumbered sec. 13 by 88 Stat. 715; 49 U.S.C. 1609).
    54. Highway Speed Ground Transportation Study (sec. 6(b), 79 Stat. 
893; 49 U.S.C. 1636(b)).

[[Page 108]]

    55. Airport and Airway Development Act of 1970 (sec. 22(b), 84 Stat. 
231; 49 U.S.C. 1722(b)).
    56. Federal Civil Defense Act of 1950 (50 U.S.C. App. 2281i).
    57. National Capital Transportation Act of 1965 (sec. 3(b)(4), 79 
Stat. 644; 40 U.S.C. 682(b)(4). Note.-- Repealed December 9, 1969, and 
labor standards incorporated in sec. 1-1431 of the District of Columbia 
Code).
    58. Model Secondary School for the Deaf Act (sec. 4, 80 Stat. 1027, 
Pub. L. 89-694, but not in the United States Code).
    59. Delaware River Basin Compact (sec. 15.1, 75 Stat. 714, Pub. L. 
87-328) (considered a statute for purposes of the plan but not in the 
United States Code).
    60. Energy Security Act (sec. 175(c), Pub. L. 96-294, 94 Stat. 611; 
42 U.S.C. 8701 note).

    (b) Part 1 of this subtitle contains the Department's procedural 
rules governing requests for wage determinations and the issuance and 
use of such wage determinations under the Davis-Bacon Act and its 
related statutes as listed in that part.



Sec. 5.2  Definitions.

    (a) The term Secretary includes the Secretary of Labor, the Deputy 
Under Secretary for Employment Standards, and their authorized 
representatives.
    (b) The term Administrator means the Administrator of the Wage and 
Hour Division, Employment Standards Administration, U.S. Department of 
Labor, or authorized representative.
    (c) The term Federal agency means the agency or instrumentality of 
the United States which enters into the contract or provides assistance 
through loan, grant, loan guarantee or insurance, or otherwise, to the 
project subject to a statute listed in Sec. 5.1.
    (d) The term Agency Head means the principal official of the Federal 
agency and includes those persons duly authorized to act in the behalf 
of the Agency Head.
    (e) The term Contracting Officer means the individual, a duly 
appointed successor, or authorized representative who is designated and 
authorized to enter into contracts on behalf of the Federal agency.
    (f) The term labor standards as used in this part means the 
requirements of the Davis-Bacon Act, the Contract Work Hours and Safety 
Standards Act (other than those relating to safety and health), the 
Copeland Act, and the prevailing wage provisions of the other statutes 
listed in Sec. 5.1, and the regulations in parts 1 and 3 of this 
subtitle and this part.
    (g) The term United States or the District of Columbia means the 
United States, the District of Columbia, and all executive departments, 
independent establishments, administrative agencies, and 
instrumentalities of the United States and of the District of Columbia, 
including corporations, all or substantially all of the stock of which 
is beneficially owned by the United States, by the foregoing 
departments, establishments, agencies, instrumentalities, and including 
nonappropriated fund instrumentalities.
    (h) The term contract means any prime contract which is subject 
wholly or in part to the labor standards provisions of any of the acts 
listed in Sec. 5.1 and any subcontract of any tier thereunder, let under 
the prime contract. A State or local Government is not regarded as a 
contractor under statutes providing loans, grants, or other Federal 
assistance in situations where construction is performed by its own 
employees. However, under statutes requiring payment of prevailing wages 
to all laborers and mechanics employed on the assisted project, such as 
the U.S. Housing Act of 1937, State and local recipients of Federal-aid 
must pay these employees according to Davis-Bacon labor standards.
    (i) The terms building or work generally include construction 
activity as distinguished from manufacturing, furnishing of materials, 
or servicing and maintenance work. The terms include without limitation, 
buildings, structures, and improvements of all types, such as bridges, 
dams, plants, highways, parkways, streets, subways, tunnels, sewers, 
mains, power lines, pumping stations, heavy generators, railways, 
airports, terminals, docks, piers, wharves, ways, lighthouses, buoys, 
jetties, breakwaters, levees, canals, dredging, shoring, rehabilitation 
and reactivation of plants, scaffolding, drilling, blasting, excavating, 
clearing, and landscaping. The manufacture or furnishing of materials, 
articles, supplies or equipment (whether or not a Federal or State 
agency acquires title to such

[[Page 109]]

materials, articles, supplies, or equipment during the course of the 
manufacture or furnishing, or owns the materials from which they are 
manufactured or furnished) is not a building or work within the meaning 
of the regulations in this part unless conducted in connection with and 
at the site of such a building or work as is described in the foregoing 
sentence, or under the United States Housing Act of 1937 and the Housing 
Act of 1949 in the construction or development of the project.
    (j) The terms construction, prosecution, completion, or repair mean 
the following:
    (1) All types of work done on a particular building or work at the 
site thereof, including work at a facility which is deemed a part of the 
site of the work within the meaning of (paragraph (l) of this section by 
laborers and mechanics employed by a construction contractor or 
construction subcontractor (or, under the United States Housing Act of 
1937; the Housing Act of 1949; and the Native American Housing 
Assistance and Self-Determination Act of 1996, all work done in the 
construction or development of the project), including without 
limitation--
    (i) Altering, remodeling, installation (where appropriate) on the 
site of the work of items fabricated off-site;
    (ii) Painting and decorating;
    (iii) Manufacturing or furnishing of materials, articles, supplies 
or equipment on the site of the building or work (or, under the United 
States Housing Act of 1937; the Housing Act of 1949; and the Native 
American Housing Assistance and Self-Determination Act of 1996 in the 
construction or development of the project);
    (iv)(A) Transportation between the site of the work within the 
meaning of paragraph (l)(1) of this section and a facility which is 
dedicated to the construction of the building or work and deemed a part 
of the site of the work within the meaning of paragraph (l)(2) of this 
section; and
    (B) Transportation of portion(s) of the building or work between a 
site where a significant portion of such building or work is 
constructed, which is a part of the site of the work within the meaning 
of paragraph (l)(1) of this section, and the physical place or places 
where the building or work will remain.
    (2) Except for laborers and mechanics employed in the construction 
or development of the project under the United States Housing Act of 
1937; the Housing Act of 1949; and the Native American Housing 
Assistance and Self-Determination Act of 1996, and except as provided in 
paragraph (j)(1)(iv)(A) of this section, the transportation of materials 
or supplies to or from the site of the work by employees of the 
construction contractor or a construction subcontractor is not 
``construction, prosecution, completion, or repair'' (see Building and 
Construction Trades Department, AFL-CIO v. United States Department of 
Labor Wage Appeals Board (Midway Excavators, Inc.), 932 F.2d 985 (D.C. 
Cir. 1991)).
    (k) The term public building or public work includes building or 
work, the construction, prosecution, completion, or repair of which, as 
defined above, is carried on directly by authority of or with funds of a 
Federal agency to serve the interest of the general public regardless of 
whether title thereof is in a Federal agency.
    (l) The term site of the work is defined as follows:
    (1) The site of the work is the physical place or places where the 
building or work called for in the contract will remain; and any other 
site where a significant portion of the building or work is constructed, 
provided that such site is established specifically for the performance 
of the contract or project;
    (2) Except as provided in paragraph (l)(3) of this section, job 
headquarters, tool yards, batch plants, borrow pits, etc., are part of 
the site of the work, provided they are dedicated exclusively, or nearly 
so, to performance of the contract or project, and provided they are 
adjacent or virtually adjacent to the site of the work as defined in 
paragraph (l)(1) of this section;
    (3) Not included in the site of the work are permanent home offices, 
branch plant establishments, fabrication plants, tool yards, etc., of a 
contractor or subcontractor whose location and continuance in operation 
are determined wholly without regard to a particular Federal or 
federally assisted

[[Page 110]]

contract or project. In addition, fabrication plants, batch plants, 
borrow pits, job headquarters, tool yards, etc., of a commercial or 
material supplier, which are established by a supplier of materials for 
the project before opening of bids and not on the site of the work as 
stated in paragraph (l)(1) of this section, are not included in the site 
of the work. Such permanent, previously established facilities are not 
part of the site of the work, even where the operations for a period of 
time may be dedicated exclusively, or nearly so, to the performance of a 
contract.
    (m) The term laborer or mechanic includes at least those workers 
whose duties are manual or physical in nature (including those workers 
who use tools or who are performing the work of a trade), as 
distinguished from mental or managerial. The term laborer or mechanic 
includes apprentices, trainees, helpers, and, in the case of contracts 
subject to the Contract Work Hours and Safety Standards Act, watchmen or 
guards. The term does not apply to workers whose duties are primarily 
administrative, executive, or clerical, rather than manual. Persons 
employed in a bona fide executive, administrative, or professional 
capacity as defined in part 541 of this title are not deemed to be 
laborers or mechanics. Working foremen who devote more than 20 percent 
of their time during a workweek to mechanic or laborer duties, and who 
do not meet the criteria of part 541, are laborers and mechanics for the 
time so spent.
    (n) The terms apprentice, trainee, and helper are defined as 
follows:
    (1) Apprentice means (i) a person employed and individually 
registered in a bona fide apprenticeship program registered with the 
U.S. Department of Labor, Employment and Training Administration, Office 
of Apprenticeship Training, Employer and Labor Services, or with a State 
Apprenticeship Agency recognized by the Bureau, or (ii) a person in the 
first 90 days of probationary employment as an apprentice in such an 
apprenticeship program, who is not individually registered in the 
program, but who has been certified by the Office of Apprenticeship 
Training, Employer and Labor Services or a State Apprenticeship Agency 
(where appropriate) to be eligible for probationary employment as an 
apprentice;
    (2) Trainee means a person registered and receiving on-the-job 
training in a construction occupation under a program which has been 
approved in advance by the U.S. Department of Labor, Employment and 
Training Administration, as meeting its standards for on-the-job 
training programs and which has been so certified by that 
Administration.
    (3) These provisions do not apply to apprentices and trainees 
employed on projects subject to 23 U.S.C. 113 who are enrolled in 
programs which have been certified by the Secretary of Transportation in 
accordance with 23 U.S.C. 113(c).
    (4) A distinct classification of ``helper'' will be issued in wage 
determinations applicable to work performed on construction projects 
covered by the labor standards provisions of the Davis-Bacon and Related 
Acts only where:
    (i) The duties of the helper are clearly defined and distinct from 
those of any other classification on the wage determination;
    (ii) The use of such helpers is an established prevailing practice 
in the area; and
    (iii) The helper is not employed as a trainee in an informal 
training program. A ``helper'' classification will be added to wage 
determinations pursuant to Sec. 5.5(a)(1)(ii)(A) only where, in 
addition, the work to be performed by the helper is not performed by a 
classification in the wage determination.
    (o) Every person performing the duties of a laborer or mechanic in 
the construction, prosecution, completion, or repair of a public 
building or public work, or building or work financed in whole or in 
part by loans, grants, or guarantees from the United States is employed 
regardless of any contractual relationship alleged to exist between the 
contractor and such person.
    (p) The term wages means the basic hourly rate of pay; any 
contribution irrevocably made by a contractor or subcontractor to a 
trustee or to a third person pursuant to a bona fide fringe benefit 
fund, plan, or program; and the

[[Page 111]]

rate of costs to the contractor or subcontractor which may be reasonably 
anticipated in providing bona fide fringe benefits to laborers and 
mechanics pursuant to an enforceable commitment to carry out a 
financially responsible plan of program, which was communicated in 
writing to the laborers and mechanics affected. The fringe benefits 
enumerated in the Davis-Bacon Act include medical or hospital care, 
pensions on retirement or death, compensation for injuries or illness 
resulting from occupational activity, or insurance to provide any of the 
foregoing; unemployment benefits; life insurance, disability insurance, 
sickness insurance, or accident insurance; vacation or holiday pay; 
defraying costs of apprenticeship or other similar programs; or other 
bona fide fringe benefits. Fringe benefits do not include benefits 
required by other Federal, State, or local law.
    (q) The term wage determination includes the original decision and 
any subsequent decisions modifying, superseding, correcting, or 
otherwise changing the provisions of the original decision. The 
application of the wage determination shall be in accordance with the 
provisions of Sec. 1.6 of this title.

[48 FR 19541, Apr. 29, 1983, as amended at 48 FR 50313, Nov. 1, 1983; 55 
FR 50149, Dec. 4, 1990; 57 FR 19206, May 4, 1992; 65 FR 69693, Nov. 20, 
2000; 65 FR 80278, Dec. 20, 2000]



Secs. 5.3--5.4  [Reserved]



Sec. 5.5  Contract provisions and related matters.

    (a) The Agency head shall cause or require the contracting officer 
to insert in full in any contract in excess of $2,000 which is entered 
into for the actual construction, alteration and/or repair, including 
painting and decorating, of a public building or public work, or 
building or work financed in whole or in part from Federal funds or in 
accordance with guarantees of a Federal agency or financed from funds 
obtained by pledge of any contract of a Federal agency to make a loan, 
grant or annual contribution (except where a different meaning is 
expressly indicated), and which is subject to the labor standards 
provisions of any of the acts listed in Sec. 5.1, the following clauses 
(or any modifications thereof to meet the particular needs of the 
agency, Provided, That such modifications are first approved by the 
Department of Labor):
    (1) Minimum wages. (i) All laborers and mechanics employed or 
working upon the site of the work (or under the United States Housing 
Act of 1937 or under the Housing Act of 1949 in the construction or 
development of the project), will be paid unconditionally and not less 
often than once a week, and without subsequent deduction or rebate on 
any account (except such payroll deductions as are permitted by 
regulations issued by the Secretary of Labor under the Copeland Act (29 
CFR part 3)), the full amount of wages and bona fide fringe benefits (or 
cash equivalents thereof) due at time of payment computed at rates not 
less than those contained in the wage determination of the Secretary of 
Labor which is attached hereto and made a part hereof, regardless of any 
contractual relationship which may be alleged to exist between the 
contractor and such laborers and mechanics.

Contributions made or costs reasonably anticipated for bona fide fringe 
benefits under section 1(b)(2) of the Davis-Bacon Act on behalf of 
laborers or mechanics are considered wages paid to such laborers or 
mechanics, subject to the provisions of paragraph (a)(1)(iv) of this 
section; also, regular contributions made or costs incurred for more 
than a weekly period (but not less often than quarterly) under plans, 
funds, or programs which cover the particular weekly period, are deemed 
to be constructively made or incurred during such weekly period. Such 
laborers and mechanics shall be paid the appropriate wage rate and 
fringe benefits on the wage determination for the classification of work 
actually performed, without regard to skill, except as provided in 
Sec. 5.5(a)(4). Laborers or mechanics performing work in more than one 
classification may be compensated at the rate specified for each 
classification for the time actually worked therein: Provided, That the 
employer's payroll records accurately set forth the time spent in each 
classification in which work is performed. The wage determination 
(including any additional

[[Page 112]]

classification and wage rates conformed under paragraph (a)(1)(ii) of 
this section) and the Davis-Bacon poster (WH-1321) shall be posted at 
all times by the contractor and its subcontractors at the site of the 
work in a prominent and accessible place where it can be easily seen by 
the workers.
    (ii)(A) The contracting officer shall require that any class of 
laborers or mechanics, including helpers, which is not listed in the 
wage determination and which is to be employed under the contract shall 
be classified in conformance with the wage determination. The 
contracting officer shall approve an additional classification and wage 
rate and fringe benefits therefore only when the following criteria have 
been met:
    (1) The work to be performed by the classification requested is not 
performed by a classification in the wage determination; and
    (2) The classification is utilized in the area by the construction 
industry; and
    (3) The proposed wage rate, including any bona fide fringe benefits, 
bears a reasonable relationship to the wage rates contained in the wage 
determination.
    (B) If the contractor and the laborers and mechanics to be employed 
in the classification (if known), or their representatives, and the 
contracting officer agree on the classification and wage rate (including 
the amount designated for fringe benefits where appropriate), a report 
of the action taken shall be sent by the contracting officer to the 
Administrator of the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, Washington, DC 20210. The 
Administrator, or an authorized representative, will approve, modify, or 
disapprove every additional classification action within 30 days of 
receipt and so advise the contracting officer or will notify the 
contracting officer within the 30-day period that additional time is 
necessary.
    (C) In the event the contractor, the laborers or mechanics to be 
employed in the classification or their representatives, and the 
contracting officer do not agree on the proposed classification and wage 
rate (including the amount designated for fringe benefits, where 
appropriate), the contracting officer shall refer the questions, 
including the views of all interested parties and the recommendation of 
the contracting officer, to the Administrator for determination. The 
Administrator, or an authorized representative, will issue a 
determination within 30 days of receipt and so advise the contracting 
officer or will notify the contracting officer within the 30-day period 
that additional time is necessary.
    (D) The wage rate (including fringe benefits where appropriate) 
determined pursuant to paragraphs (a)(1)(ii) (B) or (C) of this section, 
shall be paid to all workers performing work in the classification under 
this contract from the first day on which work is performed in the 
classification.
    (iii) Whenever the minimum wage rate prescribed in the contract for 
a class of laborers or mechanics includes a fringe benefit which is not 
expressed as an hourly rate, the contractor shall either pay the benefit 
as stated in the wage determination or shall pay another bona fide 
fringe benefit or an hourly cash equivalent thereof.
    (iv) If the contractor does not make payments to a trustee or other 
third person, the contractor may consider as part of the wages of any 
laborer or mechanic the amount of any costs reasonably anticipated in 
providing bona fide fringe benefits under a plan or program, Provided, 
That the Secretary of Labor has found, upon the written request of the 
contractor, that the applicable standards of the Davis-Bacon Act have 
been met. The Secretary of Labor may require the contractor to set aside 
in a separate account assets for the meeting of obligations under the 
plan or program.
    (2) Withholding. The (write in name of Federal Agency or the loan or 
grant recipient) shall upon its own action or upon written request of an 
authorized representative of the Department of Labor withhold or cause 
to be withheld from the contractor under this contract or any other 
Federal contract with the same prime contractor, or any other federally-
assisted contract subject to Davis-Bacon prevailing wage requirements, 
which is held by the same prime contractor, so much of the accrued 
payments or advances as may be

[[Page 113]]

considered necessary to pay laborers and mechanics, including 
apprentices, trainees, and helpers, employed by the contractor or any 
subcontractor the full amount of wages required by the contract. In the 
event of failure to pay any laborer or mechanic, including any 
apprentice, trainee, or helper, employed or working on the site of the 
work (or under the United States Housing Act of 1937 or under the 
Housing Act of 1949 in the construction or development of the project), 
all or part of the wages required by the contract, the (Agency) may, 
after written notice to the contractor, sponsor, applicant, or owner, 
take such action as may be necessary to cause the suspension of any 
further payment, advance, or guarantee of funds until such violations 
have ceased.
    (3) Payrolls and basic records. (i) Payrolls and basic records 
relating thereto shall be maintained by the contractor during the course 
of the work and preserved for a period of three years thereafter for all 
laborers and mechanics working at the site of the work (or under the 
United States Housing Act of 1937, or under the Housing Act of 1949, in 
the construction or development of the project). Such records shall 
contain the name, address, and social security number of each such 
worker, his or her correct classification, hourly rates of wages paid 
(including rates of contributions or costs anticipated for bona fide 
fringe benefits or cash equivalents thereof of the types described in 
section 1(b)(2)(B) of the Davis-Bacon Act), daily and weekly number of 
hours worked, deductions made and actual wages paid. Whenever the 
Secretary of Labor has found under 29 CFR 5.5(a)(1)(iv) that the wages 
of any laborer or mechanic include the amount of any costs reasonably 
anticipated in providing benefits under a plan or program described in 
section 1(b)(2)(B) of the Davis-Bacon Act, the contractor shall maintain 
records which show that the commitment to provide such benefits is 
enforceable, that the plan or program is financially responsible, and 
that the plan or program has been communicated in writing to the 
laborers or mechanics affected, and records which show the costs 
anticipated or the actual cost incurred in providing such benefits. 
Contractors employing apprentices or trainees under approved programs 
shall maintain written evidence of the registration of apprenticeship 
programs and certification of trainee programs, the registration of the 
apprentices and trainees, and the ratios and wage rates prescribed in 
the applicable programs.
    (ii)(A) The contractor shall submit weekly for each week in which 
any contract work is performed a copy of all payrolls to the (write in 
name of appropriate Federal agency) if the agency is a party to the 
contract, but if the agency is not such a party, the contractor will 
submit the payrolls to the applicant, sponsor, or owner, as the case may 
be, for transmission to the (write in name of agency). The payrolls 
submitted shall set out accurately and completely all of the information 
required to be maintained under Sec. 5.5(a)(3)(i) of Regulations, 29 CFR 
part 5. This information may be submitted in any form desired. Optional 
Form WH-347 is available for this purpose and may be purchased from the 
Superintendent of Documents (Federal Stock Number 029-005-00014-1), U.S. 
Government Printing Office, Washington, DC 20402. The prime contractor 
is responsible for the submission of copies of payrolls by all 
subcontractors.
    (B) Each payroll submitted shall be accompanied by a ``Statement of 
Compliance,'' signed by the contractor or subcontractor or his or her 
agent who pays or supervises the payment of the persons employed under 
the contract and shall certify the following:
    (1) That the payroll for the payroll period contains the information 
required to be maintained under Sec. 5.5(a)(3)(i) of Regulations, 29 CFR 
part 5 and that such information is correct and complete;
    (2) That each laborer or mechanic (including each helper, 
apprentice, and trainee) employed on the contract during the payroll 
period has been paid the full weekly wages earned, without rebate, 
either directly or indirectly, and that no deductions have been made 
either directly or indirectly from the full wages earned, other than 
permissible deductions as set forth in Regulations, 29 CFR part 3;

[[Page 114]]

    (3) That each laborer or mechanic has been paid not less than the 
applicable wage rates and fringe benefits or cash equivalents for the 
classification of work performed, as specified in the applicable wage 
determination incorporated into the contract.
    (C) The weekly submission of a properly executed certification set 
forth on the reverse side of Optional Form WH-347 shall satisfy the 
requirement for submission of the ``Statement of Compliance'' required 
by paragraph (a)(3)(ii)(B) of this section.
    (D) The falsification of any of the above certifications may subject 
the contractor or subcontractor to civil or criminal prosecution under 
section 1001 of title 18 and section 231 of title 31 of the United 
States Code.
    (iii) The contractor or subcontractor shall make the records 
required under paragraph (a)(3)(i) of this section available for 
inspection, copying, or transcription by authorized representatives of 
the (write the name of the agency) or the Department of Labor, and shall 
permit such representatives to interview employees during working hours 
on the job. If the contractor or subcontractor fails to submit the 
required records or to make them available, the Federal agency may, 
after written notice to the contractor, sponsor, applicant, or owner, 
take such action as may be necessary to cause the suspension of any 
further payment, advance, or guarantee of funds. Furthermore, failure to 
submit the required records upon request or to make such records 
available may be grounds for debarment action pursuant to 29 CFR 5.12.
    (4) Apprentices and trainees--(i) Apprentices. Apprentices will be 
permitted to work at less than the predetermined rate for the work they 
performed when they are employed pursuant to and individually registered 
in a bona fide apprenticeship program registered with the U.S. 
Department of Labor, Employment and Training Administration, Office of 
Apprenticeship Training, Employer and Labor Services, or with a State 
Apprenticeship Agency recognized by the Office, or if a person is 
employed in his or her first 90 days of probationary employment as an 
apprentice in such an apprenticeship program, who is not individually 
registered in the program, but who has been certified by the Office of 
Apprenticeship Training, Employer and Labor Services or a State 
Apprenticeship Agency (where appropriate) to be eligible for 
probationary employment as an apprentice. The allowable ratio of 
apprentices to journeymen on the job site in any craft classification 
shall not be greater than the ratio permitted to the contractor as to 
the entire work force under the registered program. Any worker listed on 
a payroll at an apprentice wage rate, who is not registered or otherwise 
employed as stated above, shall be paid not less than the applicable 
wage rate on the wage determination for the classification of work 
actually performed. In addition, any apprentice performing work on the 
job site in excess of the ratio permitted under the registered program 
shall be paid not less than the applicable wage rate on the wage 
determination for the work actually performed. Where a contractor is 
performing construction on a project in a locality other than that in 
which its program is registered, the ratios and wage rates (expressed in 
percentages of the journeyman's hourly rate) specified in the 
contractor's or subcontractor's registered program shall be observed. 
Every apprentice must be paid at not less than the rate specified in the 
registered program for the apprentice's level of progress, expressed as 
a percentage of the journeymen hourly rate specified in the applicable 
wage determination. Apprentices shall be paid fringe benefits in 
accordance with the provisions of the apprenticeship program. If the 
apprenticeship program does not specify fringe benefits, apprentices 
must be paid the full amount of fringe benefits listed on the wage 
determination for the applicable classification. If the Administrator 
determines that a different practice prevails for the applicable 
apprentice classification, fringes shall be paid in accordance with that 
determination. In the event the Office of Apprenticeship Training, 
Employer and Labor Services, or a State Apprenticeship Agency recognized 
by the Office, withdraws approval of an apprenticeship program, the 
contractor will no longer be permitted to utilize apprentices at less 
than the applicable predetermined rate

[[Page 115]]

for the work performed until an acceptable program is approved.
    (ii) Trainees. Except as provided in 29 CFR 5.16, trainees will not 
be permitted to work at less than the predetermined rate for the work 
performed unless they are employed pursuant to and individually 
registered in a program which has received prior approval, evidenced by 
formal certification by the U.S. Department of Labor, Employment and 
Training Administration. The ratio of trainees to journeymen on the job 
site shall not be greater than permitted under the plan approved by the 
Employment and Training Administration. Every trainee must be paid at 
not less than the rate specified in the approved program for the 
trainee's level of progress, expressed as a percentage of the journeyman 
hourly rate specified in the applicable wage determination. Trainees 
shall be paid fringe benefits in accordance with the provisions of the 
trainee program. If the trainee program does not mention fringe 
benefits, trainees shall be paid the full amount of fringe benefits 
listed on the wage determination unless the Administrator of the Wage 
and Hour Division determines that there is an apprenticeship program 
associated with the corresponding journeyman wage rate on the wage 
determination which provides for less than full fringe benefits for 
apprentices. Any employee listed on the payroll at a trainee rate who is 
not registered and participating in a training plan approved by the 
Employment and Training Administration shall be paid not less than the 
applicable wage rate on the wage determination for the classification of 
work actually performed. In addition, any trainee performing work on the 
job site in excess of the ratio permitted under the registered program 
shall be paid not less than the applicable wage rate on the wage 
determination for the work actually performed. In the event the 
Employment and Training Administration withdraws approval of a training 
program, the contractor will no longer be permitted to utilize trainees 
at less than the applicable predetermined rate for the work performed 
until an acceptable program is approved.
    (iii) Equal employment opportunity. The utilization of apprentices, 
trainees and journeymen under this part shall be in conformity with the 
equal employment opportunity requirements of Executive Order 11246, as 
amended, and 29 CFR part 30.
    (5) Compliance with Copeland Act requirements. The contractor shall 
comply with the requirements of 29 CFR part 3, which are incorporated by 
reference in this contract.
    (6) Subcontracts. The contractor or subcontractor shall insert in 
any subcontracts the clauses contained in 29 CFR 5.5(a)(1) through (10) 
and such other clauses as the (write in the name of the Federal agency) 
may by appropriate instructions require, and also a clause requiring the 
subcontractors to include these clauses in any lower tier subcontracts. 
The prime contractor shall be responsible for the compliance by any 
subcontractor or lower tier subcontractor with all the contract clauses 
in 29 CFR 5.5.
    (7) Contract termination: debarment. A breach of the contract 
clauses in 29 CFR 5.5 may be grounds for termination of the contract, 
and for debarment as a contractor and a subcontractor as provided in 29 
CFR 5.12.
    (8) Compliance with Davis-Bacon and Related Act requirements. All 
rulings and interpretations of the Davis-Bacon and Related Acts 
contained in 29 CFR parts 1, 3, and 5 are herein incorporated by 
reference in this contract.
    (9) Disputes concerning labor standards. Disputes arising out of the 
labor standards provisions of this contract shall not be subject to the 
general disputes clause of this contract. Such disputes shall be 
resolved in accordance with the procedures of the Department of Labor 
set forth in 29 CFR parts 5, 6, and 7. Disputes within the meaning of 
this clause include disputes between the contractor (or any of its 
subcontractors) and the contracting agency, the U.S. Department of 
Labor, or the employees or their representatives.
    (10) Certification of eligibility. (i) By entering into this 
contract, the contractor certifies that neither it (nor he or she) nor 
any person or firm who has an interest in the contractor's firm is a 
person or firm ineligible to be awarded

[[Page 116]]

Government contracts by virtue of section 3(a) of the Davis-Bacon Act or 
29 CFR 5.12(a)(1).
    (ii) No part of this contract shall be subcontracted to any person 
or firm ineligible for award of a Government contract by virtue of 
section 3(a) of the Davis-Bacon Act or 29 CFR 5.12(a)(1).
    (iii) The penalty for making false statements is prescribed in the 
U.S. Criminal Code, 18 U.S.C. 1001.
    (b) Contract Work Hours and Safety Standards Act. The Agency Head 
shall cause or require the contracting officer to insert the following 
clauses set forth in paragraphs (b)(1), (2), (3), and (4) of this 
section in full in any contract in an amount in excess of $100,000 and 
subject to the overtime provisions of the Contract Work Hours and Safety 
Standards Act. These clauses shall be inserted in addition to the 
clauses required by Sec. 5.5(a) or 4.6 of part 4 of this title. As used 
in this paragraph, the terms laborers and mechanics include watchmen and 
guards.
    (1) Overtime requirements. No contractor or subcontractor 
contracting for any part of the conract work which may require or 
involve the employment of laborers or mechanics shall require or permit 
any such laborer or mechanic in any workweek in which he or she is 
employed on such work to work in excess of forty hours in such workweek 
unless such laborer or mechanic receives compensation at a rate not less 
than one and one-half times the basic rate of pay for all hours worked 
in excess of forty hours in such workweek.
    (2) Violation; liability for unpaid wages; liquidated damages. In 
the event of any violation of the clause set forth in paragraph (b)(1) 
of this section the contractor and any subcontractor responsible 
therefor shall be liable for the unpaid wages. In addition, such 
contractor and subcontractor shall be liable to the United States (in 
the case of work done under contract for the District of Columbia or a 
territory, to such District or to such territory), for liquidated 
damages. Such liquidated damages shall be computed with respect to each 
individual laborer or mechanic, including watchmen and guards, employed 
in violation of the clause set forth in paragraph (b)(1) of this 
section, in the sum of $10 for each calendar day on which such 
individual was required or permitted to work in excess of the standard 
workweek of forty hours without payment of the overtime wages required 
by the clause set forth in paragraph (b)(1) of this section.
    (3) Withholding for unpaid wages and liquidated damages. The (write 
in the name of the Federal agency or the loan or grant recipient) shall 
upon its own action or upon written request of an authorized 
representative of the Department of Labor withhold or cause to be 
withheld, from any moneys payable on account of work performed by the 
contractor or subcontractor under any such contract or any other Federal 
contract with the same prime contractor, or any other federally-assisted 
contract subject to the Contract Work Hours and Safety Standards Act, 
which is held by the same prime contractor, such sums as may be 
determined to be necessary to satisfy any liabilities of such contractor 
or subcontractor for unpaid wages and liquidated damages as provided in 
the clause set forth in paragraph (b)(2) of this section.
    (4) Subcontracts. The contractor or subcontractor shall insert in 
any subcontracts the clauses set forth in paragraph (b)(1) through (4) 
of this section and also a clause requiring the subcontractors to 
include these clauses in any lower tier subcontracts. The prime 
contractor shall be responsible for compliance by any subcontractor or 
lower tier subcontractor with the clauses set forth in paragraphs (b)(1) 
through (4) of this section.
    (c) In addition to the clauses contained in paragraph (b), in any 
contract subject only to the Contract Work Hours and Safety Standards 
Act and not to any of the other statutes cited in Sec. 5.1, the Agency 
Head shall cause or require the contracting officer to insert a clause 
requiring that the contractor or subcontractor shall maintain payrolls 
and basic payroll records during the course of the work and shall 
preserve them for a period of three years from the completion of the 
contract for all laborers and mechanics, including guards and watchmen, 
working on the contract. Such records shall contain the name and address 
of

[[Page 117]]

each such employee, social security number, correct classifications, 
hourly rates of wages paid, daily and weekly number of hours worked, 
deductions made, and actual wages paid. Further, the Agency Head shall 
cause or require the contracting officer to insert in any such contract 
a clause providing that the records to be maintained under this 
paragraph shall be made available by the contractor or subcontractor for 
inspection, copying, or transcription by authorized representatives of 
the (write the name of agency) and the Department of Labor, and the 
contractor or subcontractor will permit such representatives to 
interview employees during working hours on the job.

(The information collection, recordkeeping, and reporting requirements 
contained in the following paragraphs of this section were approved by 
the Office of Management and Budget:

------------------------------------------------------------------------
                                                             OMB Control
                         Paragraph                              Number
------------------------------------------------------------------------
(a)(1)(ii)(B)..............................................    1215-0140
(a)(1)(ii)(C)..............................................    1215-0140
(a)(1)(iv).................................................    1215-0140
(a)(3)(i)..................................................   1215-0140,
                                                               1215-0017
(a)(3)(ii)(A)..............................................    1215-0149
(c)........................................................   1215-0140,
                                                               1215-0017
------------------------------------------------------------------------


[48 FR 19540, Apr. 29, 1983, as amended at 51 FR 12265, Apr. 9, 1986; 55 
FR 50150, Dec. 4, 1990; 57 FR 28776, June 26, 1992; 58 FR 58955, Nov. 5, 
1993; 61 FR 40716, Aug. 5, 1996; 65 FR 69693, Nov. 20, 2000]

    Effective Date Note: At 58 FR 58955, Nov. 5, 1993, Sec. 5.5 was 
amended by suspending paragraph (a)(1)(ii) indefinitely.



Sec. 5.6  Enforcement.

    (a)(1) It shall be the responsibility of the Federal agency to 
ascertain whether the clauses required by Sec. 5.5 have been inserted in 
the contracts subject to the labor standards provisions of the Acts 
contained in Sec. 5.1. Agencies which do not directly enter into such 
contracts shall promulgate the necessary regulations or procedures to 
require the recipient of the Federal assistance to insert in its 
contracts the provisions of Sec. 5.5. No payment, advance, grant, loan, 
or guarantee of funds shall be approved by the Federal agency unless the 
agency insures that the clauses required by Sec. 5.5 and the appropriate 
wage determination of the Secretary of Labor are contained in such 
contracts. Furthermore, no payment, advance, grant, loan, or guarantee 
of funds shall be approved by the Federal agency after the beginning of 
construction unless there is on file with the agency a certification by 
the contractor that the contractor and its subcontractors have complied 
with the provisions of Sec. 5.5 or unless there is on file with the 
agency a certification by the contractor that there is a substantial 
dispute with respect to the required provisions.
    (2) Payrolls and Statements of Compliance submitted pursuant to 
Sec. 5.5(a)(3)(ii) shall be preserved by the Federal agency for a period 
of 3 years from the date of completion of the contract and shall be 
produced at the request of the Department of Labor at any time during 
the 3-year period.
    (3) The Federal agency shall cause such investigations to be made as 
may be necessary to assure compliance with the labor standards clauses 
required by Sec. 5.5 and the applicable statutes listed in Sec. 5.1. 
Investigations shall be made of all contracts with such frequency as may 
be necessary to assure compliance. Such investigations shall include 
interviews with employees, which shall be taken in confidence, and 
examinations of payroll data and evidence of registration and 
certification with respect to apprenticeship and training plans. In 
making such examinations, particular care shall be taken to determine 
the correctness of classifications and to determine whether there is a 
disproportionate employment of laborers and of apprentices or trainees 
registered in approved programs. Such investigations shall also include 
evidence of fringe benefit plans and payments thereunder. Complaints of 
alleged violations shall be given priority.
    (4) In accordance with normal operating procedures, the contracting 
agency may be furnished various investigatory material from the 
investigation files of the Department of Labor. None of the material, 
other than computations of back wages and liquidated damages and the 
summary of back wages due, may be disclosed in any manner to anyone 
other than Federal officials charged with administering

[[Page 118]]

the contract or program providing Federal assistance to the contract, 
without requesting the permission and views of the Department of Labor.
    (5) It is the policy of the Department of Labor to protect the 
identity of its confidential sources and to prevent an unwarranted 
invasion of personal privacy. Accordingly, the identity of an employee 
who makes a written or oral statement as a complaint or in the course of 
an investigation, as well as portions of the statement which would 
reveal the employee's identity, shall not be disclosed in any manner to 
anyone other than Federal officials without the prior consent of the 
employee. Disclosure of employee statements shall be governed by the 
provisions of the ``Freedom of Information Act'' (5 U.S.C. 552, see 29 
CFR part 70) and the ``Privacy Act of 1974'' (5 U.S.C. 552a).
    (b) The Administrator shall cause to be made such investigations as 
deemed necessary, in order to obtain compliance with the labor standards 
provisions of the applicable statutes listed in Sec. 5.1, or to affirm 
or reject the recommendations by the Agency Head with respect to labor 
standards matters arising under the statutes listed in Sec. 5.1. Federal 
agencies, contractors, subcontractors, sponsors, applicants, or owners 
shall cooperate with any authorized representative of the Department of 
Labor in the inspection of records, in interviews with workers, and in 
all other aspects of the investigations. The findings of such an 
investigation, including amounts found due, may not be altered or 
reduced without the approval of the Department of Labor. Where the 
underpayments disclosed by such an investigation total $1,000 or more, 
where there is reason to believe that the violations are aggravated or 
willful (or, in the case of the Davis-Bacon Act, that the contractor has 
disregarded its obligations to employees and subcontractors), or where 
liquidated damages may be assessed under the Contract Work Hours and 
Safety Standards Act, the Department of Labor will furnish the Federal 
agency an enforcement report detailing the labor standards violations 
disclosed by the investigation and any action taken by the contractor to 
correct the violative practices, including any payment of back wages. In 
other circumstances, the Federal agency will be furnished a letter of 
notification summarizing the findings of the investigation.



Sec. 5.7  Reports to the Secretary of Labor.

    (a) Enforcement reports. (1) Where underpayments by a contractor or 
subcontractor total less than $1,000, and where there is no reason to 
believe that the violations are aggravated or willful (or, in the case 
of the Davis-Bacon Act that the contractor has disregarded its 
obligations to employees and subcontractors), and where restitution has 
been effected and future compliance assured, the Federal agency need not 
submit its investigative findings and recommendations to the 
Administrator, unless the investigation was made at the request of the 
Department of Labor. In the latter case, the Federal agency shall submit 
a factual summary report detailing any violations including any data on 
the amount of restitution paid, the number of workers who received 
restitution, liquidated damages assessed under the Contract Work Hours 
and Safety Standards Act, corrective measures taken (such as ``letters 
of notice''), and any information that may be necessary to review any 
recommendations for an appropriate adjustment in liquidated damages 
under Sec. 5.8.
    (2) Where underpayments by a contractor or subcontractor total 
$1,000 or more, or where there is reason to believe that the violations 
are aggravated or willful (or, in the case of the Davis-Bacon Act, that 
the contractor has disregarded its obligations to employees and 
subcontractors), the Federal agency shall furnish within 60 days after 
completion of its investigation, a detailed enforcement report to the 
Administrator.
    (b) Semi-annual enforcement reports. To assist the Secretary in 
fulfilling the responsibilities under Reorganization Plan No. 14 of 
1950, Federal agencies shall furnish to the Administrator by April 30 
and October 31 of each calendar year semi-annual reports on compliance 
with and enforcement of the labor standards provisions of the Davis-
Bacon Act and its related acts

[[Page 119]]

covering the periods of October 1 through March 31 and April 1 through 
September 30, respectively. Such reports shall be prepared in the manner 
prescribed in memoranda issued to Federal agencies by the Administrator. 
This report has been cleared in accordance with FPMR 101-11.11 and 
assigned interagency report control number 1482-DOL-SA.
    (c) Additional information. Upon request, the Agency Head shall 
transmit to the Administrator such information available to the Agency 
with respect to contractors and subcontractors, their contracts, and the 
nature of the contract work as the Administrator may find necessary for 
the performance of his or her duties with respect to the labor standards 
provisions referred to in this part.
    (d) Contract termination. Where a contract is terminated by reason 
of violations of the labor standards provisions of the statutes listed 
in Sec. 5.1, a report shall be submitted promptly to the Administrator 
and to the Comptroller General (if the contract is subject to the Davis-
Bacon Act), giving the name and address of the contractor or 
subcontractor whose right to proceed has been terminated, and the name 
and address of the contractor or subcontractor, if any, who is to 
complete the work, the amount and number of the contract, and the 
description of the work to be performed.



Sec. 5.8  Liquidated damages under the Contract Work Hours and Safety Standards Act.

    (a) The Contract Work Hours and Safety Standards Act requires that 
laborers or mechanics shall be paid wages at a rate not less than one 
and one-half times the basic rate of pay for all hours worked in excess 
of forty hours in any workweek. In the event of violation of this 
provision, the contractor and any subcontractor shall be liable for the 
unpaid wages and in addition for liquidated damages, computed with 
respect to each laborer or mechanic employed in violation of the Act in 
the amount of $10 for each calendar day in the workweek on which such 
individual was required or permitted to work in excess of forty hours 
without payment of required overtime wages. Any contractor of 
subcontractor aggrieved by the withholding of liquidated damages shall 
have the right to appeal to the head of the agency of the United States 
(or the territory of District of Columbia, as appropriate) for which the 
contract work was performed or for which financial assistance was 
provided.
    (b) Findings and recommendations of the Agency Head. The Agency Head 
has the authority to review the administrative determination of 
liquidated damages and to issue a final order affirming the 
determination. It is not necessary to seek the concurrence of the 
Administrator but the Administrator shall be advised of the action 
taken. Whenever the Agency Head finds that a sum of liquidated damages 
administratively determined to be due is incorrect or that the 
contractor or subcontractor violated inadvertently the provisions of the 
Act notwithstanding the exercise of due care upon the part of the 
contractor or subcontractor involved, and the amount of the liquidated 
damages computed for the contract is in excess of $500, the Agency Head 
may make recommendations to the Secretary that an appropriate adjustment 
in liquidated damages be made or that the contractor or subcontractor be 
relieved of liability for such liquidated damages. Such findings with 
respect to liquidated damages shall include findings with respect to any 
wage underpayments for which the liquidated damages are determined.
    (c) The recommendations of the Agency Head for adjustment or relief 
from liquidated damages under paragraph (a) of this section shall be 
reviewed by the Administrator or an authorized representative who shall 
issue an order concurring in the recommendations, partially concurring 
in the recommendations, or rejecting the recommendations, and the 
reasons therefor. The order shall be the final decision of the 
Department of Labor, unless a petition for review is filed pursuant to 
part 7 of this title, and the Administrative Review Board in its 
discretion reviews such decision and order; or, with respect to 
contracts subject to the Service Contract Act,

[[Page 120]]

unless petition for review is filed pursuant to part 8 of this title, 
and the Administrative Review Board in its discretion reviews such 
decision and order.
    (d) Whenever the Agency Head finds that a sum of liquidated damages 
administratively determined to be due under section 104(a) of the 
Contract Work Hours and Safety Standards Act for a contract is $500 or 
less and the Agency Head finds that the sum of liquidated damages is 
incorrect or that the contractor or subcontractor violated inadvertently 
the provisions of the Contract Work Hours and Safety Standards Act 
notwithstanding the exercise of due care upon the part of the contractor 
or subcontractor involved, an appropriate adjustment may be made in such 
liquidated damages or the contractor or subcontractor may be relieved of 
liability for such liquidated damages without submitting recommendations 
to this effect or a report to the Department of Labor. This delegation 
of authority is made under section 105 of the Contract Work Hours and 
Safety Standards Act and has been found to be necessary and proper in 
the public interest to prevent undue hardship and to avoid serious 
impairment of the conduct of Government business.

[48 FR 19541, Apr. 29, 1983, as amended at 51 FR 12265, Apr. 9, 1986; 51 
FR 13496, Apr. 21, 1986]



Sec. 5.9  Suspension of funds.

    In the event of failure or refusal of the contractor or any 
subcontractor to comply with the labor standards clauses contained in 
Sec. 5.5 and the applicable statutes listed in Sec. 5.1, the Federal 
agency, upon its own action or upon written request of an authorized 
representative of the Department of Labor, shall take such action as may 
be necessary to cause the suspension of the payment, advance or 
guarantee of funds until such time as the violations are discontinued or 
until sufficient funds are withheld to compensate employees for the 
wages to which they are entitled and to cover any liquidated damages 
which may be due.



Sec. 5.10  Restitution, criminal action.

    (a) In cases other than those forwarded to the Attorney General of 
the United States under paragraph (b), of this section, where violations 
of the labor standards clauses contained in Sec. 5.5 and the applicable 
statutes listed in Sec. 5.1 result in underpayment of wages to 
employees, the Federal agency or an authorized representative of the 
Department of Labor shall request that restitution be made to such 
employees or on their behalf to plans, funds, or programs for any type 
of bona fide fringe benefits within the meaning of section 1(b)(2) of 
the Davis-Bacon Act.
    (b) In cases where the Agency Head or the Administrator finds 
substantial evidence that such violations are willful and in violation 
of a criminal statute, the matter shall be forwarded to the Attorney 
General of the United States for prosecution if the facts warrant. In 
all such cases the Administrator shall be informed simultaneously of the 
action taken.



Sec. 5.11  Disputes concerning payment of wages.

    (a) This section sets forth the procedure for resolution of disputes 
of fact or law concerning payment of prevailing wage rates, overtime 
pay, or proper classification. The procedures in this section may be 
initiated upon the Administrator's own motion, upon referral of the 
dispute by a Federal agency pursuant to Sec. 5.5(a)(9), or upon request 
of the contractor or subcontractor(s).
    (b)(1) In the event of a dispute described in paragraph (a) of this 
section in which it appears that relevant facts are at issue, the 
Administrator will notify the affected contractor and subcontractor(s) 
(if any), by registered or certified mail to the last known address, of 
the investigation findings. If the Administrator determines that there 
is reasonable cause to believe that the contractor and/or 
subcontractor(s) should also be subject to debarment under the Davis-
Bacon Act or Sec. 5.12(a)(1), the letter will so indicate.
    (2) A contractor and/or subcontractor desiring a hearing concerning 
the Administrator's investigative findings shall request such a hearing 
by letter postmarked within 30 days of the date of the Administrator's 
letter. The request shall set forth those findings which are in dispute 
and the reasons

[[Page 121]]

therefor, including any affirmative defenses, with respect to the 
violations and/or debarment, as appropriate.
    (3) Upon receipt of a timely request for a hearing, the 
Administrator shall refer the case to the Chief Administrative Law Judge 
by Order of Reference, to which shall be attached a copy of the letter 
from the Administrator and response thereto, for designation of an 
Administrative Law Judge to conduct such hearings as may be necessary to 
resolve the disputed matters. The hearing shall be conducted in 
accordance with the procedures set forth in 29 CFR part 6.
    (c)(1) In the event of a dispute described in paragraph (a) of this 
section in which it appears that there are no relevant facts at issue, 
and where there is not at that time reasonable cause to institute 
debarment proceedings under Sec. 5.12, the Administrator shall notify 
the contractor and subcontractor(s) (if any), by registered or certified 
mail to the last known address, of the investigation findings, and shall 
issue a ruling on any issues of law known to be in dispute.
    (2)(i) If the contractor and/or subcontractor(s) disagree with the 
factual findings of the Administrator or believe that there are relevant 
facts in dispute, the contractor or subcontractor(s) shall so advise the 
Administrator by letter postmarked within 30 days of the date of the 
Administrator's letter. In the response, the contractor and/or 
subcontractor(s) shall explain in detail the facts alleged to be in 
dispute and attach any supporting documentation.
    (ii) Upon receipt of a response under paragraph (c)(2)(i) of this 
section alleging the existence of a factual dispute, the Administrator 
shall examine the information submitted. If the Administrator determines 
that there is a relevant issue of fact, the Administrator shall refer 
the case to the Chief Administrative Law Judge in accordance with 
paragraph (b)(3) of this section. If the Administrator determines that 
there is no relevant issue of fact, the Administrator shall so rule and 
advise the contractor and subcontractor(s) (if any) accordingly.
    (3) If the contractor and/or subcontractor(s) desire review of the 
ruling issued by the Administrator under paragraph (c)(1) or (2) of this 
section, the contractor and/or subcontractor(s) shall file a petition 
for review thereof with the Administrative Review Board within 30 days 
of the date of the ruling, with a copy thereof the Administrator. The 
petition for review shall be filed in accordance with part 7 of this 
title.
    (d) If a timely response to the Administrator's findings or ruling 
is not made or a timely petition for review is not filed, the 
Administrator's findings and/or ruling shall be final, except that with 
respect to debarment under the Davis-Bacon Act, the Administrator shall 
advise the Comptroller General of the Administrator's recommendation in 
accordance with Sec. 5.12(a)(1). If a timely response or petition for 
review is filed, the findings and/or ruling of the Administrator shall 
be inoperative unless and until the decision is upheld by the 
Administrative Law Judge or the Administrative Review Board.



Sec. 5.12  Debarment proceedings.

    (a)(1) Whenever any contractor or subcontractor is found by the 
Secretary of Labor to be in aggravated or willful violation of the labor 
standards provisions of any of the applicable statutes listed in 
Sec. 5.1 other than the Davis-Bacon Act, such contractor or 
subcontractor or any firm, corporation, partnership, or association in 
which such contractor or subcontractor has a substantial interest shall 
be ineligible for a period not to exceed 3 years (from the date of 
publication by the Comptroller General of the name or names of said 
contractor or subcontractor on the ineligible list as provided below) to 
receive any contracts or subcontracts subject to any of the statutes 
listed in Sec. 5.1.
    (2) In cases arising under contracts covered by the Davis-Bacon Act, 
the Administrator shall transmit to the Comptroller General the names of 
the contractors or subcontractors and their responsible officers, if any 
(and any firms in which the contractors or subcontractors are known to 
have an interest), who have been found to have disregarded their 
obligations to employees, and the recommendation of the Secretary of 
Labor or authorized representative regarding debarment.

[[Page 122]]

The Comptroller General will distribute a list to all Federal agencies 
giving the names of such ineligible person or firms, who shall be 
ineligible to be awarded any contract or subcontract of the United 
States or the District of Columbia and any contract or subcontract 
subject to the labor standards provisions of the statutes listed in 
Sec. 5.1.
    (b)(1) In addition to cases under which debarment action is 
initiated pursuant to Sec. 5.11, whenever as a result of an 
investigation conducted by the Federal agency or the Department of 
Labor, and where the Administrator finds reasonable cause to believe 
that a contractor or subcontractor has committed willful or aggravated 
violations of the labor standards provisions of any of the statutes 
listed in Sec. 5.1 (other than the Davis-Bacon Act), or has committed 
violations of the Davis-Bacon Act which constitute a disregard of its 
obligations to employees or subcontractors under section 3(a) thereof, 
the Administrator shall notify by registered or certified mail to the 
last known address, the contractor or subcontractor and its responsible 
officers, if any (and any firms in which the contractor or subcontractor 
are known to have a substantial interest), of the finding. The 
Administrator shall afford such contractor or subcontractor and any 
other parties notified an opportunity for a hearing as to whether 
debarment action should be taken under paragraph (a)(1) of this section 
or section 3(a) of the Davis-Bacon Act. The Administrator shall furnish 
to those notified a summary of the investigative findings. If the 
contractor or subcontractor or any other parties notified wish to 
request a hearing as to whether debarment action should be taken, such a 
request shall be made by letter postmarked within 30 days of the date of 
the letter from the Administrator, and shall set forth any findings 
which are in dispute and the reasons therefor, including any affirmative 
defenses to be raised. Upon receipt of such request for a hearing, the 
Administrator shall refer the case to the Chief Administrative Law Judge 
by Order of Reference, to which shall be attached a copy of the letter 
from the Administrator and the response thereto, for designation of an 
Administrative Law Judge to conduct such hearings as may be necessary to 
determine the matters in dispute. In considering debarment under any of 
the statutes listed in Sec. 5.1 other than the Davis-Bacon Act, the 
Administrative Law Judge shall issue an order concerning whether the 
contractor or subcontractor is to be debarred in accordance with 
paragraph (a)(1) of this section. In considering debarment under the 
Davis-Bacon Act, the Administrative Law Judge shall issue a 
recommendation as to whether the contractor or subcontractor should be 
debarred under section 3(a) of the Act.
    (2) Hearings under this section shall be conducted in accordance 
with 29 CFR part 6. If no hearing is requested within 30 days of receipt 
of the letter from the Administrator, the Administrator's findings shall 
be final, except with respect to recommendations regarding debarment 
under the Davis-Bacon Act, as set forth in paragraph (a)(2) of this 
section.
    (c) Any person or firm debarred under Sec. 5.12(a)(1) may in writing 
request removal from the debarment list after six months from the date 
of publication by the Comptroller General of such person or firm's name 
on the ineligible list. Such a request should be directed to the 
Administrator of the Wage and Hour Division, Employment Standards 
Administration, U.S. Department of Labor, Washington, DC 20210, and 
shall contain a full explanation of the reasons why such person or firm 
should be removed from the ineligible list. In cases where the 
contractor or subcontractor failed to make full restitution to all 
underpaid employees, a request for removal will not be considered until 
such underpayments are made. In all other cases, the Administrator will 
examine the facts and circumstances surrounding the violative practices 
which caused the debarment, and issue a decision as to whether or not 
such person or firm has demonstrated a current responsibility to comply 
with the labor standards provisions of the statutes listed in Sec. 5.1, 
and therefore should be removed from the ineligible list. Among the 
factors to be considered in reaching such a decision are the severity of 
the violations, the contractor or

[[Page 123]]

subcontractor's attitude towards compliance, and the past compliance 
history of the firm. In no case will such removal be effected unless the 
Administrator determines after an investigation that such person or firm 
is in compliance with the labor standards provisions applicable to 
Federal contracts and Federally assisted construction work subject to 
any of the applicable statutes listed in Sec. 5.1 and other labor 
statutes providing wage protection, such as the Service Contract Act, 
the Walsh-Healey Public Contracts Act, and the Fair Labor Standards Act. 
If the request for removal is denied, the person or firm may petition 
for review by the Administrative Review Board pursuant to 29 CFR part 7.
    (d)(1) Section 3(a) of the Davis-Bacon Act provides that for a 
period of three years from date of publication on the ineligible list, 
no contract shall be awarded to any persons or firms placed on the list 
as a result of a finding by the Comptroller General that such persons or 
firms have disregarded obligations to employees and subcontractors under 
that Act, and further, that no contract shall be awarded to ``any firm, 
corporation, partnership, or association in which such persons or firms 
have an interest.'' Paragraph (a)(1) of this section similarly provides 
that for a period not to exceed three years from date of publication on 
the ineligible list, no contract subject to any of the statutes listed 
in Sec. 5.1 shall be awarded to any contractor or subcontractor on the 
ineligible list pursuant to that paragraph, or to ``any firm, 
corporation, partnership, or association'' in which such contractor or 
subcontractor has a ``substantial interest.'' A finding as to whether 
persons or firms whose names appear on the ineligible list have an 
interest (or a substantial interest, as appropriate) in any other firm, 
corporation, partnership, or association, may be made through 
investigation, hearing, or otherwise.
    (2)(i) The Administrator, on his/her own motion or after receipt of 
a request for a determination pursuant to paragraph (d)(3) of this 
section may make a finding on the issue of interest (or substantial 
interest, as appropriate).
    (ii) If the Administrator determines that there may be an interest 
(or substantial interest, as appropriate), but finds that there is 
insufficient evidence to render a final ruling thereon, the 
Administrator may refer the issue to the Chief Administrative Law Judge 
in accordance with paragraph (d)(4) of this section.
    (iii) If the Administrator finds that no interest (or substantial 
interest, as appropriate) exists, or that there is not sufficient 
information to warrant the initiation of an investigation, the 
requesting party, if any, will be so notified and no further action 
taken.
    (iv)(A) If the Administrator finds that an interest (or substantial 
interest, as appropriate) exists, the person or firm affected will be 
notified of the Administrator's finding (by certified mail to the last 
known address), which shall include the reasons therefor, and such 
person or firm shall be afforded an opportunity to request that a 
hearing be held to render a decision on the issue.
    (B) Such person or firm shall have 20 days from the date of the 
Administrator's ruling to request a hearing. A detailed statement of the 
reasons why the Administrator's ruling is in error, including facts 
alleged to be in dispute, if any, shall be submitted with the request 
for a hearing.
    (C) If no hearing is requested within the time mentioned in 
paragraph (d)(2)(iv)(B) of this section, the Administrator's finding 
shall be final and the Administrator shall so notify the Comptroller 
General. If a hearing is requested, the ruling of the Administrator 
shall be inoperative unless and until the administrative law judge or 
the Administrative Review Board issues an order that there is an 
interest (or substantial interest, as appropriate).
    (3)(i) A request for a determination of interest (or substantial 
interest, as appropriate), may be made by any interested party, 
including contractors or prospective contractors and associations of 
contractor's representatives of employees, and interested Government 
agencies. Such a request shall be submitted in writing to the 
Administrator, Wage and Hour Division, Employment Standards 
Administration,

[[Page 124]]

U.S. Department of Labor, Washington, DC 20210.
    (ii) The request shall include a statement setting forth in detail 
why the petitioner believes that a person or firm whose name appears on 
the debarred bidders list has an interest (or a substantial interest, as 
appropriate) in any firm, corporation, partnership, or association which 
is seeking or has been awarded a contract of the United States or the 
District of Columbia, or which is subject to any of the statutes listed 
in Sec. 5.1. No particular form is prescribed for the submission of a 
request under this section.
    (4) Referral to the Chief Administrative Law Judge. The 
Administrator, on his/her own motion under paragraph (d)(2)(ii) of this 
section or upon a request for hearing where the Administrator determines 
that relevant facts are in dispute, will by order refer the issue to the 
Chief Administrative Law Judge, for designation of an Administrative Law 
Judge who shall conduct such hearings as may be necessary to render a 
decision solely on the issue of interest (or substantial interest, as 
appropriate). Such proceedings shall be conducted in accordance with the 
procedures set forth at 29 CFR part 6.
    (5) Referral to the Administrative Review Board. If the person or 
firm affected requests a hearing and the Administrator determines that 
relevant facts are not in dispute, the Administrator will refer the 
issue and the record compiled thereon to the Administrative Review Board 
to render a decision solely on the issue of interest (or substantial 
interest, as appropriate). Such proceeding shall be conducted in 
accordance with the procedures set forth at 29 CFR part 7.

[48 FR 19541, Apr. 29, 1983, as amended at 48 FR 50313, Nov. 1, 1983]



Sec. 5.13  Rulings and interpretations.

    All questions relating to the application and interpretation of wage 
determinations (including the classifications therein) issued pursuant 
to part 1 of this subtitle, of the rules contained in this part and in 
parts 1 and 3, and of the labor standards provisions of any of the 
statutes listed in Sec. 5.1 shall be referred to the Administrator for 
appropriate ruling or interpretation. The rulings and interpretations 
shall be authoritative and those under the Davis-Bacon Act may be relied 
upon as provided for in section 10 of the Portal-to-Portal Act of 1947 
(29 U.S.C. 259). Requests for such rulings and interpretations should be 
addressed to the Administrator, Wage and Hour Division, Employment 
Standards Administration, U.S. Department of Labor, Washington, DC 
20210.



Sec. 5.14  Variations, tolerances, and exemptions from parts 1 and 3 of this subtitle and this part.

    The Secretary of Labor may make variations, tolerances, and 
exemptions from the regulatory requirements of this part and those of 
parts 1 and 3 of this subtitle whenever the Secretary finds that such 
action is necessary and proper in the public interest or to prevent 
injustice and undue hardship. Variations, tolerances, and exemptions may 
not be made from the statutory requirements of any of the statutes 
listed in Sec. 5.1 unless the statute specifically provides such 
authority.



Sec. 5.15  Limitations, variations, tolerances, and exemptions under the Contract Work Hours and Safety Standards Act.

    (a) General. Upon his or her own initiative or upon the request of 
any Federal agency, the Secretary of Labor may provide under section 105 
of the Contract Work Hours and Safety Standards Act reasonable 
limitations and allow variations, tolerances, and exemptions to and from 
any or all provisions of that Act whenever the Secretary finds such 
action to be necessary and proper in the public interest to prevent 
injustice, or undue hardship, or to avoid serious impairment of the 
conduct of Government business. Any request for such action by the 
Secretary shall be submitted in writing, and shall set forth the reasons 
for which the request is made.
    (b) Exemptions. Pursuant to section 105 of the Contract Work Hours 
and Safety Standards Act, the following classes of contracts are found 
exempt from all provisions of that Act in order to prevent injustice, 
undue hardship, or serious impairment of Government business:

[[Page 125]]

    (1) Contract work performed in a workplace within a foreign country 
or within territory under the jurisdiction of the United States other 
than the following: A State of the United States; the District of 
Columbia; Puerto Rico; the Virgin Islands; Outer Continental Shelf lands 
defined in the Outer Continental Shelf Lands Act (ch. 345, 67 Stat. 
462); American Samoa; Guam; Wake Island; Eniwetok Atoll; Kwajalein 
Atoll; and Johnston Island.
    (2) Agreements entered into by or on behalf of the Commodity Credit 
Corporation providing for the storing in or handling by commercial 
warehouses of wheat, corn, oats, barley, rye, grain sorghums, soybeans, 
flaxseed, rice, naval stores, tobacco, peanuts, dry beans, seeds, 
cotton, and wool.
    (3) Sales of surplus power by the Tennessee Valley Authority to 
States, counties, municipalities, cooperative organization of citizens 
or farmers, corporations and other individuals pursuant to section 10 of 
the Tennessee Valley Authority Act of 1933 (16 U.S.C. 8311).
    (c) Tolerances. (1) The ``basic rate of pay'' under section 102 of 
the Contract Work Hours and Safety Standards Act may be computed as an 
hourly equivalent to the rate on which time-and-one-half overtime 
compensation may be computed and paid under section 7 of the Fair Labor 
Standards Act of 1938, as amended (29 U.S.C. 207), as interpreted in 
part 778 of this title. This tolerance is found to be necessary and 
proper in the public interest in order to prevent undue hardship.
    (2) Concerning the tolerance provided in paragraph (c)(1) of this 
section, the provisions of section 7(d)(2) of the Fair Labor Standards 
Act and Sec. 778.7 of this title should be noted. Under these 
provisions, payments for occasional periods when no work is performed, 
due to vacations, and similar causes are excludable from the ``regular 
rate'' under the Fair Labor Standards Act. Such payments, therefore, are 
also excludable from the ``basic rate'' under the Contract Work Hours 
and Safety Standards Act.
    (3) See Sec. 5.8(c) providing a tolerance subdelegating authority to 
the heads of agencies to make appropriate adjustments in the assessment 
of liquidated damages totaling $500 or less under specified 
circumstances.
    (4)(i) Time spent in an organized program of related, supplemental 
instruction by laborers or mechanics employed under bona fide 
apprenticeship or training programs may be excluded from working time if 
the criteria prescribed in paragraphs (c)(4)(ii) and (iii) of this 
section are met.
    (ii) The apprentice or trainee comes within the definition contained 
in Sec. 5.2(n).
    (iii) The time in question does not involve productive work or 
performance of the apprentice's or trainee's regular duties.
    (d) Variations. (1) In the event of failure or refusal of the 
contractor or any subcontractor to comply with overtime pay requirements 
of the Contract Work Hours and Safety Standards Act, if the funds 
withheld by Federal agencies for the violations are not sufficient to 
pay fully both the unpaid wages due laborers and mechanics and the 
liquidated damages due the United States, the available funds shall be 
used first to compensate the laborers and mechanics for the wages to 
which they are entitled (or an equitable portion thereof when the funds 
are not adequate for this purpose); and the balance, if any, shall be 
used for the payment of liquidated damages.
    (2) In the performance of any contract entered into pursuant to the 
provisions of 38 U.S.C. 620 to provide nursing home care of veterans, no 
contractor or subcontractor under such contract shall be deemed in 
violation of section 102 of the Contract Work Hours and Safety Standards 
Act by virtue of failure to pay the overtime wages required by such 
section for work in excess of 40 hours in the workweek to any individual 
employed by an establishment which is an institution primarily engaged 
in the care of the sick, the aged, or the mentally ill or defective who 
reside on the premises if, pursuant to an agreement or understanding 
arrived at between the employer and the employee before performance of 
the work, a work period of 14 consecutive days is accepted in lieu of 
the workweek of 7 consecutive days for the purpose of overtime 
compensation and if such individual receives

[[Page 126]]

compensation for employment in excess of 8 hours in any workday and in 
excess of 80 hours in such 14-day period at a rate not less than 1\1/2\ 
times the regular rate at which the individual is employed, computed in 
accordance with the requirements of the Fair Labor Standards Act of 
1938, as amended.
    (3) Any contractor or subcontractor performing on a government 
contract the principal purpose of which is the furnishing of fire 
fighting or suppression and related services, shall not be deemed to be 
in violation of section 102 of the Contract Work Hour and Safety 
Standards Act for failing to pay the overtime compensation required by 
section 102 of the Act in accordance with the basic rate of pay as 
defined in paragraph (c)(1) of this section, to any pilot or copilot of 
a fixed-wing or rotary-wing aircraft employed on such contract if:
    (i) Pursuant to a written employment agreement between the 
contractor and the employee which is arrived at before performance of 
the work.
    (A) The employee receives gross wages of not less than $300 per week 
regardless of the total number of hours worked in any workweek, and
    (B) Within any workweek the total wages which an employee receives 
are not less than the wages to which the employee would have been 
entitled in that workweek if the employee were paid the minimum hourly 
wage required under the contract pursuant to the provisions of the 
Service Contract Act of 1965 and any applicable wage determination 
issued thereunder for all hours worked, plus an additional premium 
payment of one-half times such minimum hourly wage for all hours worked 
in excess of 40 hours in the workweek;
    (ii) The contractor maintains accurate records of the total daily 
and weekly hours of work performed by such employee on the government 
contract. In the event these conditions for the exemption are not met, 
the requirements of section 102 of the Contract Work Hours and Safety 
Standards Act shall be applicable to the contract from the date the 
contractor or subcontractor fails to satisfy the conditions until 
completion of the contract.

(Reporting and recordkeeping requirements in paragraph (d)(2) have been 
approved by the Office of Management and Budget under control numbers 
1215-0140 and 1215-0017. Reporting and recordkeeping requirements in 
paragraph (d)(3)(ii) have been approved by the Office of Management and 
Budget under control number 1215-0017)

[48 FR 19541, Apr. 29, 1983, as amended at 51 FR 12265, Apr. 9, 1986; 61 
FR 40716, Aug. 5, 1996]



Sec. 5.16  Training plans approved or recognized by the Department of Labor prior to August 20, 1975.

    (a) Notwithstanding the provisions of Sec. 5.5(a)(4)(ii) relating to 
the utilization of trainees on Federal and federally assisted 
construction, no contractor shall be required to obtain approval of a 
training program which, prior to August 20, 1975, was approved by the 
Department of Labor for purposes of the Davis-Bacon and Related Acts, 
was established by agreement of organized labor and management and 
therefore recognized by the Department, and/or was recognized by the 
Department under Executive Order 11246, as amended. A copy of the 
program and evidence of its prior approval, if applicable shall be 
submitted to the Employment and Training Administration, which shall 
certify such prior approval or recognition of the program. In every 
other respect, the provisions of Sec. 5.5(a)(4)(ii)--including those 
relating to registration of trainees, permissible ratios, and wage rates 
to be paid--shall apply to these programs.
    (b) Every trainee employed on a contract executed on and after 
August 20, 1975, in one of the above training programs must be 
individually registered in the program in accordance with Employment and 
Training Administration procedures, and must be paid at the rate 
specified in the program for the level of progress. Any such employee 
listed on the payroll at a trainee rate who is not registered and 
participating in a program certified by ETA pursuant to this section, or 
approved and certified by ETA pursuant to Sec. 5.5(a)(4)(ii), must be 
paid the wage rate determined by the Secretary of Labor for the 
classification of work actually performed. The ratio of trainees

[[Page 127]]

to journeymen shall not be greater than permitted by the terms of the 
program.
    (c) In the event a program which was recognized or approved prior to 
August 20, 1975, is modified, revised, extended, or renewed, the changes 
in the program or its renewal must be approved by the Employment and 
Training Administration before they may be placed into effect.



Sec. 5.17  Withdrawal of approval of a training program.

    If at any time the Employment and Training Administration 
determines, after opportunity for a hearing, that the standards of any 
program, whether it is one recognized or approved prior to August 20, 
1975, or a program subsequently approved, have not been complied with, 
or that such a program fails to provide adequate training for 
participants, a contractor will no longer be permitted to utilize 
trainees at less than the predetermined rate for the classification of 
work actually performed until an acceptable program is approved.



   Subpart B--Interpretation of the Fringe Benefits Provisions of the 
                             Davis-Bacon Act

    Source: 29 FR 13465, Sept. 30, 1964, unless otherwise noted.



Sec. 5.20  Scope and significance of this subpart.

    The 1964 amendments (Pub. L. 88-349) to the Davis-Bacon Act require, 
among other things, that the prevailing wage determined for Federal and 
federally-assisted construction include: (a) The basic hourly rate of 
pay; and (b) the amount contributed by the contractor or subcontractor 
for certain fringe benefits (or the cost to them of such benefits). The 
purpose of this subpart is to explain the provisions of these 
amendments. This subpart makes available in one place official 
interpretations of the fringe benefits provisions of the Davis-Bacon 
Act. These interpretations will guide the Department of Labor in 
carrying out its responsibilities under these provisions. These 
interpretations are intended also for the guidance of contractors, their 
associations, laborers and mechanics and their organizations, and local, 
State and Federal agencies, who may be concerned with these provisions 
of the law. The interpretations contained in this subpart are 
authoritative and may be relied upon as provided for in section 10 of 
the Portal-to-Portal Act of 1947 (29 U.S.C. 359). The omission to 
discuss a particular problem in this subpart or in interpretations 
supplementing it should not be taken to indicate the adoption of any 
position by the Secretary of Labor with respect to such problem or to 
constitute an administrative interpretation, practice, or enforcement 
policy. Questions on matters not fully covered by this subpart may be 
referred to the Secretary for interpretation as provided in Sec. 5.12.



Sec. 5.21  [Reserved]



Sec. 5.22  Effect of the Davis-Bacon fringe benefits provisions.

    The Davis-Bacon Act and the prevailing wage provisions of the 
related statutes listed in Sec. 1.1 of this subtitle confer upon the 
Secretary of Labor the authority to predetermine, as minimum wages, 
those wage rates found to be prevailing for corresponding classes of 
laborers and mechanics employed on projects of a character similar to 
the contract work in the area in which the work is to be performed. See 
paragraphs (a) and (b) of Sec. 1.2 of this subtitle. The fringe benefits 
amendments enlarge the scope of this authority by including certain bona 
fide fringe benefits within the meaning of the terms ``wages'', ``scale 
of wages'', ``wage rates'', ``minimum wages'' and ``prevailing wages'', 
as used in the Davis-Bacon Act.



Sec. 5.23  The statutory provisions.

    The fringe benefits provisions of the 1964 amendments to the Davis-
Bacon Act are, in part, as follows:

    (b) As used in this Act the term ``wages'', ``scale of wages'', 
``wage rates'', ``minimum wages'', and ``prevailing wages'' shall 
include--
    (1) The basic hourly rate of pay; and
    (2) The amount of--
    (A) The rate of contribution irrevocably made by a contractor or 
subcontractor to a trustee or to a third person pursuant to a fund, 
plan, or program; and

[[Page 128]]

    (B) The rate of costs to the contractor or subcontractor which may 
be reasonably anticipated in providing benefits to laborers and 
mechanics pursuant to an enforceable commitment to carry out a 
financially responsible plan or program which was communicated in 
writing to the laborers and mechanics affected,

for medical or hospital care, pensions on retirement or death, 
compensation for injuries or illness resulting from occupational 
activity, or insurance to provide any of the foregoing, for unemployment 
benefits, life insurance, disability and sickness insurance, or accident 
insurance, for vacation and holiday pay, for defraying costs of 
apprenticeship or other similar programs, or for other bona fide fringe 
benefits, but only where the contractor or subcontractor is not required 
by other Federal, State, or local law to provide any of such benefits * 
* *.



Sec. 5.24  The basic hourly rate of pay.

    ``The basic hourly rate of pay'' is that part of a laborer's or 
mechanic's wages which the Secretary of Labor would have found and 
included in wage determinations prior to the 1964 amendments. The 
Secretary of Labor is required to continue to make a separate finding of 
this portion of the wage. In general, this portion of the wage is the 
cash payment made directly to the laborer or mechanic. It does not 
include fringe benefits.



Sec. 5.25  Rate of contribution or cost for fringe benefits.

    (a) Under the amendments, the Secretary is obligated to make a 
separate finding of the rate of contribution or cost of fringe benefits. 
Only the amount of contributions or costs for fringe benefits which meet 
the requirements of the act will be considered by the Secretary. These 
requirements are discussed in this subpart.
    (b) The rate of contribution or cost is ordinarily an hourly rate, 
and will be reflected in the wage determination as such. In some cases, 
however, the contribution or cost for certain fringe benefits may be 
expressed in a formula or method of payment other than an hourly rate. 
In such cases, the Secretary may in his discretion express in the wage 
determination the rate of contribution or cost used in the formula or 
method or may convert it to an hourly rate of pay whenever he finds that 
such action would facilitate the administration of the Act. See 
Sec. 5.5(a)(1)(i) and (iii).



Sec. 5.26  ``* * * contribution irrevocably made * * * to a trustee or to a third person''.

    Under the fringe benefits provisions (section 1(b)(2) of the Act) 
the amount of contributions for fringe benefits must be made to a 
trustee or to a third person irrevocably. The ``third person'' must be 
one who is not affiliated with the contractor or subcontractor. The 
trustee must assume the usual fiduciary responsibilities imposed upon 
trustees by applicable law. The trust or fund must be set up in such a 
way that in no event will the contractor or subcontractor be able to 
recapture any of the contributions paid in or any way divert the funds 
to his own use or benefit. Although contributions made to a trustee or 
third person pursuant to a benefit plan must be irrevocably made, this 
does not prevent return to the contractor or subcontractor of sums which 
he had paid in excess of the contributions actually called for by the 
plan, as where such excess payments result from error or from the 
necessity of making payments to cover the estimated cost of 
contributions at a time when the exact amount of the necessary 
contributions under the plan is not yet ascertained. For example, a 
benefit plan may provide for definite insurance benefits for employees 
in the event of the happening of a specified contingency such as death, 
sickness, accident, etc., and may provide that the cost of such definite 
benefits, either in full or any balance in excess of specified employee 
contributions, will be borne by the contractor or subcontractor. In such 
a case the return by the insurance company to the contractor or 
subcontractor of sums paid by him in excess of the amount required to 
provide the benefits which, under the plan, are to be provided through 
contributions by the contractor or subcontractor, will not be deemed a 
recapture or diversion by the employer of contributions made pursuant to 
the plan. (See Report of the Senate Committee on Labor and Public 
Welfare, S. Rep. No. 963, 88th Cong., 2d Sess., p. 5.)

[[Page 129]]



Sec. 5.27  ``* * * fund, plan, or program''.

    The contributions for fringe benefits must be made pursuant to a 
fund, plan or program (sec. 1(b)(2)(A) of the act). The phrase ``fund, 
plan, or program'' is merely intended to recognize the various types of 
arrangements commonly used to provide fringe benefits through employer 
contributions. The phrase is identical with language contained in 
section 3(1) of the Welfare and Pension Plans Disclosure Act. In 
interpreting this phrase, the Secretary will be guided by the experience 
of the Department in administering the latter statute. (See Report of 
Senate Committee on Labor and Public Welfare, S. Rep. No. 963, 88th 
Cong., 2d Sess., p. 5.)



Sec. 5.28  Unfunded plans.

    (a) The costs to a contractor or subcontractor which may be 
reasonably anticipated in providing benefits of the types described in 
the act pursuant to an enforceable commitment to carry out a financially 
responsible plan or program, are considered fringe benefits within the 
meaning of the act (see 1(b)(2)(B) of the act). The legislative history 
suggests that these provisions were intended to permit the consideration 
of fringe benefits meeting, among others, these requirements and which 
are provided from the general assets of a contractor or subcontractor. 
(Report of the House Committee on Education and Labor, H. Rep. No. 308, 
88th Cong., 1st Sess., p. 4.)
    (b) No type of fringe benefit is eligible for consideration as a so-
called unfunded plan unless:
    (1) It could be reasonably anticipated to provide benefits described 
in the act;
    (2) It represents a commitment that can be legally enforced;
    (3) It is carried out under a financially responsible plan or 
program; and
    (4) The plan or program providing the benefits has been communicated 
in writing to the laborers and mechanics affected. (See S. Rep. No. 963, 
p. 6.)
    (c) It is in this manner that the act provides for the consideration 
of unfunded plans or programs in finding prevailing wages and in 
ascertaining compliance with the Act. At the same time, however, there 
is protection against the use of this provision as a means of avoiding 
the act's requirements. The words ``reasonably anticipated'' are 
intended to require that any unfunded plan or program be able to 
withstand a test which can perhaps be best described as one of actuarial 
soundness. Moreover, as in the case of other fringe benefits payable 
under the act, an unfunded plan or program must be ``bona fide'' and not 
a mere simulation or sham for avoiding compliance with the act. (See S. 
Rep. No. 963, p. 6.) The legislative history suggests that in order to 
insure against the possibility that these provisions might be used to 
avoid compliance with the act, the committee contemplates that the 
Secretary of Labor in carrying out his responsibilities under 
Reorganization Plan No. 14 of 1950, may direct a contractor or 
subcontractor to set aside in an account assets which, under sound 
actuarial principles, will be sufficient to meet the future obligation 
under the plan. The preservation of this account for the purpose 
intended would, of course, also be essential. (S. Rep. No. 963, p. 6.) 
This is implemented by the contractual provisions required by 
Sec. 5.5(a)(1)(iv).



Sec. 5.29  Specific fringe benefits.

    (a) The act lists all types of fringe benefits which the Congress 
considered to be common in the construction industry as a whole. These 
include the following: Medical or hospital care, pensions on retirement 
or death, compensation for injuries or illness resulting from 
occupational activity, or insurance to provide any of the foregoing, 
unemployment benefits, life insurance, disability and sickness 
insurance, or accident insurance, vacation and holiday pay, defrayment 
of costs of apprenticeship or other similar programs, or other bona fide 
fringe benefits, but only where the contractor or subcontractor is not 
required by other Federal, State, or local law to provide any of such 
benefits.
    (b) The legislative history indicates that it was not the intent of 
the Congress to impose specific standards relating to administration of 
fringe benefits. It was assumed that the majority of fringe benefits 
arrangements of this nature will be those which are administered in 
accordance with requirements of section 302(c)(5) of the National

[[Page 130]]

Labor Relations Act, as amended (S. Rep. No. 963, p. 5).
    (c) The term ``other bona fide fringe benefits'' is the so-called 
``open end'' provision. This was included so that new fringe benefits 
may be recognized by the Secretary as they become prevailing. It was 
pointed out that a particular fringe benefit need not be recognized 
beyond a particular area in order for the Secretary to find that it is 
prevailing in that area. (S. Rep. No. 963, p. 6).
    (d) The legislative reports indicate that, to insure against 
considering and giving credit to any and all fringe benefits, some of 
which might be illusory or not genuine, the qualification was included 
that such fringe benefits must be ``bona fide'' (H. Rep. No. 308, p. 4; 
S. Rep. No. 963, p. 6). No difficulty is anticipated in determining 
whether a particular fringe benefit is ``bona fide'' in the ordinary 
case where the benefits are those common in the construction industry 
and which are established under a usual fund, plan, or program. This 
would be typically the case of those fringe benefits listed in paragraph 
(a) of this section which are funded under a trust or insurance program. 
Contractors may take credit for contributions made under such 
conventional plans without requesting the approval of the Secretary of 
Labor under Sec. 5.5(a)(1)(iv).
    (e) Where the plan is not of the conventional type described in the 
preceding paragraph, it will be necessary for the Secretary to examine 
the facts and circumstances to determine whether they are ``bona fide'' 
in accordance with requirements of the act. This is particularly true 
with respect to unfunded plans. Contractors or subcontractors seeking 
credit under the act for costs incurred for such plans must request 
specific permission from the Secretary under Sec. 5.5(a)(1)(iv).
    (f) The act excludes fringe benefits which a contractor or 
subcontractor is obligated to provide under other Federal, State, or 
local law. No credit may be taken under the act for the payments made 
for such benefits. For example, payment for workmen's compensation 
insurance under either a compulsory or elective State statute are not 
considered payments for fringe benefits under the Act. While each 
situation must be separately considered on its own merits, payments made 
for travel, subsistence or to industry promotion funds are not normally 
payments for fringe benefits under the Act. The omission in the Act of 
any express reference to these payments, which are common in the 
construction industry, suggests that these payments should not normally 
be regarded as bona fide fringe benefits under the Act.



Sec. 5.30  Types of wage determinations.

    (a) When fringe benefits are prevailing for various classes of 
laborers and mechanics in the area of proposed construction, such 
benefits are includable in any Davis-Bacon wage determination. 
Illustrations, contained in paragraph (c) of this section, demonstrate 
some of the different types of wage determinations which may be made in 
such cases.
    (b) Wage determinations of the Secretary of Labor under the act do 
not include fringe benefits for various classes of laborers and 
mechanics whenever such benefits do not prevail in the area of proposed 
construction. When this occurs the wage determination will contain only 
the basic hourly rates of pay, that is only the cash wages which are 
prevailing for the various classes of laborers and mechanics. An 
illustration of this situation is contained in paragraph (c) of this 
section.
    (c) Illustrations:

----------------------------------------------------------------------------------------------------------------
                                                                     Fringe benefits payments
                                         Basic   ---------------------------------------------------------------
               Classes                  hourly    Health and                          Apprenticeship
                                         rates      welfare    Pensions    Vacations      program       Others
----------------------------------------------------------------------------------------------------------------
Laborers............................       $3.25  ..........  ..........  ..........  ..............  ..........
Carpenters..........................        4.00       $0.15  ..........  ..........  ..............  ..........
Painters............................        3.90         .15       $0.10       $0.20  ..............  ..........
Electricians........................        4.85         .10         .15  ..........  ..............  ..........
Plumbers............................        4.95         .15         .20  ..........         $0.05    ..........

[[Page 131]]

 
Ironworkers.........................        4.60  ..........  ..........         .10  ..............  ..........
----------------------------------------------------------------------------------------------------------------
(It should be noted this format is not necessarily in the exact form in which determinations will issue; it is
  for illustration only.)



Sec. 5.31  Meeting wage determination obligations.

    (a) A contractor or subcontractor performing work subject to a 
Davis-Bacon wage determination may discharge his minimum wage 
obligations for the payment of both straight time wages and fringe 
benefits by paying in cash, making payments or incurring costs for 
``bona fide'' fringe benefits of the types listed in the applicable wage 
determination or otherwise found prevailing by the Secretary of Labor, 
or by a combination thereof.
    (b) A contractor or subcontractor may discharge his obligations for 
the payment of the basic hourly rates and the fringe benefits where both 
are contained in a wage determination applicable to his laborers or 
mechanics in the following ways:
    (1) By paying not less than the basic hourly rate to the laborers or 
mechanics and by making the contributions for the fringe benefits in the 
wage determinations, as specified therein. For example, in the 
illustration contained in paragraph (c) of Sec. 5.30, the obligations 
for ``painters'' will be met by the payment of a straight time hourly 
rate of not less than $3.90 and by contributing not less than at the 
rate of 15 cents an hour for health and welfare benefits, 10 cents an 
hour for pensions, and 20 cents an hour for vacations; or
    (2) By paying not less than the basic hourly rate to the laborers or 
mechanics and by making contributions for ``bona fide'' fringe benefits 
in a total amount not less than the total of the fringe benefits 
required by the wage determination. For example, the obligations for 
``painters'' in the illustration in paragraph (c) of Sec. 5.30 will be 
met by the payment of a straight time hourly rate of not less than $3.90 
and by contributions of not less than a total of 45 cents an hour for 
``bona fide'' fringe benefits; or
    (3) By paying in cash directly to laborers or mechanics for the 
basic hourly rate and by making an additional cash payment in lieu of 
the required benefits. For example, where an employer does not make 
payments or incur costs for fringe benefits, he would meet his 
obligations for ``painters'' in the illustration in paragraph (c) of 
Sec. 5.30, by paying directly to the painters a straight time hourly 
rate of not less than $4.35 ($3.90 basic hourly rate plus 45 cents for 
fringe benefits); or
    (4) As stated in paragraph (a) of this section, the contractor or 
subcontractor may discharge his minimum wage obligations for the payment 
of straight time wages and fringe benefits by a combination of the 
methods illustrated in paragraphs (b)(1) thru (3) of this section. Thus, 
for example, his obligations for ``painters'' may be met by an hourly 
rate, partly in cash and partly in payments or costs for fringe benefits 
which total not less than $4.35 ($3.90 basic hourly rate plus 45 cents 
for fringe benefits). The payments in such case may be $4.10 in cash and 
25 cents in payments or costs in fringe benefits. Or, they may be $3.75 
in cash and 60 cents in payments or costs for fringe benefits.

[30 FR 13136, Oct. 15, 1965]



Sec. 5.32  Overtime payments.

    (a) The act excludes amounts paid by a contractor or subcontractor 
for fringe benefits in the computation of overtime under the Fair Labor 
Standards Act, the Contract Work Hours and Safety Standards Act, and the 
Walsh-Healey Public Contracts Act whenever the overtime provisions of 
any of these statutes apply concurrently with the Davis-Bacon Act or its 
related prevailing wage statutes. It is clear from the legislative 
history that in no event can the regular or basic rate upon

[[Page 132]]

which premium pay for overtime is calculated under the aforementioned 
Federal statutes be less than the amount determined by the Secretary of 
Labor as the basic hourly rate (i.e. cash rate) under section 1(b)(1) of 
the Davis-Bacon Act. (See S. Rep. No. 963, p. 7.) Contributions by 
employees are not excluded from the regular or basic rate upon which 
overtime is computed under these statutes; that is, an employee's 
regular or basic straight-time rate is computed on his earnings before 
any deductions are made for the employee's contributions to fringe 
benefits. The contractor's contributions or costs for fringe benefits 
may be excluded in computing such rate so long as the exclusions do not 
reduce the regular or basic rate below the basic hourly rate contained 
in the wage determination.
    (b) The legislative report notes that the phrase ``contributions 
irrevocably made by a contractor or subcontractor to a trustee or to a 
third person pursuant to a fund, plan, or program'' was added to the 
bill in Committee. This language in essence conforms to the overtime 
provisions of section 7(d)(4) of the Fair Labor Standards Act, as 
amended. The intent of the committee was to prevent any avoidance of 
overtime requirements under existing law. See H. Rep. No. 308, p. 5.
    (c)(1) The act permits a contractor or subcontractor to pay a cash 
equivalent of any fringe benefits found prevailing by the Secretary of 
Labor. Such a cash equivalent would also be excludable in computing the 
regular or basic rate under the Federal overtime laws mentioned in 
paragraph (a). For example, the W construction contractor pays his 
laborers or mechanics $3.50 in cash under a wage determination of the 
Secretary of Labor which requires a basic hourly rate of $3 and a fringe 
benefit contribution of 50 cents. The contractor pays the 50 cents in 
cash because he made no payments and incurred no costs for fringe 
benefits. Overtime compensation in this case would be computed on a 
regular or basic rate of $3.00 an hour. However, in some cases a 
question of fact may be presented in ascertaining whether or not a cash 
payment made to laborers or mechanics is actually in lieu of a fringe 
benefit or is simply part of their straight time cash wage. In the 
latter situation, the cash payment is not excludable in computing 
overtime compensation. Consider the examples set forth in paragraphs 
(c)(2) and (3) of this section.
    (2) The X construction contractor has for some time been paying 
$3.25 an hour to a mechanic as his basic cash wage plus 50 cents an hour 
as a contribution to a welfare and pension plan. The Secretary of Labor 
determines that a basic hourly rate of $3 an hour and a fringe benefit 
contribution of 50 cents are prevailing. The basic hourly rate or 
regular rate for overtime purposes would be $3.25, the rate actually 
paid as a basic cash wage for the employee of X, rather than the $3 rate 
determined as prevailing by the Secretary of Labor.
    (3) Under the same prevailing wage determination, discussed in 
paragraph (c)(2) of this section, the Y construction contractor who has 
been paying $3 an hour as his basic cash wage on which he has been 
computing overtime compensation reduces the cash wage to $2.75 an hour 
but computes his costs of benefits under section 1(b)(2)(B) as $1 an 
hour. In this example the regular or basic hourly rate would continue to 
be $3 an hour. See S. Rep. No. 963, p. 7.



PART 6--RULES OF PRACTICE FOR ADMINISTRATIVE PROCEEDINGS ENFORCING LABOR STANDARDS IN FEDERAL AND FEDERALLY ASSISTED CONSTRUCTION CONTRACTS AND FEDERAL SERVICE 
CONTRACTS--Table of Contents




                           Subpart A--General

Sec.
6.1  Applicability of rules.
6.2  Definitions.
6.3  Service; copies of documents and pleadings.
6.4  Subpoenas (Service Contract Act).
6.5  Production of documents and witnesses.
6.6  Administrative Law Judge.
6.7  Appearances.
6.8  Transmission of record.

[[Page 133]]

 Subpart B--Enforcement Proceedings Under the Service Contract Act (and 
  Under the Contract Work Hours and Safety Standards Act for Contracts 
                  Subject to the Service Contract Act)

6.15  Complaints.
6.16  Answers.
6.17  Amendments to pleadings.
6.18  Consent findings and order.
6.19  Decision of the Administrative Law Judge.
6.20  Petition for review.
6.21  Ineligible list.

Subpart C--Enforcement Proceedings Under the Davis-Bacon Act and Related 
Prevailing Wage Statutes, the Copeland Act, and the Contract Work Hours 
and Safety Standards Act (Except Under Contracts Subject to the Service 
                              Contract Act)

6.30  Referral to Chief Administrative Law Judge.
6.31  Amendments to pleadings.
6.32  Consent findings and order.
6.33  Decision of the Administrative Law Judge.
6.34  Petition for review.
6.35  Ineligible lists.

               Subpart D--Substantial Interest Proceedings

6.40  Scope.
6.41  Referral to Chief Administrative Law Judge.
6.42  Amendments to pleadings.
6.43  Consent findings and order.
6.44  Decision of the Administrative Law Judge.
6.45  Petition for review.
6.46  Ineligible list.

      Subpart E--Substantial Variance and Arm's-Length Proceedings

6.50  Scope.
6.51  Referral to Chief Administrative Law Judge.
6.52  Appointment of Administrative Law Judge and notification of 
          prehearing conference and hearing date.
6.53  Prehearing conference.
6.54  Hearing.
6.55  Closing of record.
6.56  Decision of the Administrative Law Judge.
6.57  Petition for review.

    Authority: Secs. 4 and 5, 79 Stat. 1034, 1035 as amended by 86 Stat. 
789, 790, 41 U.S.C. 353 and 354; 5 U.S.C. 301; Reorg. Plan No. 14 of 
1950, 64 Stat. 1267, 5 U.S.C. Appendix; 46 Stat. 1494, as amended by 49 
Stat. 1011, 78 Stat. 238, 40 U.S.C. 276a-276a-7; 76 Stat. 357-359, 40 
U.S.C. 327-332; 48 Stat. 948, as amended by 63 Stat. 108, 72 Stat. 967, 
40 U.S.C. 276c.

    Source: 49 FR 10627, Mar. 21, 1984, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 6 appear at 61 FR 
19984, May 3, 1996.



                           Subpart A--General



Sec. 6.1  Applicability of rules.

    This part provides the rules of practice for administrative 
proceedings under the Service Contract Act, the Davis-Bacon Act and 
related statutes listed in Sec. 5.1 of part 5 of this title which 
require payment of wages determined in accordance with the Davis-Bacon 
Act, the Contract Work Hours and Safety Standards Act, and the Copeland 
Act. See parts 4 and 5 of this title.



Sec. 6.2  Definitions.

    (a) Administrator means the Administrator of the Wage and Hour 
Division, Employment Standards Administration, U.S. Department of Labor, 
or authorized representative.
    (b) Associate Solicitor means the Associate Solicitor for Fair Labor 
Standards, Office of the Solicitor, U.S. Department of Labor, 
Washington, DC 20210.
    (c) Chief Administrative Law Judge means the Chief Administrative 
Law Judge, U.S. Department of Labor, 800 K Street, NW., Suite 400, 
Washington DC 20001-8002.
    (d) Respondent means the contractor, subcontractor, person alleged 
to be responsible under the contract or subcontract, and/or any firm, 
corporation, partnership, or association in which such person or firm is 
alleged to have a substantial interest (or interest, if the proceeding 
is under the Davis-Bacon Act) against whom the proceedings are brought.

[49 FR 10627, Mar. 21, 1984, as amended at 56 FR 54708, Oct. 22, 1991]



Sec. 6.3  Service; copies of documents and pleadings.

    (a) Manner of service. Service upon any party shall be made by the 
party filing the pleading or document by delivering a copy or mailing a 
copy to the last known address. When a party is

[[Page 134]]

represented by an attorney, the service should be upon the attorney.
    (b) Proof of service. A certificate of the person serving the 
pleading or other document by personal delivery or by mailing, setting 
forth the manner of said service shall be proof of the service. Where 
service is made by mail, service shall be complete upon mailing. 
However, documents are not deemed filed until received by the Chief 
Clerk at the Office of Administrative Law Judges and where documents are 
filed by mail 5 days shall be added to the prescribed period.
    (c) Service upon Department, number of copies of pleading or other 
documents. An original and three copies of all pleadings and other 
documents shall be filed with the Department of Labor: The original and 
one copy with the Administrative Law Judge before whom the case is 
pending, one copy with the attorney representing the Department during 
the hearing, and one copy with the Associate Solicitor.



Sec. 6.4  Subpoenas (Service Contract Act).

    All applications under the Service Contract Act for subpoenas ad 
testificandum and subpoenas duces tecum shall be made in writing to the 
Administrative Law Judge. Application for subpoenas duces tecum shall 
specify as exactly as possible the documents to be produced.



Sec. 6.5  Production of documents and witnesses.

    The parties, who shall be deemed to be the Department of Labor and 
the respondent(s), may serve on any other party a request to produce 
documents or witnesses in the control of the party served, setting forth 
with particularity the documents or witnesses requested. The party 
served shall have 15 days to respond or object thereto unless a shorter 
or longer time is ordered by the Administrative Law Judge. The parties 
shall produce documents and witnesses to which no privilege attaches 
which are in the control of the party, if so ordered by the 
Administrative Law Judge upon motion therefor by a party. If a privilege 
is claimed, it must be specifically claimed in writing prior to the 
hearing or orally at the hearing or deposition, including the reasons 
therefor. In no event shall a statement taken in confidence by the 
Department of Labor or other Federal agency be ordered to be produced 
prior to the date of testimony at trial of the person whose statement is 
at issue unless the consent of such person has been obtained.



Sec. 6.6  Administrative Law Judge.

    (a) Equal Access to Justice Act. Proceedings under this part are not 
subject to the provisions of the Equal Access to Justice Act (Pub. L. 
96-481). In any hearing conducted pursuant to the provisions of this 
part 6, Administrative Law Judges shall have no power or authority to 
award attorney fees and/or other litigation expenses pursuant to the 
provisions of the Equal Access to Justice Act.
    (b) Contumacious conduct: failure or refusal of a witness to appear 
or answer. Contumacious conduct at any hearing before an Administrative 
Law Judge shall be ground for exclusion from the hearing., In cases 
arising under the Service Contract Act, the failure or refusal of a 
witness to appear at any hearing or at a deposition when so ordered by 
the Administrative Law Judge, or to answer any question which has been 
ruled to be proper, shall be ground for the action provided in section 5 
of the Act of June 30, 1936 (41 U.S.C. 39) and, in the discretion of the 
Administrative Law Judge, for striking out all or part of the testimony 
which may have been given by such witness.



Sec. 6.7  Appearances.

    (a) Representation. The parties may appear in person, by counsel, or 
otherwise.
    (b) Failure to appear. In the event that a party appears at the 
hearing and no party appears for the opposing side, the presiding 
Administrative Law Judge is authorized, if such party fails to show good 
cause for such failure to appear, to dismiss the case or to find the 
facts as alleged in the complaint and to enter a default judgment 
containing such findings, conclusions and order as are appropriate. Only 
where a petition for review of such default judgment cites alleged 
procedural irregularities in the proceeding below and not the merits of 
the case shall a

[[Page 135]]

non-appearing party be permitted to file such a petition for review. 
Failure to appear at a hearing shall not be deemed to be a waiver of the 
right to be served with a copy of the Administrative Law Judge's 
decision.



Sec. 6.8  Transmission of record.

    If a petition for review of the Administrative Law Judge's decision 
is filed with the Administrative Review Board, the Chief Administrative 
Law Judge shall promptly transmit the record of the proceeding.
    If a petition for review is not filed within the time prescribed in 
this part, the Chief Administrative Law Judge shall so advise the 
Administrator.



 Subpart B--Enforcement Proceedings Under the Service Contract Act (and 
  Under the Contract Work Hours and Safety Standards Act for Contracts 
                  Subject to the Service Contract Act)



Sec. 6.15  Complaints.

    (a) Enforcement proceedings under the Service Contract Act and under 
the Contract Work Hours and Safety Standards Act for contracts subject 
to the Service Contract Act, may be instituted by the Associate 
Solicitor for Fair Labor Standards or a Regional Solicitor by issuing a 
complaint and causing the complaint to be served upon the respondent.
    (b) The complaint shall contain a clear and concise factual 
statement of the grounds for relief and the relief requested.
    (c) The Administrative Law Judge shall notify the parties of the 
time and place for a hearing.



Sec. 6.16  Answers.

    (a) Within 30 days after the service of the complaint the respondent 
shall file an answer with the Chief Administrative Law Judge. The answer 
shall be signed by the respondent or his/her attorney.
    (b) The answer shall (1) contain a statement of the facts which 
constitute the grounds of defense, and shall specifically admit, 
explain, or deny each of the allegations of the complaint unless the 
respondent is without knowledge, in which case the answer shall so 
state; or (2) state that the respondent admits all of the allegations of 
the complaint. The answer may contain a waiver of hearing. Failure to 
file an answer to or plead specifically to any allegation of the 
complaint shall constitute an admission of such allegation.
    (c) Failure to file an answer shall constitute grounds for waiver of 
hearing and entry of a default judgment unless respondent shows good 
cause for such failure to file. In preparing the decision of default 
judgment the Administrative Law Judge shall adopt as findings of fact 
the material facts alleged in the complaint and shall order the 
appropriate relief and/or sanctions.



Sec. 6.17  Amendments to pleadings.

    At any time prior to the close of the hearing record, the complaint 
or answer may be amended with the permission of the Administrative Law 
Judge and on such terms as he/she may approve. When issues not raised by 
the pleadings are reasonably within the scope of the original complaint 
and are tried by express or implied consent of the parties, they shall 
be treated in all respects as if they had been raised in the pleadings, 
and such amendments may be made as necessary to make them conform to the 
evidence. Such amendments shall be allowed when justice and the 
presentation of the merits are served thereby, provided there is no 
prejudice to the objecting party's presentation on the merits. A 
continuance in the hearing may be granted or the record left open to 
enable the new allegations to be addressed. The presiding Administrative 
Law Judge may, upon reasonable notice and upon such terms as are just, 
permit supplemental pleadings setting forth transactions, occurrences or 
events which have happened since the data of the pleadings and which are 
relevant to any of the issues involved.



Sec. 6.18  Consent findings and order.

    (a) At any time prior to the receipt of evidence or, at the 
discretion of the Administrative Law Judge, prior to the issuance of the 
decision of the Administrative Law Judge, the parties may enter into 
consent findings and an

[[Page 136]]

order disposing of the processings in whole or in part.
    (b) Any agreement containing consent findings and an order disposing 
of a proceeding in whole or in part shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the complaint and the agreement;
    (3) A waiver of any further procedural steps before the 
Administrative Law Judge and Administrative Review Board regarding those 
matters which are the subject of the agreement; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Within 30 days after receipt of an agreement containing consent 
findings and an order disposing of the disputed matter in whole, the 
Administrative Law Judge shall, if satisfied with its form and 
substance, accept such agreement by issuing a decision based upon the 
agreed findings and order. If such agreement disposes of only a part of 
the disputed matter, a hearing shall be conducted on the matters 
remaining in dispute.



Sec. 6.19  Decision of the Administrative Law Judge.

    (a) Proposed findings of fact, conclusions, and order. Within 20 
days of filing of the transcript of the testimony or such additional 
time as the Administrative Law Judge may allow each party may file with 
the Administrative Law Judge proposed findings of fact, conclusion of 
law, and order, together with a supporting brief expressing the reasons 
for such proposals. Such proposals and brief shall be served on all 
parties, and shall refer to all portions of the record and to all 
authorities relied upon in support of each proposal.
    (b) Decision of the Administrative Law Judge. (1) Within a 
reasonable time after the time allowed for the filing of proposed 
findings of fact, conclusions of law, and order, or within 30 days after 
receipt of an agreement containing consent findings and order disposing 
of the disputed matter in whole, the Administrative Law Judge shall make 
his/her decision. If any aggrieved party desires review of the decision, 
a petition for review thereof shall be filed as provided in Sec. 6.20 of 
this title, and such decision and order shall be inoperative unless and 
until the Administrative Review Board issues an order affirming the 
decision. The decision of the Administrative Law Judge shall include 
findings of fact and conclusions of law, with reasons and bases 
therefor, upon each material issue of fact, law, or discretion presented 
on the record. The decision of the Administrative Law Judge shall be 
based upon a consideration of the whole record, including any admissions 
made under Secs. 6.16, 6.17 and 6.18 of this title. It shall be 
supported by reliable and probative evidence. Such decision shall be in 
accordance with the regulations and rulings contained in parts 4 and 5 
and other pertinent parts of this title.
    (2) If the respondent is found to have violated the Service Contract 
Act, the Administrative Law Judge shall include in his/her decision an 
order as to whether the respondent is to be relieved from the ineligible 
list as provided in section 5(a) of the Act, and, if relief is ordered, 
findings of the unusual circumstance, within the meaning of section 5(a) 
of the Act, which are the basis therefor. If respondent is found to have 
violated the provisions of the Contract Work Hours and Safety Standards 
Act, the Administrative Law Judge shall issue an order as to whether the 
respondent is to be subject to the ineligible list as provided in 
Sec. 5.12(a)(1) of part 4 of this title, including findings regarding 
the existence of aggravated or willful violations. If wages and/or 
fringe benefits are found due under the Service Contract Act and/or the 
Contract Work Safety Standards Act and are unpaid, no relief from the 
ineligible list shall be ordered except on condition that such wages 
and/or fringe benefits are paid.
    (3) The Administrative Law Judge shall make no findings regarding 
liquidated damages under the Contract Work Hours and Safety Standards 
Act.



Sec. 6.20  Petition for review.

    Within 40 days after the date of the decision of the Administrative 
Law

[[Page 137]]

Judge (or such additional time as is granted by the Administrative 
Review Board), any party aggrieved thereby who desires review thereof 
shall file a petition for review of the decision with supporting 
reasons. Such party shall transmit the petition in writing to the 
Administrative Review Board pursuant to 29 CFR part 8, with a copy 
thereof to the Chief Administrative Law Judge. The petition shall refer 
to the specific findings of fact, conclusions of law, or order at issue. 
A petition concerning the decision on the ineligibility list shall also 
state the unusual circumstances or lack thereof under the Service 
Contract Act, and/or the aggravated or willful violations of the 
Contract Work Hours and Safety Standards Act or lack thereof, as 
appropriate.



Sec. 6.21  Ineligible list.

    (a) Upon the final decision of the Administrative Law Judge or 
Administrative Review Board, as appropriate, the Administrator shall 
within 90 days forward to the Comptroller General the name of any 
respondent found in violation of the Service Contract Act, including the 
name of any firm, corporation, partnership, or association in which the 
respondent has a substantial interest, unless such decision orders 
relief from the ineligible list because of unusual circumstances.
    (b) Upon the final decision of the Administrative Law Judge or the 
Administrative Review Board, as appropriate, the Administrator promptly 
shall forward to the Comptroller General the name of any respondent 
found to be in aggravated or willful violation of the Contract Work 
Hours and Safety Standards Act, and the name of any firm, corporation, 
partnership, or association in which the respondent has a substantial 
interest.



Subpart C--Enforcement Proceedings Under the Davis-Bacon Act and Related 
Prevailing Wage Statutes, the Copeland Act, and the Contract Work Hours 

and Safety Standards Act (Except Under Contracts Subject to the Service 
                              Contract Act)



Sec. 6.30  Referral to Chief Administrative Law Judge.

    (a) Upon timely receipt of a request for a hearing under Sec. 5.11 
(where the Administrator has determined that relevant facts are in 
dispute) or Sec. 5.12 of part 5 of this title, the Administrator shall 
refer the case to the Chief Administrative Law Judge by Order of 
Reference, to which shall be attached a copy of the notification letter 
to the respondent from the Administrator and response thereto, for 
designation of an Administrative Law Judge to conduct such hearings as 
may be necessary to decide the disputed matters. A copy of the Order of 
Reference and attachments thereto shall be served upon the respondent.
    (b) The notification letter from the Administrator and response 
thereto shall be given the effect of a complaint and answer, 
respectively, for purposes of the administrative proceedings. The 
notification letter and response shall be in accordance with the 
provisions of Sec. 5.11 or Sec. 5.12(b)(1) of part 5 of this title, as 
appropriate.



Sec. 6.31  Amendments to pleadings.

    At any time prior to the closing of the hearing record, the 
complaint (notification letter) or answer (response) may be amended with 
the permission of the Administrative Law Judge and upon such terms as 
he/she may approve. For proceedings pursuant to Sec. 5.11 of part 5 of 
this title, such an amendment may include a statement that debarment 
action is warranted under Sec. 5.12(a)(1) of part 5 of this title or 
under section 3(a) of the Davis-

[[Page 138]]

Bacon Act. Such amendments shall be allowed when justice and the 
presentation of the merits are served thereby, provided there is no 
prejudice to the objecting party's presentation on the merits. When 
issues not raised by the pleadings are reasonably within the scope of 
the original complaint and are tried by express or implied consent of 
the parties, they shall be treated in all respects as if they had been 
raised in the pleadings, and such amendments may be made as necessary to 
make them conform to the evidence. The presiding Administrative Law 
Judge may, upon reasonable notice and upon such terms as are just, 
permit supplemental pleadings setting forth transactions, occurrences or 
events which have happened since the date of the pleadings and which are 
relevant to any of the issues involved. A continuance in the hearing may 
be granted or the record left open to enable the new allegations to be 
addressed.



Sec. 6.32  Consent findings and order.

    (a) At any time prior to the receipt of evidence or, at the 
discretion of the Administrative Law Judge, prior to the issuance of the 
decision of the Administrative Law Judge, the parties may enter into 
consent findings and an order disposing of the proceeding in whole or in 
part.
    (b) Any agreement containing consent findings and an order disposing 
of a proceeding in whole or in part shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the complaint and the agreement;
    (3) That any order concerning debarment under the Davis-Bacon Act 
(but not under any of the other statutes listed in Sec. 5.1 of part 5 of 
this title) shall constitute a recommendation to the Comptroller 
General;
    (4) A waiver of any further procedural steps before the 
Administrative Law Judge and the Administrative Review Board regarding 
those matters which are the subject of the agreement; and
    (5) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Within 30 days after receipt of an agreement containing consent 
findings and an order disposing of the disputed matter in whole, the 
Administrative Law Judge shall, if satisfied with its form and 
substance, accept such agreement by issuing a decision based upon the 
agreed findings and order. If such agreement disposes of only a part of 
the disputed matter, a hearing shall be conducted on the matters 
remaining in dispute.



Sec. 6.33  Decision of the Administrative Law Judge.

    (a) Proposed findings of fact, conclusions, and order. Within 20 
days of filing of the transcript of the testimony or such additional 
time as the Administrative Law Judge may allow, each party may file with 
the Administrative Law Judge proposed findings of fact, conclusions of 
law, and order, together with a supporting brief expressing the reasons 
for such proposals. Such proposals and brief shall be served on all 
parties, and shall refer to all portions of the record and to all 
authorities relied upon in support of each proposal.
    (b) Decision of the Administrative Law Judge. (1) Within a 
reasonable time after the time allowed for filing of proposed findings 
of fact, conclusions of law, and order, or within 30 days of receipt of 
an agreement containing consent findings and order disposing of the 
disputed matter in whole, the Administrative Law Judge shall make his/
her decision. If any aggrieved party desires review of the decision, a 
petition for review thereof shall be filed as provided in Sec. 6.34 of 
this title, and such decision and order shall be inoperative unless and 
until the Administrative Review Board either declines to review the 
decision or issues an order affirming the decision. The decision of the 
Administrative Law Judge shall include findings of fact and conclusions 
of law, with reasons and bases therefor, upon each material issue of 
fact, law, or discretion presented on the record. Such decision shall be 
in accordance with the regulations and rulings contained in part 5 and 
other pertinent

[[Page 139]]

parts of this title. The decision of the Administrative Law Judge shall 
be based upon a consideration of the whole record, including any 
admissions made in the respondent's answer (response) and Sec. 6.32 of 
this title. It shall be supported by reliable and probative evidence.
    (2) If the respondent is found to have violated the labor standards 
provisions of any of the statutes listed in Sec. 5.1 of part 5 of this 
title other than the Davis-Bacon Act, and if debarment action was 
requested pursuant to the complaint (notification letter) or any 
amendment thereto, the Administrative Law Judge shall issue an order as 
to whether the respondent is to be subject to the ineligible list as 
provided in Sec. 5.12(a)(1) of this title, including any findings of 
aggravated or willful violations. If the respondent is found to have 
violated the Davis-Bacon Act, and if debarment action was requested, the 
Administrative Law Judge shall issue as a part of the order a 
recommendation as to whether respondent should be subject to the 
ineligible list pursuant to section 3(a) of the Act, including any 
findings regarding respondent's disregard of obligations to employees 
and subcontractors. If wages are found due and are unpaid, no relief 
from the ineligible list shall be ordered or recommended except on 
condition that such wages are paid.
    (3) The Administrative Law Judge shall make no findings regarding 
liquidated damages under the Contract Work Hours and Safety Standards 
Act.



Sec. 6.34  Petition for review.

    Within 40 days after the date of the decision of the Administrative 
Law judge (or such additional time as is granted by the Administrative 
Review Board). any party aggrieved thereby who desires review thereof 
shall file a petition for review of the decision with supporting 
reasons. Such party shall transmit the petition in writing to the 
Administrative Review Board, pursuant to part 7 of this title, with a 
copy thereof to the Chief Administrative Law judge. The petition shall 
refer to the specific findings of fact, conclusions of law, or order at 
issue. A petition concerning the decision on debarment shall also state 
the aggravated or willful violations and/or disregard of obligations to 
employees and subcontractors, or lack thereof, as appropriate.



Sec. 6.35  Ineligible lists.

    Upon the final decision of the Administrative Law Judge or 
Administrative Review Board, as appropriate, regarding violations of any 
statute listed in Sec. 5.1 of part 5 of this title other than the Davis-
Bacon Act, the Administrator promptly shall foward to the Comptroller 
General the name of any respondent found to have committed aggravated or 
willful violations of the labor standards provisions of such statute, 
and the name of any firm, corporation, partnership, or association in 
which such respondent has a substantial interest. Upon the final 
decision of the Administrative Law Judge or Administrative Review Board, 
as appropriate, regarding violations of the Davis-Bacon Act, the 
Administrator promptly shall forward to the Comptroller General any 
recommendation regarding debarment action against a respondent, and the 
name of any firm, corporation, partnership, or association in which such 
respondent has an interest.



               Subpart D--Substantial Interest Proceedings



Sec. 6.40  Scope.

    This subpart supplements the procedures contained in Sec. 4.12 of 
part 4 and Sec. 5.12(d) of part 5 of this title, and states the rules of 
practice applicable to hearings to determine whether persons of firms 
whose names appear on the ineligible list pursuant to section 5(a) of 
the Service Contract Act or Sec. 5.12(a)(1) of part 5 of this title have 
a substantial interest in any firm, corporation, partnership, or 
association other than those listed on the ineligible list; and/or to 
determine whether persons or firms whose names appear on the ineligible 
list pursuant to section 3(a) of the Davis-Bacon Act have an interest in 
any firm, corporation, partnership, or association other than those 
listed on the ineligible list.

[[Page 140]]



Sec. 6.41  Referral to Chief Administrative Law Judge.

    (a) Upon timely receipt of a request for a hearing under Sec. 4.12 
of part 4 or Sec. 5.12 of part 5 of this title, where the Administrator 
has determined that relevant facts are in dispute, or on his/her own 
motion, the Administrator shall refer the case to the Chief 
Administrative Law Judge by Order of Reference, to which shall be 
attached a copy of any findings of the Administrator and response 
thereto, for designation of an Administrative Law Judge to conduct such 
hearings as may be necessary to decide the disputed matters. A copy of 
the Order of Reference and attachments thereto shall be served upon the 
person or firm requesting the hearing, if any and upon the respondents.
    (b) The findings of the Administrator and response thereto shall be 
given the effect of a complaint and answer, respectively, for purposes 
of the administrative preceedings.



Sec. 6.42  Amendments to pleadings.

    At any time prior to the closing of the hearing record, the 
complaint (Administrator's findings) or answer (response) may be amended 
with the permission of the Administrative Law Judge and upon such terms 
as he/she may approve. Such amendments shall be allowed when justice and 
the presentation of the merits are served thereby, provided there is no 
prejudice to the objecting party's presentation on the merits. When 
issues not raised by the pleadings are reasonably within the scope of 
the original complaint and are tried by express or implied consent of 
the parties, they shall be treated in all respects as if they had been 
raised in the pleadings, and such amendments may be made as necessary to 
make them conform to the evidence. The presiding Administative Law Judge 
may, upon such terms as are just, permit supplemental pleadings setting 
forth transactions, occurrences or events which have happened a since 
the data of the pleadings and which are relevant to any of the issues 
involved. A continuance in the hearing may be granted or the record left 
open to enable the new allegations to be addressed.



Sec. 6.43  Consent findings and order.

    (a) At any time prior to the receipt of evidence or, at the 
discretion of the Administrative Law Judge, prior to the issuance of the 
decision of the Administrative Law Judge, the parties may enter into 
consent findings and an order disposing of the proceeding in whole or in 
part.
    (b) Any agreement containing consent findings and an order disposing 
of a proceeding in whole or in part shall provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing:
    (2) That the entire record on which any order may be based shall 
consist solely of the complaint and the agreement;
    (3) A waiver of any further procedural steps before the 
Administrative Law Judge and the Administrative Review Board, as 
appropriate, regarding those matters which are the subject of the 
agreement; and
    (4) A waiver of any right to challenge or contest the validity of 
the findings and order entered into in accordance with the agreement.
    (c) Within 30 days after receipt of an agreement containing consent 
findings and an order disposing of the disputed matter in whole, the 
Administrative Law Judge shall accept such agreement by issuing a 
decision based upon the agreed findings and order. If a such agreement 
disposes of only a part of the disputed matter, a hearing shall be 
conducted on the matters remaining in dispute.



Sec. 6.44  Decision of the Administrative Law Judge.

    (a) Proposed findings of fact, conclusions, and order. Within 30 
days of filing of the transcript of the testimony, each party may file 
with the Administrative Law Judge proposed findings of fact, conclusions 
of law, and order, together with a supporting brief expressing the 
reasons for such proposals. Such proposals and brief shall be served on 
all parties, and shall refer to all portions of the record and to all 
authorities relied upon in support of each proposal.
    (b) Decision of the Administrative Law Judge. Within 60 days after 
the time allowed for filing of proposed findings of

[[Page 141]]

fact, conclusions of law, and order, or within 30 days after receipt of 
an agreement containing consent findings and order disposing of the 
disputed matter in whole, the Administrative Law Judge shall make his/
her decision. If any aggrieved party desires review of the decision a 
petition for review thereof shall be filed as provided in Sec. 6.45 of 
this title, and such decision and order shall be inoperative unless and 
until the Administrative Review Board issues an order affirming the 
decision. The decision of the Administrative Law Judge shall include 
findings of fact and conclusions of law, with reasons and bases 
therefor, upon each material issue of fact, law, or discretion presented 
on the record. Such decision shall be in accordance with the regulations 
and rulings contained in parts 4 and 5 and other pertinent parts of this 
title. The decision of the Administrative Law Judge shall be based upon 
a consideration of the whole record, including any admissions made in 
the respondents' answer (response) and Sec. 6.43 of this title.



Sec. 6.45  Petition for review.

    Within 30 days after the date of the decision of the Administrative 
Law Judge, any party aggrieved thereby who desires review thereof shall 
file a petition for review of the decision with supporting reasons. Such 
party shall transmit the petition in writing to the Administrative 
Review Board pursuant to 29 CFR part 8 if the proceeding was under the 
Service Contract Act, or to the Administrative Review Board pursuant to 
29 CFR part 7 if the proceeding was under Sec. 5.12(a)(1) of part 5 of 
this title or under section 3(a) of the Davis-Bacon Act, with a copy 
thereof to the Chief Administrative Law Judge. The petition for review 
shall refer to the specific findings of fact, conclusions of law, or 
order at issue.



Sec. 6.46  Ineligible list.

    Upon the final decision of the Administrative Law Judge, 
Administrative Review Board, as appropriate, the Administrator promptly 
shall forward to the Comptroller General the names of any firm, 
corporation, partnership, or association in which a person or firm 
debarred pursuant to section 5(a) of the Service Contract Act or 
Sec. 5.12(a) of part 5 of this title has a substantial interest; and/or 
the name of any firm, corporation, partnership, or association in which 
a person or firm debarred pursuant to section 3(a) of the Davis-Bacon 
Act has an interest.



      Subpart E--Substantial Variance and Arm's Length Proceedings



Sec. 6.50  Scope.

    This subpart supplements the procedures contained in Secs. 4.10 and 
4.11 of part 4 of this title and states the rules of practice applicable 
to hearings under section 4(c) of the Act to determine whether the 
collectively bargained wages and/or fringe benefits otherwise required 
to be paid under that section and sections 2(a)(1) and (2) of the Act 
are substantially at variance with those which prevail for services of a 
character similar in the locality, and/or to determine whether the wages 
and/or fringe benefits provided in the collective bargaining agreement 
were reached as a result of arm's-length negotiations.



Sec. 6.51  Referral to Chief Administrative Law Judge.

    (a) Referral pursuant to Sec. 4.10 or Sec. 4.11 of part 4 of this 
title will be by an Order of Reference from the Administrator to the 
Chief Administrative Law Judge, to which will be attached the material 
submitted by the applicant or any other material the Administrator 
considers relevant and, for proceedings pursuant to Sec. 4.11 of this 
title, a copy of any findings of the Administrator. A copy of the Order 
of Reference and all attachments will be sent by mail to the following 
parties: The agency whose contract is involved, the parties to the 
collective bargaining agreement, any contractor or subcontractor 
performing on the contract, any contractor or subcontractor known to be 
desirous of bidding thereon or performing services thereunder who is 
known or believed to be interested in the determination of the issue, 
any unions or other authorized representatives of service employees 
employed or who may be expected to be employed by such contractor or 
subcontractor on

[[Page 142]]

the contract work, and any other affected parties known to be interested 
in the determination of the issue. The Order of Reference will have 
attached a certificate of service naming all interested parties who have 
been served.
    (b) Accompanying the Order of Reference and attachments will be a 
notice advising that any interested party, including the applicant, who 
intends to participate in the proceeding shall submit a written response 
to the Chief Administrative Law Judge within 20 days of the date on 
which the certificate of service indicates the Order of Reference was 
mailed. The notice will state that such a response shall include:
    (1) A statement of the interested party's case;
    (2) A list of witnesses the interested party will present, a summary 
of the testimony each is expected to give, and copies of all exhibits 
proposed to be proffered;
    (3) A list of persons who have knowledge of the facts for whom the 
interested party requests that subpoenas be issued and a brief statement 
of the purpose of their testimony; and
    (4) A certificate of service in accordance with Sec. 6.3 of this 
title on all interested parties, including the Administrator.



Sec. 6.52  Appointment of Administrative Law Judge and notification of prehearing conference and hearing date.

    Upon receipt from the Administrator of an Order of Reference, notice 
to the parties, attachments and certificate of service, the Chief 
Administrative Law Judge shall appoint an Administrative Law Judge to 
hear the case. The Administrative Law Judge shall promptly notify all 
interested parties of the time and place of a prehearing conference and 
of the hearing which shall be held immediately upon the completion of 
prehearing conference. The date of the prehearing conference and hearing 
shall be not more than 60 days from the date on which the certificate of 
service indicates the Order of Reference was mailed.



Sec. 6.53  Prehearing conference.

    (a) At the prehearing conference the Administrative Law Judge shall 
attempt to determine the exact areas of agreement and disagreement 
raised by the Administrator's Order of Reference and replies thereto, so 
that the evidence and arguments presented at the hearing will be 
relevant, complete, and as brief and concise as possible.
    (b) Any interested party desiring to file proposed findings of fact 
and conclusions of law shall submit them to the Administrative Law Judge 
at the prehearing conference.
    (c) If the parties agree that no hearing is necessary to supplement 
the written evidence and the views and arguments that have been 
presented, the Administrative Law Judge shall forthwith render his/her 
final decision. The Administrative Law Judge with the agreement of the 
parties may permit submission of additional written evidence or 
argument, such as data accompanied by affidavits attesting to its 
validity or depositions, within ten days of commencement of the 
prehearing conference.



Sec. 6.54  Hearing.

    (a) Except as provided in Sec. 6.53(c) of this title, the hearing 
shall commence immediately upon the close of the prehearing conference. 
All matters remaining in controversy, including the presentation of 
additional evidence, shall be considered at the hearing. There shall be 
a minimum of formality in the proceeding consistent with orderly 
procedure.
    (b) To expedite the proceeding the Administrative Law Judge shall, 
after consultation with the parties, set reasonable guidelines and 
limitations for the presentations to be made at the hearing. The 
Administrative Law Judge may limit cross-examination and may question 
witnesses.
    (c) Under no circumstances shall source data obtained by the Bureau 
of Labor Statistics, U.S. Department of Labor, or the names of 
establishments contacted by the Bureau be submitted into evidence or 
otherwise disclosed. Where the Bureau has conducted a survey, the 
published summary of the data may be submitted into evidence.

[[Page 143]]

    (d) Affidavits or depositions may be admitted at the discretion of 
the Administrative Law Judge. The Administrative Law Judge may also 
require that unduly repetitious testimony be submitted as affidavits. 
Such affidavits shall be submitted within three days of the conclusions 
of the hearing.
    (e) Counsel for the Administrator shall participate in the 
proceeding to the degree he/she deems appropriate.
    (f) An expedited transcript shall be made of the hearing and of the 
prehearing conference.



Sec. 6.55  Closing of record.

    The Administrative Law Judge shall close the record promptly and not 
later than 10 days after the date of commencement of the prehearing 
conference. Post-hearing briefs may be permitted, but the filing of 
briefs shall not delay issuance of the decision of the Administrative 
Law Judge pursuant to Sec. 6.56 of this title.



Sec. 6.56  Decision of the Administrative Law Judge.

    Within 15 days of receipt of the transcript, the Administrative Law 
Judge shall render his/her decision containing findings of fact and 
conclusions of law. The decision of the Administrative Law Judge shall 
be based upon consideration of the whole record, and shall be in 
accordance with the regulations and rulings contained in part 4 and 
other pertinent parts of this title. If any party desires review of the 
decision, a petition for review thereof shall be filed as provided in 
Sec. 6.57 of this title, and such decision and order shall be 
inoperative unless and until the Administrative Review Board issues an 
order affirming the decision. If a petition has not been filed within 10 
days of issuance of the Administrative Law Judge's decision, the 
Administrator shall promptly issue any wage determination which may be 
required as a result of the decision.



Sec. 6.57  Petition for review.

    Within 10 days after the date of the decision of the Administrative 
Law Judge, any interested party who participated in the proceedings 
before the Administrative Law Judge and desires review of the decision 
shall file a petition for review by the Administrative Review Board 
pursuant to 29 CFR part 8. The petition shall refer to the specific 
findings of fact, conclusions of law, or order excepted to and the 
specific pages of transcript relevant to the petition for review.



PART 7--PRACTICE BEFORE THE ADMINISTRATIVE REVIEW BOARD WITH REGARD TO FEDERAL AND FEDERALLY ASSISTED CONSTRUCTION CONTRACTS--Table of Contents




                      Subpart A--Purpose and Scope

Sec.
7.1  Purpose and scope.

                Subpart B--Review of Wage Determinations

7.2  Who may file petitions for review.
7.3  Where to file.
7.4  When to file.
7.5  Contents of petitions.
7.6  Filing of wage determination record.
7.7  Presentations of other interested persons.
7.8  Disposition by the Administrative Review Board.

       Subpart C--Review of Other Proceedings and Related Matters

7.9  Review of decisions in other proceedings.

               Subpart D--Some General Procedural Matters

7.11  Right to counsel.
7.12  Intervention; other participation.
7.13  Consolidations.
7.14  Oral proceedings.
7.15  Public information.
7.16  Filing and service.
7.17  Variations in procedures.
7.18  Motions; extensions of time.

    Authority: Reorg. Plan No. 14 of 1950, 64 Stat. 1267; 5 U.S.C. 301, 
3 CFR, 1949-1953 Comp., p. 1007; sec. 2, 48 Stat. 948 as amended; 40 
U.S.C. 276c; secs. 104, 105, 76 Stat. 358, 359; 40 U.S.C. 330, 331; 65 
Stat. 290; 36 FR 306, 8755.

    Source: 36 FR 10863, June 4, 1971, unless otherwise noted.

    Editorial Note: Nomenclature changes to part 7 appear at 61 FR 
19985, May 3, 1996.

[[Page 144]]



                      Subpart A--Purpose and Scope



Sec. 7.1  Purpose and scope.

    (a) This part contains the rules of practice of the Administrative 
Review Board when it is exercising its jurisdiction described in 
paragraph (b) of this section.
    (b) The Board has jurisdiction to hear and decide in its discretion 
appeals concerning questions of law and fact from final decisions under 
parts 1, 3, and 5 of this subtitle including decisions as to the 
following: (1) Wage determinations issued under the Davis-Bacon Act and 
its related minimum wage statutes; (2) debarment cases arising under 
part 5 of this subtitle; (3) controversies concerning the payment of 
prevailing wage rates or proper classifications which involve 
significant sums of money, large groups of employees, or novel or 
unusual situations; and (4) recommendations of a Federal agency for 
appropriate adjustment of liquidated damages which are assessed under 
the Contract Work Hours and Safety Standards Act.
    (c) In exercising its discretion to hear and decide appeals, the 
Board shall consider, among other things, timeliness, the nature of the 
relief sought, matters of undue hardship or injustice, or the public 
interest.
    (d) In considering the matters within the scope of its jurisdiction 
the Board shall act as the authorized representative of the Secretary of 
Labor. The Board shall act as fully and finally as might the Secretary 
of Labor concerning such matters.
    (e) The Board is an essentially appellate agency. It will not hear 
matters de novo except upon a showing of extraordinary circumstances. It 
may remand under appropriate instructions any case for the taking of 
additional evidence and the making of new or modified findings by reason 
of the additional evidence.

[36 FR 10863, June 4, 1971, as amended at 61 FR 19985, May 3, 1996]



                Subpart B--Review of Wage Determinations.



Sec. 7.2  Who may file petitions for review.

    (a) Any interested person who is seeking a modification or other 
change in a wage determination under part 1 of this subtitle and who has 
requested the administrative officer authorized to make such 
modification or other change under part 1 and the request has been 
denied, after appropriate reconsideration shall have a right to petition 
for review of the action taken by that officer.
    (b) For purpose of this section, the term interested person is 
considered to include, without limitation:
    (1) Any contractor, or an association representing a contractor, who 
is likely to seek or to work under a contract containing a particular 
wage determination, or any laborer or mechanic, or any labor 
organization which represents a laborer or mechanic, who is likely to be 
employed or to seek employment under a contract containing a particular 
wage determination, and
    (2) any Federal, State, or local agency concerned with the 
administration of a proposed contract or a contract containing a 
particular wage determination issued pursuant to the Davis-Bacon Act or 
any of its related statutes.



Sec. 7.3  Where to file.

    The petition (original and four copies) accompanied by a statement 
of service shall be filed with the Administrative Review Board, U.S. 
Department of Labor, Washington, DC 20210. In addition, copies of the 
petition shall be served upon each of the following: (a) The Federal, 
State, or local agency, or agencies involved; (b) the officer issuing 
the wage determination; and (c) any other person (or the authorized 
representatives of such persons) known, or reasonably expected, to be 
interested in the subject matter of the petition.

[[Page 145]]



Sec. 7.4  When to file.

    (a) Requests for review of wage determinations must be timely made. 
Timeliness is dependent upon the pertinent facts and circumstances 
involved, including without limitation the contract schedule of the 
administering agency, the nature of the work involved, and its location.
    (b) The Board shall under no circumstances request any administering 
agency to postpone any contract action because of the filing of a 
petition. This is a matter which must be resolved directly with the 
administering agency by the petitioner or other interested person.



Sec. 7.5  Contents of petitions.

    (a) A petition for the review of a wage determination shall: (1) Be 
in writing and signed by the petitioner or his counsel (or other 
authorized representative); (2) be described as a petition for review by 
the Administrative Review Board; (3) identify clearly the wage 
determination, location of the project or projects in question, and the 
agency concerned; (4) state that the petitioner has requested 
reconsideration of the wage determination in question and describe 
briefly the action taken in response to the request; (5) contain a short 
and plain statement of the grounds for review; and (6) be accompanied by 
supporting data, views, or arguments.
    (b) A petition shall indicate whether or not the petitioner consents 
to the disposition of the questions involved by a single member of the 
Board.



Sec. 7.6  Filing of wage determination record.

    (a) In representing the officer issuing the wage determination the 
Solicitor shall, among other things, file promptly with the Board a 
record supporting his findings and conclusions, after receipt of service 
of the petition.
    (b) In representing the officer issuing the wage determination the 
Solicitor shall file with the Board a statement of the position of the 
officer issuing the wage determination concerning any findings 
challenged in the petition; and shall make service on the petitioner and 
any other interested persons.



Sec. 7.7  Presentations of other interested persons.

    Interested persons other than the petitioner shall have a reasonable 
opportunity as specified by the Board in particular cases to submit to 
the Board written data, views, or arguments relating to the petition. 
Such matter (original and four copies) should be filed with the 
Administrative Review Board, U.S. Department of Labor, Washington, DC 
20210. Copies of any such matter shall be served on the petitioner and 
other interested persons.



Sec. 7.8  Disposition by the Administrative Review Board.

    (a) The Board may decline review of any case whenever in its 
judgement a review would be inappropriate or because of lack of 
timeliness, the nature of the relief sought, or other reasons.
    (b) The Board shall decide the case upon the basis of all relevant 
matter contained in the entire record before it. The Board shall notify 
interested persons participating in the proceeding of its decision.
    (c) Decisions of the Board shall be by majority vote. A case will be 
reviewed upon the affirmative vote of one member.



       Subpart C--Review of Other Proceedings and Related Matters



Sec. 7.9  Review of decisions in other proceedings.

    (a) Any party or aggrieved person shall have a right to file a 
petition for review with the Board (original and four copies), within a 
reasonable time from any final decision in any agency action under part 
1, 3, or 5 of this subtitle.
    (b) The petition shall state concisely the points relied upon, and 
shall be accompanied by a statement setting forth supporting reasons. 
Further, the petition shall indicate whether or not the petitioner 
consents to the disposition of the questions involved by a single 
member.
    (c) A copy of the presentation shall be served upon the officer who 
issued the decision, and upon any other party or known interested 
person, as the case may be. In representing the officer who issued the 
final decision in any agency

[[Page 146]]

action under parts 1, 3, or 5 of the subtitle, the Solicitor shall, 
among other things, file promptly with the Board a record supporting the 
officer's decision, including any findings upon which the decision is 
based, after receipt of service of the petition.
    (d) In representing the officer issuing a final decision in any 
agency action under parts 1, 3, and 5 of this subtitle, the Solicitor 
shall file with the Board a statement of the position of the officer who 
issued the final decision at issue, concerning the decision challenged; 
and shall make service on the petitioner and any other interested 
persons.
    (e) The Board shall afford any other parties or known interested 
persons a reasonable opportunity to respond to the petition. Copies of 
any such response shall be served upon the officer issuing the decision 
below and upon the petitioner.
    (f) The Board shall pass upon the points raised in the petition upon 
the basis of the entire record before it, and shall notify the parties 
to the proceeding of its decision. In any remand of a case as provided 
in Sec. 7.1(e), the Board shall include any appropriate instructions.



               Subpart D--Some General Procedural Matters



Sec. 7.11  Right to counsel.

    Each interested person or party shall have the right to appear in 
person or by or with counsel or other qualified representative in any 
proceeding before the Board.



Sec. 7.12  Intervention; other participation.

    For good cause shown, the Board may permit any interested person or 
party to intervene or otherwise participate in any proceeding held by 
the Board. Except when requested orally before the Board, a petition to 
intervene or otherwise participate shall be in writing (original and 
four copies) and shall state with precision and particularity: (a) The 
petitioner's relationship to the matters involved in the proceedings, 
and (b) the nature of the presentation which he would make. Copies of 
the petition shall be served to all parties or interested persons known 
to participate in the proceeding, who may respond to the petition. 
Appropriate service shall be made of any response.



Sec. 7.13  Consolidations.

    Upon its own initiative or upon motion of any interested person or 
party, the Board may consolidate in any proceeding or concurrently 
consider two or more appeals which involve substantially the same 
persons or parties, or issues which are the same or closely related, if 
it finds that such consolidation or concurrent review will contribute to 
a proper dispatch of its business and to the ends of justice, and it 
will not unduly delay consideration of any such appeals.



Sec. 7.14  Oral proceedings.

    (a) With respect to any proceeding before it, the Board may upon its 
own initiative or upon request of any interested person or party direct 
the interested persons or parties to appear before the Board or its 
designee at a specified time and place in order to simplify the issues 
presented or to take up any other matters which may tend to expedite or 
facilitate the disposition of the proceeding.
    (b) In its discretion, the Board, or a single presiding member, may 
permit oral argument in any proceeding. The Board or the presiding 
member, shall prescribe the time and place for argument and the time 
allotted for argument. A petitioner wishing to make oral argument should 
make the request therefor in his petition.



Sec. 7.15  Public information.

    (a) Subject to the provisions of Secs. 1.15, 5.6, and part 70 of 
this subtitle, all papers and documents made a part of the official 
record in the proceedings of the Board and decisions of the Board shall 
be made available for public inspection during usual business hours at 
the office of the Administrative Review Board, U.S. Department of Labor, 
Washington, DC 20210.
    (b) Facsimile copies of such papers, documents and decisions shall 
be furnished upon request. There shall be a charge of 25 cents for each 
facsimile page reproduction except for copies of

[[Page 147]]

materials duplicated for distribution for no charge as provided in 
paragraph (c) of this section. Postal fees in excess of domestic first 
class postal rates as are necessary for transmittal of copies will be 
added to the per-page fee specified unless stamps or stamped envelopes 
are furnished with the request.
    (c) No charge need to be made for furnishing:
    (1) Unauthenticated copies of any rules, regulations, or decisions 
of general import,
    (2) Copies to agencies which will aid in the administration of the 
Davis-Bacon and related acts,
    (3) Copies to contractor associations and labor organizations for 
general dissemination of the information contained therein, and
    (4) Only occasionally unauthenticated copies of papers and 
documents.



Sec. 7.16  Filing and service.

    (a) Filing. All papers submitted to the Board under this part shall 
be filed with the Executive Director of the Administrative Review Board, 
U.S. Department of Labor, Washington, DC 20210.
    (b) Number of copies. An original and four copies of all papers 
shall be submitted.
    (c) Manner of service. Service under this part shall be by the 
filing party or interested person, service may be personal or may be by 
mail. Service by mail is complete on mailing.
    (d) Proof of service. Papers filed with the Board shall contain an 
acknowledgement of service by the person served or proof of service in 
the form of a statement of the date and the manner of service and the 
names of the person or persons served, certified by the person who made 
service.



Sec. 7.17  Variations in procedures.

    Upon reasonable notice to the parties or interested persons, the 
Board may vary the procedures specified in this part in particular 
cases.



Sec. 7.18  Motions; extensions of time.

    (a) Except as otherwise provided in this part, any application for 
an order or other relief shall be made by motion for such order or 
relief. Except when made orally before the Board, motions shall be in 
writing and shall be accompanied by proof of service on all other 
parties or interested persons. If a motion is supported by briefs, 
affidavits, or other papers, they shall be served and filed with the 
motion. Any party or interested person, as the case may be, may respond 
to the motion within such time as may be provided by the Board.
    (b) Requests for extensions of time in any proceeding as to the 
filing of papers or oral presentations shall be in the form of a motion 
under paragraph (a) of this section.



PART 8--PRACTICE BEFORE THE ADMINISTRATIVE REVIEW BOARD WITH REGARD TO FEDERAL SERVICE CONTRACTS--Table of Contents




                      Subpart A--Purpose and Scope

Sec.
8.1  Purpose and scope.

                Subpart B--Review of Wage Determinations

8.2  Who may file petitions of review.
8.3  When to file.
8.4  Contents of petition.
8.5  Filing of wage determination record.
8.6  Disposition by the Administrative Review Board.

       Subpart C--Review of Other Proceedings and Related Matters

8.7  Review of decisions in other proceedings.
8.8  Filing of administrative record.
8.9  Disposition by the Administrative Review Board.

                  Subpart D--General Procedural Matters

8.10  Filing and service.
8.11  Presentations of other interested persons.
8.12  Intervention; other participation.
8.13  Right to counsel.
8.14  Consolidations.
8.15  Motions; extensions of time.
8.16  Oral proceedings.
8.17  Decision of the Board.
8.18  Public information.
8.19  Equal Access to Justice Act.

    Authority: Secs. 4 and 5, 79 Stat. 1034, 1035, as amended by 86 
Stat. 789, 790, 41 U.S.C. 353, 354; 5 U.S.C. 301; Reorg. Plan No. 14 of 
1950, 64 Stat. 1267, 5 U.S.C. Appendix; 76 Stat. 357-359, 40 U.S.C. 327-
332.

[[Page 148]]


    Source: 49 FR 10637, Mar. 21, 1984, unless otherwise noted.

    Editorial Note: Nomenclature changes appear at 61 FR 19985, May 3, 
1996.



                      Subpart A--Purpose and Scope



Sec. 8.1  Purpose and scope.

    (a) This part contains the rules of practice of the Administrative 
Review Board when it is exercising its jurisdiction described in 
paragraph (b) of this section.
    (b) The Board has jurisdiction to hear and decide in its discretion 
appeals concerning questions of law and fact from final decisions of the 
Administrator of the Wage and Hour Division or authorized 
representative, and from decisions of Administrative Law Judges under 
subparts B, D, and E of part 6 of this title, arising under the Service 
Contract Act and the Contract Work Hours and Safety Standards Act where 
the contract is also subject to the Service Contract Act. The Board 
shall not have jurisdiction to pass on the validity of any portion of 
the Code of Federal Regulations which has been duly promulgated through 
notice and comment by the Department of Labor and shall observe the 
provisions thereof, where pertinent, in its decisions. The jurisdiction 
of the Board includes:
    (1) Wage determinations issued under the Service Contract Act;
    (2) Substantial variance proceedings or arm's-length negotiations 
proceedings pursuant to section 4(c) of the Service Contract Act;
    (3) Debarment or other enforcement proceedings;
    (4) Proceedings to determine substantial interest of debarred 
persons or firms;
    (5) Decisions of the Wage-Hour Administrator or authorized 
representative regarding recommendations of a Federal agency for 
adjustment or waiver of liquidated damages assessed under the Contract 
Work Hours and Safety Standards Act;
    (6) Other final actions of the Wage-Hour Administrator or authorized 
representative (e.g., additional classification actions and rulings with 
respect to application of the Act(s), or the regulations, or of wage 
determinations issued thereunder).
    (7) Other matters specifically referred to the Board by the 
Secretary of Labor.
    (c) In considering the matters within the scope of its jurisdiction 
the Board shall act as the authorized representative of the Secretary of 
Labor and shall act as fully and finally as might the Secretary of Labor 
concerning such matters.
    (d) The Board is an appellate body and shall decide cases properly 
brought before it on the basis of all relevant matter contained in the 
entire record before it. Decisions by the Board shall be based upon the 
preponderance of the evidence before it. It may remand with appropriate 
instructions any case for the taking of additional evidence and the 
making of new or modified findings by reason of the additional evidence. 
However, unless the petition for review cities alleged procedural 
irregularities in the proceeding below and not the merits of a case, the 
Board shall not consider a petition for review filed by any party 
against whom default judgment has been entered pursuant to the 
provisions of part 6 of this title.

[49 FR 10637, Mar. 21, 1984, as amended at 61 FR 19985, May 3, 1996]



                Subpart B--Review of Wage Determinations



Sec. 8.2  Who may file petitions of review.

    (a) Any interested party who is seeking a modification of other 
change in a wage determination under the Service Contract Act and who 
has requested the Wage-Hour Administrator or authorized representative 
to make such modification or other change under Sec. 4.55 of part 4 of 
this title, and the request has been denied, shall have a right to 
petition of review of the action taken by that officer.
    (b) For purposes of this subpart, the term interested party shall 
mean:
    (1) Any employee or any labor organization which represents an 
employee who is likely to be employed or to seek employment under a 
contract containing a particular wage determination, or any contractor 
or an association representing a contractor who is likely to seek a 
contract or to work

[[Page 149]]

under a contract containing a particular wage determination;
    (2) The Federal agency(s) which will administer a proposed contract 
containing a particular wage determination issued pursuant to the 
Service Contract Act; and
    (3) Any other party whom the Board finds to have a sufficient 
interest in the wage determination.



Sec. 8.3  When to file.

    (a) Requests for review of wage determinations must be filed within 
20 days of issuance of the Wage-Hour Administrator's decision denying a 
request to make a change in the wage determination.
    (b) The Board shall under no circumstances request any administering 
agency to postpone any contract action because of the filing of a 
petition.



Sec. 8.4  Contents of petition.

    (a) A petition for review of a wage determination shall:
    (1) Be in writing and signed by the petitioner or his/her counsel 
(or other authorized representative);
    (2) Be addressed to the Administrative Review Board;
    (3) Identify clearly the wage determination, location where the 
contract will be performed, if known, and the agency concerned;
    (4) State that the petitioner has requested reconsideration of the 
wage determination in question pursuant to 29 CFR 4.55 and describe 
briefly the action taken in response to the request;
    (5) Contain a short and plain statement of the grounds for review;
    (6) Be accompanied by supporting data, views, or arguments; and
    (7) Contain a statement that all data or other evidence submitted 
have previously been submitted to the Administrator.
    (b) A petition shall indicate whether or not the petitioner consents 
to the disposition of the questions involved by a single member of the 
Board.



Sec. 8.5  Filing of wage determination record.

    The Associate Solicitor for Fair Labor Standards shall, promptly 
after service of the petition, file with the Board the record upon which 
the wage determination was based. Under no circumstances shall source 
data obtained by the Bureau of Labor Statistics, U.S. Department of 
Labor, or the names of establishments contacted by the Bureau be filed 
with the Board or otherwise disclosed. Where the Bureau has conducted a 
survey, the published summary of the data may be filed.



Sec. 8.6  Disposition by the Administrative Review Board.

    (a) The Board may decline review of any case whenever in its 
judgment review would be inappropriate because of lack of timeliness, 
the nature of the relief sought, the case involves only settled issues 
of law, the appeal is frivolous on its face, or other reasons. A case 
will be reviewed upon the affirmative vote of one member.
    (b) Except as provided in paragraphs (c) and (d) of this section, 
the Board will not review a wage determination after award, exercise of 
option, or extension of a contract, unless such procurement action was 
taken without the wage determination required pursuant to Secs. 4.4 and 
4.5 of part 4 of this title.
    (c) A wage determination may be reviewed after award, exercise of 
option, or extension of a contract if it is issued after a finding by an 
Administrative Law Judge or the Board that a substantial variance exists 
between collectively bargained wage rates and/or fringe benefits 
otherwise required to be paid pursuant to section 4(c) of the Act and 
those prevailing for services of a character similar in the locality, or 
after a finding that such collective bargaining agreement was not 
reached as a result of arm's length negotiations.
    (d) Where a petition for review of a wage determination is filed 
prior to award, exercise of option, or extension of a contract, the 
Board may review the wage determination after such award, exercise of 
option, or extension of a contract if the issue is a significant issue 
of general applicability. The Board's decision shall not affect the 
contract after such award, exercise of option, or extension.
    (e) In issuing its decision the Board will act expeditiously, taking 
into consideration procurement deadlines. The Board shall decide the 
case upon the basis of all relevant matters contained

[[Page 150]]

in the entire record before it and shall not consider any data not 
submitted to the Wage-Hour Administrator with the request for 
reconsideration. The Board in its decision affirming, modifying, or 
setting aside the wage determination, shall include a statement of 
reasons or bases for the actions taken. In any remand of a case as 
provided in Sec. 8.1(d) of this title, the Board shall include 
appropriate instructions.



       Subpart C--Review of Other Proceedings and Related Matters



Sec. 8.7  Review of decisions in other proceedings.

    (a) A petition for review of a decision of an Administrative Law 
Judge pursuant to subparts B, D or E of part 6 of this title may be 
filed by any aggrieved party in accordance with the provisions therein.
    (b) A petition for review of a final written decision (other than a 
wage determination) of the Administrator or authorized representative 
may be filed by any aggrieved party within 60 days of the date of the 
decision of which review is sought. Where a case has been referred 
directly to the Board pursuant to Sec. 4.11 or Sec. 4.12 of this title, 
no petition for review shall be necessary; a brief in support of the 
aggrieved party's position shall be filed within 30 days of filing of 
the administrative record by the Administrator.
    (c) A petition shall state concisely the points relied upon, and 
shall be accompanied by a statement setting forth supporting reasons. 
The petition shall also indicate whether or not the petitioner consents 
to the disposition of the questions involved by a single member.



Sec. 8.8  Filing of administrative record.

    (a) If a petition for review has been filed concerning a decision 
pursuant to part 6 of this title, the Chief Administrative Law Judge 
shall promptly forward the record of the proceeding before the 
Administrative Law Judge to the Board.
    (b) If a petition for review has been filed concerning a final 
decision of the Wage-Hour Administrator or authorized representative, 
the Associate Solicitor for Fair Labor Standards shall promptly file 
with the Board a record upon which the decision was based.



Sec. 8.9  Disposition by the Administrative Review Board.

    (a) The Board may decline review of any case whenever in its 
judgment review would be inappropriate because of lack of timeliness, 
the nature of the relief sought, the case involves only settled issues 
of law, the appeal is frivolous on its face, or other reasons. A case 
will be reviewed upon the affirmative vote of one member.
    (b) In issuing its decision the Board will take into consideration 
procurement deadlines where appropriate. The Board shall pass upon the 
points raised in the petition upon the basis of the entire record before 
it. The Board may affirm, modify or set aside, in whole or in part, the 
decision under review and shall issue a decision including a statement 
of reasons or bases for the actions taken. The Board shall modify or set 
aside findings of fact only when it determines that those findings are 
not supported by a preponderance of the evidence. In any remand of a 
case as provided in Sec. 8.1(e) of this title, the Board shall include 
any appropriate instructions.



                  Subpart D--General Procedural Matters



Sec. 8.10  Filing and service.

    (a) Filing. All papers submitted to the Board under this part shall 
be filed with the Executive Director of the Administrative Review Board, 
U.S. Department of Labor, Washington, DC 20210.
    (b) Number of copies. An original and four copies of all papers 
shall be submitted.
    (c) Manner of service. Service under this part shall be personal or 
by mail. Service by mail is complete on mailing. For purposes of this 
part, filing is accomplished upon the day of service, by mail or 
otherwise.
    (d) Proof of service. Papers filed with the Board shall contain an 
acknowledgement of service by the person served or proof of service in 
the form of

[[Page 151]]

a statement of the date and the manner of service and the names of the 
person or persons served, certified by the person who made service.
    (e) Service upon the Department of Labor and other interested 
parties. A copy of all documents filed with the Board shall be served 
upon the Associate Solicitor, Division of Fair Labor Standards, U.S. 
Department of Labor, Washington, DC 20210; the Administrator, Wage and 
Hour Division, U.S. Department of Labor, Washington, DC 20210; the 
Federal contracting agency involved; and all other interested parties.



Sec. 8.11  Presentations of other interested persons.

    (a) Where a petition has been filed for review of a wage 
determination or other final decision of the Administrator or authorized 
representative, the Board shall notify the parties known or believed to 
be interested in the case. The Associate Solicitor and any other parties 
interested in presenting their views shall file a statement within 30 
days of the filing of the petition (or such other time as is specified 
by the Board, with consideration of procurement deadlines, as 
appropriate).
    (b) Where a petition has been filed for review of a decision issued 
pursuant to subparts B, D or E of part 6 of this title, any other 
parties to the proceeding interested in presenting their views shall 
file a statement within 30 days of the filing of the petition (or such 
other time as is specified by the Board, with consideration of 
procurement deadlines, as appropriate).



Sec. 8.12  Intervention; other participation.

    For good cause shown, the Board may permit any interested party to 
intervene or otherwise participate in any proceeding held by the Board. 
Except when requested orally before the Board, a petition to intervene 
or otherwise participate shall be in writing (original and four copies) 
and shall state with precision and particularity:
    (a) The petitioner's relationship to the matters involved in the 
proceedings, and
    (b) The nature of the presentation which the peititioner would make.



Sec. 8.13  Right to counsel.

    Each interested party shall have the right to appear in person or by 
counsel or other representative in any proceeding before the Board.



Sec. 8.14  Consolidations.

    Upon its own initative or upon motion of any interested party, the 
Board may consolidate any proceeding or concurrently consider two or 
more appeals which involve substantially the same parties, or issues 
which are the same or closely related, if it finds that such 
consolidation or concurrent review will contribute to a proper dispatch 
of its business and to the ends of justice, and it will not unduly delay 
consideration of any such appeals.



Sec. 8.15  Motions; extensions of time.

    (a) Except as otherwise provided in this part, any application for 
an order or other relief shall be made by motion. Except when made 
orally before the Board, motions shall be in writing and shall be 
accompanied by proof of service on all other parties. If a motion is 
supported by briefs, affidavits, or other papers, they shall be served 
and filed with the motion. Any party may respond to the motion within 
such time as may be provided by the Board.
    (b) Requests for extension of time as to the filing of papers or 
oral presentation shall be in the form of a motion under paragraph (a) 
of this section.



Sec. 8.16  Oral proceedings.

    (a) With respect to any proceedings before it, the Board may upon 
its own initative or upon request of any interested party direct the 
interested parties to appear before the Board or its designee at a 
specified time and place in order to simplify the issues persented or to 
take up any other matters which may tend to expedite or facilitate the 
disposition of the proceeding.
    (b) In its discretion, the Board or a single presiding member may 
permit oral argument in any proceeding. The Board or the presiding 
member shall

[[Page 152]]

prescribe the time and place for argument and the time allocated for 
argument. A petitioner wishing to make oral argument should make the 
request therefore in the petition.



Sec. 8.17  Decision of the Board.

    (a) Unless the petitioner consents to disposition by a single 
member, decisions of the Board shall be by majority vote.
    (b) Where petitioner consents to disposition by a single member, 
other interested parties shall have an opportunity to oppose such 
disposition, and such opposition shall be taken into consideration by 
the Board in determining whether the decision shall be by a single 
member or majority vote.



Sec. 8.18  Public information.

    Subject to the provisions of part 70 of this title, all papers and 
documents made a part of the official record in the proceedings of the 
Board and decisions of the Board shall be made available for public 
inspection during usual business hours at the Office of the 
Administrative Review Board, U.S. Department of Labor, Washington, DC 
20210.



Sec. 8.19  Equal Access to Justice Act.

    Proceedings under the Service Contract Act and the Contract Work 
Hours and Safety Standards Act are not subject to the Equal Access to 
Justice Act (Pub. L. 96-481). Accordingly, in any proceeding conducted 
pursuant to the provisions of this part 8, the Board shall have no power 
or authority to award attorney fees and/or other litigation expenses 
pursuant to the Equal Access to Justice Act.



PART 11--DEPARTMENT OF LABOR NATIONAL ENVIRONMENTAL POLICY ACT (NEPA) COMPLIANCE PROCEDURES--Table of Contents




                      Subpart A--General Provisions

Sec.
11.1  Purpose and scope.
11.2  Applicability.
11.3  Responsible agency officials.

                  Subpart B--Administrative Procedures

11.10  Identification of agency actions.
11.11  Development of environmental analyses and documents.
11.12  Content and format of environmental documents.
11.13  Public participation.
11.14  Legislation.

    Authority: NEPA, (42 U.S.C. 4321 et seq.), Executive Order 11514, 
Protection and Enhancement of Environmental Quality (March 5, 1970, as 
amended by Executive Order 11991, May 24, 1977) and Council on 
Environmental Quality Regulations (National Environmental Policy Act, 
Implementation of Procedural Provisions) 40 CFR parts 1500-1508 (43 FR 
55978).

    Source: 45 FR 51188, Aug. 1, 1980, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 11.1  Purpose and scope.

    (a) The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 
4321 et seq.) directs that, ``to the fullest extent possible, * * * the 
policies, regulations and public laws of the United States shall be 
interpreted and administered in accordance with the policies set forth'' 
in the Act for the preservation of the environment. As a means for 
achieving this objective, Executive Order 11991 of May 24, 1977 
(amending E.O. 11514 of March 5, 1970) directed the Council on 
Environmental Quality (CEQ) to issue uniform regulations for 
implementation of NEPA by all Federal agencies. These regulations were 
published in final form on November 29, 1978 (43 FR 55978) as 40 CFR 
parts 1500-1508. The CEQ's NEPA regulations require that each Federal 
agency adopt implementing procedures to supplement their regulations (40 
CFR 1507.3). Accordingly, the purpose of this part is to prescribe 
procedures to be followed by Department of Labor agencies when such 
agencies are contemplating actions which may be subject to the 
requirements of NEPA. These regulations do not replace 40 CFR parts 
1500-1508; rather they are to be read together with, and as a supplement 
to, the CEQ's regulations.
    (b) It is the responsibility of each agency to comply with the 
policies set forth in NEPA to the fullest extent possible and consistent 
with its statutory authority. Each agency shall comply with all 
applicable requirements of this part except where compliance

[[Page 153]]

would be inconsistent with other statutory requirements. However, no 
trivial violation of, or noncompliance with, these procedures shall give 
rise to an independent cause of action (cf. 40 CFR 1500.3 and 
1507.3(b)).



Sec. 11.2  Applicability.

    Although all Department of Labor agencies are subject to NEPA, only 
three of its agencies routinely propose or consider actions which may 
require the preparation of environment assessments or environmental 
impact statements. These are the Occupational Safety and Health 
Administration (OSHA), which acts pursuant to the Occupational Safety 
and Health Act of 1970 (29 U.S.C. 651, et seq.); the Mine Safety and 
Health Administration (MSHA), which acts pursuant to the Federal Mine 
Safety and Health Act of 1977 (30 U.S.C. 801, et seq.); and the 
Employment and Training Administration (ETA) (through one of its major 
programs, the Job Corps) which purchases and leases land and constructs 
Job Corps centers pursuant to the Comprehensive Employment and Training 
Act (29 U.S.C. 801, et. seq.). Therefore, these procedures have been 
designed primarily with the duties and rulemaking processes of these 
agencies in mind. If and when other Department of Labor agencies propose 
actions requiring environmental impact analyses, they shall use these 
procedures, to the extent that they are applicable, in performing such 
analyses.



Sec. 11.3  Responsible agency officials.

    (a) The Assistant Secretary of Labor for Policy, Evaluation and 
Research (ASPER) shall be responsible for the following:
    (1) Overall review of Department of Labor agency compliance with the 
requirements of NEPA, the CEQ's regulations and these Departmental 
procedures;
    (2) Maintaining contacts with CEQ and the Environmental Protection 
Agency (EPA) as the Departmental NEPA liaison; and
    (3) Preparing and coordinating Departmental comments in response to 
environmental impact statements prepared by other Federal agencies which 
have been submitted to the Department for review, as required by 40 CFR 
1503.2.
    (b) Assistant Secretaries of Labor and other officials of equivalent 
rank or responsibility (hereinafter ``agency heads'') shall be 
responsible for their agencies' compliance with NEPA.
    (1) These responsibilities shall include the following:
    (i) Assuring that the agencies under their control observe the 
requirements of 40 CFR 1507.2 on compliance capability;
    (ii) Preparing environmental impact assessments and statements in 
accordance with the requirements of these regulations and 40 CFR parts 
1501 and 1502, and advising private applicants, or other non-Federal 
entities, of the possible need for information foreseeably required for 
later Federal action pursuant to 40 CFR 1501.2(d);
    (iii) Assuring public participation in the NEPA process in 
accordance with 40 CFR parts 1503 and 1506;
    (iv) Commenting on environmental impact statements prepared by other 
agencies, when their agencies have jurisdiction by law or special 
expertise with respect to any environmental impacts connected with a 
proposed action, as required by 40 CFR part 1503;
    (v) Assuring that environmental documents prepared by their agencies 
accompany proposed actions through existing agency review processes, and 
that, along with other relevant materials, and consistent with 40 CFR 
1505.1(e), the full range of alternatives discussed in these documents 
are considered in the planning of agency actions and in the making of 
decisions and that the alternatives considered are encompassed by those 
discussed in the documents; and
    (vi) Assuring, where possible, the mitigation of adverse 
environmental effects of agency actions.
    (2) In accordance with 40 CFR 1506.5(c), agency heads will also be 
responsible for assuring the quality of environmental impact statements 
prepared by their agencies. Where environmental impact statements will 
be prepared by a contractor, the agency heads will assure that their 
agencies furnish guidance to the contractor,

[[Page 154]]

participate in the document's preparation, independently evaluate the 
statement prior to approval and take responsibility for the scope and 
contents.
    (c) Agency heads may designate program offices or individuals as 
NEPA contacts for their agencies. The name and address of the NEPA 
contact shall be included on the cover sheet of each environmental 
document published by the agency, or if no cover sheet is provided, the 
name and address of this office or individual shall be included with any 
instructions to the public on obtaining further information or 
submitting comments on the document.
    (1) It shall be the duty of an agency's NEPA contact to know the 
status of all environmental documents being prepared by the agency or in 
cooperation with another agency.
    (2) The NEPA contact shall receive and respond to inquiries 
concerning the status of all environmental documents being prepared 
within the agency or in cooperation with another agency.



                  Subpart B--Administrative Procedures



Sec. 11.10  Identification of agency actions.

    Pursuant to the CEQ definition of ``major Federal action'' (40 CFR 
1508.18) and 40 CFR 1507.3(b)(2), the following paragraphs identify and 
classify Department of Labor actions which: normally will not require 
preparation of an environmental document (i.e. an environmental 
assessment or an environmental impact statement); or usually will 
require preparation of an environmental document.
    (a) OSHA/MSHA actions. Actions of the Occupational Safety and Health 
Administration (OSHA) and the Mine Safety and Health Administration 
(MSHA) are classified as follows:
    (1) Categorically excluded actions. OSHA/MSHA actions listed in the 
following Table will normally qualify for categorical exclusion from 
NEPA requirements: i.e., such actions do not require preparation of 
either an environmental assessment or an environmental impact statement, 
because they do not have a significant impact on the quality of the 
human environment. Classification as a categorical exclusion, however, 
does not prohibit OSHA or MSHA from preparing an environmental 
assessment or environmental impact statement on any of the following 
actions when OSHA or MSHA determines it to be appropriate. Also, in 
extraordinary circumstances where a normally excluded action is found to 
have a potentially significant environmental effect, OSHA or MSHA shall 
prepare an environmental assessment and/or an environmental impact 
statement as required.

                    OSHA/MSHA Categorical Exclusions
------------------------------------------------------------------------
              Type of action                    Reason for exclusion
------------------------------------------------------------------------
(i) Promulgation, modification or          Safety standards promote
 revocation of any safety standard.         injury avoidance by means of
 Examples of these actions are: Machine     mechanical applications or
 guarding requirements, safety lines,       work practices, the effects
 warning signals, etc.                      of which do not impact on
                                            air, water or soil quality,
                                            plant or animal life, the
                                            use of land or other aspects
                                            of the human environment.
(ii) Approval of petitions for variances   Variances are taken from
 from MSHA/OSHA safety standards or OSHA    existing standards. Thus
 health standards.                          environmental documents, as
                                            appropriate, will already
                                            have been prepared. In terms
                                            of worker health and safety,
                                            any variance must be at
                                            least as effective as the
                                            original standard.
(iii) Agency legislative requests for      Exempted by 40 CFR 1508.17.
 appropriations.
(iv) Recordkeeping and reporting           No possibility of significant
 requirements.                              environmental impact.
(v) Routine agency personnel actions.....  Such actions typically
                                            involve small numbers of
                                            individuals and have no
                                            possibility of significant
                                            environmental impact.
(vi) Training of employers, employees,     These actions involve
 agency personnel and others in the         educational activities which
 recognition, avoidance or abatement of     have no possibility of
 occupational hazards. Providing            significant environmental
 consultative services to industry.         impact.
(vii) Enforcement proceedings............  Exempted by 40 CFR 1508.18.
(viii) Equipment approvals...............  No possibility of significant
                                            environmental impact.
(ix) State grants under Sec. 503 of the    These grants assist States in
 Federal Mine Safety and Health Act.        developing and implementing
                                            laws to improve mine safety
                                            and health and to promote
                                            coordination between State
                                            and Federal governments.
                                            They have no possibility of
                                            significant environmental
                                            impact.
(x) Certification or qualification         No possibility of significant
 proceedings.                               environmental impact.
------------------------------------------------------------------------

    (2) Actions requiring environmental assessment. Several classes of 
OSHA/MSHA actions normally require the

[[Page 155]]

preparation of an environmental assessment prior to determining whether 
either a finding of no significant impact or an environmental impact 
statement must be prepared. (However, OSHA or MSHA may proceed to 
prepare an environmental impact statement, without first preparing an 
environmental assessment, if it determines such action to be appropriate 
or necessary, as provided by 40 CFR 1501.3(a)). Actions in this 
classification include:
    (i) Promulgation, modification or revocation of a health standard; 
and
    (ii) Approval or revocation of State plans for the enforcement of 
safety and health standards (not applicable to MSHA).
    (3) Actions requiring preparation of an environmental impact 
statement. Preparation of an environmental impact statement will always 
be required for proposals for promulgation, modification or revocation 
of health standards which will significantly affect air, water or soil 
quality, plant or animal life, the use of land or other aspects of the 
human environment.
    (4) Emergency temporary standards. Situations requiring the issuance 
of emergency temporary standards (issued for a period of up to six 
months, pursuant to section 6(c) of the Occupational Safety and Health 
Act of 1970, and for a period of up to nine months, pursuant to section 
101(b) of the Federal Mine Safety and Health Act of 1977) are of such 
nature that the provisions of 40 CFR parts 1500 et seq. may not be 
strictly observable. Pursuant to 40 CFR 1506.11, however, OSHA and MSHA 
will consult with the Council on Environmental Quality in connection 
with such situations, and will, in any event, prepare environmental 
assessments or environmental impact statements, as appropriate, on any 
proposed permanent regulation to be promulgated for the purpose of 
replacing the temporary action.
    (b) Real property actions. Actions that will involve construction, 
or the purchase or lease of property, in connection with the 
establishment or substantial alteration of a Job Corps center, of any 
similar Job Corps facility, or other property actions of a similar 
character by another agency, will normally require the preparation of an 
environmental assessment prior to determining whether either a finding 
of no significant impact or an environmental impact statement must be 
prepared.
    (c) Other Departmental actions. Certain actions taken to implement 
other Department of Labor programs will normally qualify for categorical 
exclusion from NEPA requirements. These matters are excluded because the 
possibility of environmental impact is remote. However, classification 
as a categorical exclusion does not prohibit or release an agency from 
preparing an environmental assessment or environmental impact statement 
when the agency determines it to be appropriate. These actions include:
    (1) U.S. Employment Service activities and related placement, 
counseling, recruitment, information, testing, certification and 
associated actions;
    (2) Apprenticeship activities and related certification and 
technical assistance actions;
    (3) Training activities, other than Job Corps, including work 
experience, classroom training and public service employment;
    (4) Unemployment insurance, trade adjustment assistance, workers' 
compensation programs, retirement programs, employee protection 
programs, and related employees benefit programs or activities involving 
the replacement or regulation of employee wages;
    (5) Wage and hour programs to protect low-income workers, eliminate 
discriminatory employment practices, prevent curtailment of employment 
and earnings for certain groups of workers, minimize loss of income due 
to indebtedness, protect farm and migrant labor and related activities;
    (6) Contract compliance programs to ensure equal employment 
opportunity and related actions;
    (7) Labor-management relations activities and activities of labor 
organizations, employers and their officers or representatives;
    (8) Research, evaluation, development and information collection 
projects related to any of the aforementioned activities;
    (9) Labor statistics programs; and

[[Page 156]]

    (10) Matters involving personnel policy, procurement policy, freedom 
of information and privacy policy, and related matters of Departmental 
management.



Sec. 11.11  Development of environmental analyses and documents.

    (a) Potential environmental effects of agency actions shall begin to 
be examined at the time a topic for potential action is submitted to the 
agency staff for research, proposal development, or other consideration. 
During this stage the agency shall determine whether the type of action 
which may be proposed may be categorically excluded from NEPA 
environmental analysis requirements pursuant to Sec. 11.10. If the type 
of action being considered is not categorically excluded, or is an 
extraordinary case of a normally excluded action which may have 
significant environmental impacts, development of the information needed 
to make an environmental assessment shall begin. Actions described in 
Sec. 11.10(b) shall be submitted to the Assistant Secretary for 
Administration and Management at this point, pursuant to applicable 
Departmental procedures, for appropriate review, including a 
determination with respect to whether or not the action is located in or 
near a floodplain or wetlands area in connection with the requirements 
of Executive Orders 11988 and 11990.
    (b) When information gathered during the early stages of proposal 
development indicates that preparation of an environmental impact 
statement will be required, the agency shall begin preparation of such a 
document by initiating the scoping process in accordance with 40 CFR 
1501.7. However, if the information is not clearly indicative of the 
need for preparation of an environmental impact statement, an 
environmental assessment shall be prepared.
    (c) Agencies are encouraged, in developing environmental 
assessments, to explore all factors which it may become necessary to 
examine should it be determined that preparation of an environmental 
impact statement is necessary, even though some of those factors, such 
as economic and social effects, ``are not intended by themselves to 
require preparation of an environmental impact statement'' (40 CFR 
1508.14). Thus in making environmental assessments of real property 
actions described in Sec. 11.10(b), agencies are encouraged to consider 
the following factors, among others:
    (1) The nature and degree of any former use of a proposed facility 
and the number of individuals the facility formerly served, as compared 
with its use and population to be served under the new proposal;
    (2) The population of the area (numbers, density and makeup);
    (3) Community facilities and services, taking into consideration 
capacity and present and former use, including: Health services 
(hospitals, physicians), business and community development policy, 
recreational facilities (parks, theaters), fire and police protection, 
schools, energy resources, waste disposal, water, traffic and roadway 
systems, sewage systems, communications, and public transportation;
    (4) The proximity of the facility to residential areas;
    (5) The potential impact on the quality of drinking water, air 
quality, noise levels, designated scenic areas, land use, soil quality 
(including drainage or erosion problems), buildings valued for their 
design or which are otherwise locally significant, the listing or 
eligibility for listing of a site in the National Register for Historic 
places, consistent with the requirements of 20 CFR 684.24a where 
applicable, neighborhood character, and health and safety of residents;
    (6) The potential impact on natural systems and resources including 
rivers and streams, forests, wetlands, floodplains, wilderness areas or 
places, and species designated for preservation, including species of 
plants and animals and their critical habitats as identified in 
regulations published by the Secretary of the Interior (50 CFR chapter 
I, part 17), and by the Secretary of Commerce (50 CFR chapter II, parts 
217, 222.23, 223, and 227.4); and
    (7) Other considerations appropriate in light of the nature and size 
of the project.
    (d) If an agency determines, on the basis of an environmental 
assessment, that preparation of an environmental

[[Page 157]]

impact statement is not required, notice of a finding of no significant 
impact and the availability of the environmental assessment shall be 
prepared and published in the Federal Register. In the case of proposed 
rulemaking, the notice of a finding of no significant impact may be 
published in the Federal Register at any time prior to the publication 
of the proposed action, or it may be included in the Federal Register 
notice of proposed rulemaking. Issuance of a finding of no significant 
impact at the proposal stage of rulemaking shall not foreclose further 
consideration of environmental issues during the rulemaking proceedings. 
Therefore the Department of Labor notes that, consistent with 40 CFR 
1500.3, the finding shall not be considered final until promulgation of 
the rule involved (the action affecting the environment).
    (1) If it is determined that preparation of an environmental impact 
statement is not required for an action, but that action is one which 
would normally require the preparation of an environmental impact 
statement, an action closely similar to one which would normally require 
the preparation of an environmental impact statement, or an action 
without precedent in this regard, the agency shall make a preliminary 
finding of no significant impact available for public review and 
comment. In accordance with 40 CFR 1501.4(e)(2), this finding shall be 
made available for at least 30 days before a final determination is made 
as to whether an environmental impact statement will be prepared, and 
before any public record may be closed and the proposed action may 
become effective.
    (2) Although not required by 40 CFR 1501.4(e)(2), an agency may use 
the procedure described in Sec. 11.11(d)(1) whenever the agency 
determines it to be appropriate.
    (e) If it is determined on the basis of an environmental assessment, 
prepared in connection with an action described in Sec. 11.10(b), that 
preparation of an environmental impact statement is required, or that 
public review is required in connection with actions in floodplains or 
wetlands that do not require environmental impact statements under E.O. 
11988 or E.O. 11990, the agency shall consider altering the proposed 
action or changing the site of the proposed project, and shall proceed 
with preparation of an environmental impact statement or appropriate 
public review actions only after obtaining written authorization from 
the Assistant Secretary for Administration and Management.
    (f) Filing of any draft environmental impact statement with the 
Environmental Protection Agency (EPA), pursuant to 40 CFR 1506.9, and 
circulation to the public, will ordinarily coincide with publication of 
the proposed agency action, which is the subject of that document, in 
the Federal Register. In any event, the statement will be made available 
for public comment for at least a 45-day period.
    (g) The final decision on the proposed action shall be made not 
earlier than 90 days following publication of EPA's notice of the filing 
of the draft environmental impact statement, and, except as provided 
below, not earlier than 30 days following publication of EPA's notice of 
the filing of the final environmental impact statement.
    (1) In accordance with 40 CFR 1506.10, an agency engaged in 
rulemaking under the Administrative Procedure Act or other statute, for 
the purpose of protecting the public health or safety, may waive the 30-
day time period noted above and publish a decision on a final rule 
simultaneously with publication of the notice of the availability of the 
final environmental impact statement. Therefore, Departmental agencies 
(such as OSHA and MSHA) meeting these requirements, may file and 
circulate the final environmental impact statement at the same time a 
notice of decision is being published, provided that the final rule or 
action may not become effective for at least 30 days from the date of 
publication of the EPA's notice of filing of the final environmental 
impact statement.
    (2) If a supplement to a final environmental impact statement is 
prepared, it shall be incorporated into the rulemaking record. If the 
supplement is prepared following the close of the rulemaking record and 
is based on, or introduces, new data or major new alternatives or 
analyses, the rulemaking

[[Page 158]]

record will be reopened for at least 30 days to receive public comments. 
The final action may not become effective for at least 30 days following 
EPA publication of the filing of the supplemental statement.
    (h) In accordance with 40 CFR 1505.2, when an agency prepares a 
final environmental impact statement, the agency shall prepare a concise 
public record of decision detailing what the decision was, what 
alternatives were considered (specifying the environmentally preferable 
alternative), how those considerations entered into the decision, and 
whether all practicable means to avoid or minimize environmental harm 
from the alternative selected have been adopted, and if not, the reason 
they were not. This record may be contained in, or integrated with, the 
preamble to the Federal Register notice of final action or in any other 
public document considered appropriate by the agency.



Sec. 11.12  Content and format of environmental documents.

    (a) An environmental assessment may be prepared in any format 
considered effective by the agency involved. When such a document is 
prepared in connection with a proposed action, it must be made readily 
available to the public either by placement into the public record (with 
public notice provided in accordance with 40 CFR part 1506) or by 
publication in the Federal Register. The preamble to the Federal 
Register notice of proposed rulemaking may be considered the 
environmental assessment provided that the document contains the 
elements required by 40 CFR 1508.9(b).
    (b) A finding of no significant impact (40 CFR 1508.13) may be 
prepared in any format considered to be effective or necessary by the 
agency involved in the proposed action.
    (c) The finding of no significant impact, and the environmental 
assessment on which it was based, as well as any comments received in 
response to these documents shall be included in the public record of 
the proposed action.
    (d) Department of Labor agencies shall comply with the format 
requirements for environmental impact statements as set forth at 40 CFR 
1502.10, except when an agency determines that there is a compelling 
reason to do otherwise, such as more effective communication or reduced 
duplication of effort and paperwork (40 CFR 1506.4). For example, in 
OSHA/MSHA informal rulemaking proceedings, environmental documents may 
be combined with the Federal Register notice of proposed or final 
rulemaking. Filing and circulation of the combined preamble/
environmental document shall be in accordance with the requirements of 
40 CFR 1506.9.
    (e) The final environmental impact statement shall contain any 
changes in information or supplemental information received since the 
filing and circulation of the draft environmental impact statement, as 
well as a summary, or copies of the substantive comments received in 
response to the draft environmental impact statement. If such changes 
and comments are minor, an agency may circulate only the changes and 
comments, including responses to the comments, rather than the entire 
impact statement, to the extent permitted by 40 CFR 1502.19. However, 
the entire document, with a new cover sheet, shall be filed with EPA and 
placed in the rulemaking record.



Sec. 11.13  Public participation.

    (a) When an agency has determined that preparation of an 
environmental impact statement is required, the agency shall publish a 
notice of intent to prepare an environmental impact statement in the 
Federal Register and shall invite public participation in the agency's 
scoping process as required by 40 CFR 1501.7.
    (b) When the draft environmental impact statement has been prepared 
and filed with the EPA pursuant to Sec. 11.11(f), comments on the 
document shall be solicited from appropriate Federal, State and local 
agencies, Indian tribes, and other persons or organizations who may be 
interested or affected, as required by 40 CFR 1503.1.
    (c) In the case of an action with effects primarily of local 
concern, agencies shall consider the use of clearinghouses, newspapers 
and other public media likely to generate local participation in the 
agency process as ways of supplementing the notices otherwise

[[Page 159]]

specified in this part. The use of such public media does not, however, 
require or authorized the use of paid advertising.



Sec. 11.14  Legislation.

    Notwithstanding any provisions of this part, environmental 
assessments or impact statements prepared in connection with requests 
for new legislation or modification of existing statutes shall be 
handled in accordance with applicable OMB and Department of Labor 
procedures on the preparation and submission of legislative proposals 
and the requirements of 40 CFR 1506.8.



PART 12--UNIFORM RELOCATION ASSISTANCE AND REAL PROPERTY ACQUISITION FOR FEDERAL AND FEDERALLY ASSISTED PROGRAMS--Table of Contents




    Authority: Section 213, Uniform Relocation Assistance and Real 
Property Acquisition Policies Act of 1970, Public Law 91-646, 84 Stat. 
1894 (42 U.S.C. 4601) as amended by the Surface Transportation and 
Uniform Relocation Assistance Act of 1987. title IV of Public Law 100-
17, 101 Stat. 246-256 (42 U.S.C. 4601 note).



Sec. 12.1  Uniform relocation assistance and real property acquisition.

    Regulations and procedures for complying with the Uniform Relocation 
Assistance and Real Property Acquisition Policies Act of 1970 (Pub. L 
91-646, 84 Stat. 1894, 42 U.S.C. 4601), as amended by the Surface 
Transportation and Uniform Relocation Assistance Act of 1987 (title IV 
of Pub. L. 100-17, 101 Stat. 246-255, 42 U.S.C. 4601 note) are set forth 
in 49 CFR part 24.

[52 FR 48020, Dec. 17, 1987, and 54 FR 8912, Mar. 2, 1989]



PART 14--SECURITY REGULATIONS--Table of Contents




             Subpart A--Introduction to Security Regulations

Sec.
14.1  Purpose.
14.2  Policy.
14.3  DOL Classification Review Committee.
14.4  Definitions.

               Subpart B--Review of Classified Information

14.10  Mandatory review for declassification.

            Subpart C--Transmission of Classified Information

14.20  Dissemination to individuals and firms outside the executive 
          branch.
14.21  Release of classified information to foreign governments.
14.22  Availability of classified information to persons not employed by 
          the Department of Labor.

    Authority: E.O. 12356 of April 2, 1982 (47 FR 14874).

    Source: 50 FR 51391, Dec. 17, 1985, unless otherwise noted.



             Subpart A--Introduction to Security Regulations



Sec. 14.1  Purpose.

    These regulations implement Executive Order 12356, entitled National 
Security Information, dated April 2, 1982, and directives issued 
pursuant to that Order through the National Security Council and the 
Atomic Energy Act of 1954, as amended.



Sec. 14.2  Policy.

    The interests of the United States and its citizens are best served 
when information regarding the affairs of Government is readily 
available to the public. Provisions for such an informed citizenry are 
reflected in the Freedom of Information Act (5 U.S.C. 552) and in the 
current public information policies of the executive branch.
    (a) Safeguarding national security information. Some official 
information within the Federal Government is directly concerned with 
matters of national defense and the conduct of foreign relations. This 
information must, therefore, be subject to security constraints, and 
limited in term of its distribution.
    (b) Exemption from public disclosure. Official information of a 
sensitive nature, hereinafter referred to as national security 
information, is expressly exempted from compulsory public disclosure by 
Section 552(b)(1) of title 5 U.S.C. Persons wrongfully disclosing such 
information are subject to

[[Page 160]]

prosecution under United States criminal laws.
    (c) Scope. To ensure that national security information is 
protected, but only to the extent and for such a period as is necessary, 
these regulations:
    (1) Identify information to be protected.
    (2) Prescribe procedures on classification, declassification, 
downgrading, and safeguarding of information.
    (3) Establish a monitoring system to ensure the effectiveness of the 
Department of Labor (DOL) security program and regulations.
    (d) Limitation. The need to safeguard national security information 
in no way implies an indiscriminate license to withhold information from 
the public. It is important that the citizens of the United States have 
access, consistent with national security, to information concerning the 
policies and programs of their Government.



Sec. 14.3  DOL Classification Review Committee.

    A DOL Classification Review Committee is hereby established.
    (a) Composition of committee. The members of this Committee are:

Chairperson--Director, Directorate or Administrative Service and Safety 
and Health Programs, OASAM
Member--Director, Office of Management, Administration and Planning, 
Bureau of International Labor Affairs
Member--Security Officer, Bureau of Labor Statistics
Member--Security Officer, Occupational Safety and Health Administration
Member--Director, Office of Management, Office of the Solicitor
Member--Assistant Inspector General for Investigations.

    (b) Responsibilities. The Committee is responsible for:
    (1) Acting on all suggestions and complaints arising with respect to 
the DOL's information security program.
    (2) Reviewing all requests for records under the Freedom of 
Information Act, 5 U.S.C. 552, when a proposed denial is based on 
classification under Executive Order 1356 to determine if such 
classification is current.
    (3) Recommending to the Secretary of Labor appropriate 
administrative actions to correct abuses or violations of any provision 
of Executive Order 12356 or directives thereunder. Recommended 
administrative actions may include notification by warning letter, 
formal reprimand, and, to the extent permitted by law, suspension 
without pay and removal. Upon receipt of any such recommendation, the 
Secretary shall immediately advise the Committee of the action taken.



Sec. 14.4  Definitions.

    The following definitions apply under these regulations:
    (a) Primary organization unit--refers to an agency headed by an 
official reporting to the Secretary or Under Secretary.
    (b) Classify--to assign information to one of the classification 
categories after determining that the information requires protection in 
the interest of national security.
    (c) Courier--an individual designated by appropriate authority to 
protect classified and administratively controlled information in 
transit.
    (d) Custodian--the person who has custody or is responsible for the 
custody of classified information.
    (e) Declassify--the authorized removal of an assigned 
classification.
    (f) Document--any recorded information regardless of its physical 
form or characteristics, including (but not limited to):
    (1) Written material--(whether handwritten, printed or typed).
    (2) Painted, drawn, or engraved material.
    (3) Sound or voice recordings.
    (4) Printed photographs and exposed or printed films (either still 
or motion picture).
    (5) Reproductions of the foregoing, by whatever process.
    (g) Downgrade--to assign lower classfication than that previously 
assigned.
    (h) Derivative classification--a determination that information is 
in substance the same as information that is currently classified. It is 
to incorporate, paraphrase, restate or generate in new form information 
that is already classified (usually by another Federal agency).
    (i) Information Security Oversight Office (ISOO)--an office located 
in the General Services Administration (GSA)

[[Page 161]]

that monitors the implementation of E.O. 12356.
    (j) Marking--the physical act of indicating the assigned security 
classification on national security information.
    (k) Material--any document, product, or substance on or in which 
information is recorded or embodied.
    (l) Nonrecord material--extra copies and duplicates, the use of 
which is temporary, including shorthand notes, used carbon paper, 
preliminary drafts, and other material of similar nature.
    (m) Paraphrasing--a restatement of the text without alteration of 
its meaning.
    (n) Product and substance--any item of material (other than a 
document) in all stages of development, processing, or construction and 
including elements, ingredients, components, accessories, fixtures, 
dies, models, and mockup associated with such items.
    (o) Record material--all books, papers, maps, photographs, or other 
documentary materials, regardless of physical form or characteristics, 
made or received by the U.S. Government in connection with the 
transaction of public business; this includes material preserved by an 
agency or its legitimate successor as evidence of its organization, 
functions, policies, decisions, procedures, or other activities, or 
because of the informational data contained herein.
    (p) True reading--the paraphrased literal text.
    (q) Upgraded-- to assign a higher classification than that 
previously assigned.



               Subpart B--Review of Classified Information



Sec. 14.10  Mandatory review for declassification.

    (a) Scope of review. The mandatory review procedures apply to 
information originally classified by the DOL when it had such authority, 
i.e., before December 1, 1978. Requests may come from members of the 
public or a government employee or agency. The procedures do not apply 
to information originated by other agencies and merely held in 
possession of the DOL. Requests for disclosure submitted under 
provisions of the Freedom of Information Act are to be processed in 
accordance with provisions of that Act.
    (b) Where requests should be directed. Requests for mandatory review 
for declassification should be directed to the Department of Labor, 
Office of the Assistant Secretary for Administration and Management 
(OASAM), Washington, DC 20210. Requests should be in writing and should 
reasonably describe the classified information to allow identification. 
Whenever a request does not reasonably describe the information sought, 
the requestor will be notified that unless additional information is 
provided or the scope of the request is narrowed, no further action will 
be undertaken.
    (c) Processing. The OASAM will assign the request for information to 
the appropriate DOL office for declassification consideration. A 
decision will be made within 60 days as to whether the requested 
information may be declassified and, if so, made available to the 
requestor. If the information may not be released in whole or in part, 
the requestor will be given a brief statement as to the reasons for 
denial, and a notice of the right to appeal the determination to the DOL 
Classification Review Committee, Office of the Assistant Secretary for 
Administration and Management, Washington, DC 20210. The requestor is to 
be told that such an appeal must be filed with the DOL within 60 days.
    (d) Appeals procedure. The DOL Classification Review Committee will 
review and act within 30 days on all applications and appeals for the 
declassification of information. The Committee is authorized to overrule 
on behalf of the Secretary, Agency determinations in whole or in part, 
when it decides that continued protection is not required. It will 
notify the requestor of the declassification and provide the 
information. If the Committee determines that continued classification 
is required, it will promply notify the requestor and provide the 
reasons for the determination.
    (e) Burden of proof. In evaluating requests for declassification the 
DOL Classification Review Committee will require the DOL office having 
jurisdiction over the document to prove that continued classification is 
warranted.

[[Page 162]]

    (f) Fees. If the request requires a service for which fair and 
equitable fees may be charged pursuant to title 5 of the Independent 
Office Appropriation Act, 31 U.S.C. 483a (1976), the requestor will be 
notified and charged.



            Subpart C--Transmission of Classified Information



Sec. 14.20  Dissemination to individuals and firms outside the executive branch.

    Request for classified information received from sources outside the 
executive branch of the Federal Government, provided the information has 
been originated by the DOL, will be honored in accordance with the 
following guidelines:
    (a) Top Secret information. All requests for Top Secret information 
by an individual or firm outside the executive branch must be referred 
promptly to the OASAM for consideration on an individual basis.
    (b) Secret and Confidential information. Subject to the restrictions 
below, Secret or Confidential information may be furnished to an 
individual or firm outside the executive branch if the action furthers 
the official program of the organization unit in which the information 
originated. The official furnishing such information must ensure that 
the individuals to whom the information is to be furnished have the 
appropriate DOL clearance, or at least clearance for the same or higher 
classification for another Federal department, or outside agency whose 
security clearances are acceptable to the DOL. The official must also 
ensure that the person to whom the classified information is being 
furnished possess the proper facilities for safeguarding such 
information. No Secret or Confidential information may be furnished to 
an individual or firm outside the executive branch without written 
concurrence from the primary organizational unit head or the Security 
Officer of that unit.
    (c) Unauthorized knowledge of classified information. Upon receipt 
of a request for classified information which raised a suspicion that an 
individual or organization outside the executive branch has unauthorized 
knowledge of the existence of Confidential, Secret, or Top Secret 
information, a report providing all available details must be 
immediately submitted to the DOL Document Security Officer for 
appropriate action and disposition.
    (d) Requests from outside the United States. All requests from 
outside the United States for Top Secret, Secret or Confidential 
information, except those received from foreign offices of the primary 
organizational unit or from U.S. embassies or similar missions, will be 
referred to the Deputy Under Secretary for International Affairs.
    (e) Access by historical researchers. Individuals outside the 
executive branch engaged in historical research may be authorized access 
to classified information over which the DOL has jurisdiction provided:
    (1) The research and need for access conform to the requirements of 
section 4-3 of Executive Order 12356.
    (2) The information requested is reasonably accessible and can be 
located and compiled with a reasonable amount of effort.
    (3) The researcher agrees to safeguard the information in a manner 
consistent with E.O. 12356 and directives thereunder.
    (4) The researcher agrees to a review of the notes and manuscript to 
determine that no classified information is contained therein.

Authorization for access is valid for the period required but no longer 
than two years from the date of issuance unless it is renewed under the 
conditions and regulations governing its original authorization.
    (f) Access by former presidential appointees. Individuals who have 
previously occupied policymaking positions to which they were appointed 
by the President may be authorized access to classified information 
which they originated, reviewed, signed, or received while in public 
office. Upon request, information identified by such individuals will be 
reviewed for declassification in accordance with the provisions of these 
regulations.

[[Page 163]]



Sec. 14.21  Release of classified information to foreign governments.

    National security information will be released to foreign 
governments in accordance with the criteria and procedures stated in the 
President's Directive entitled ``Basic Policy Governing the Release of 
Classified Defense Information to Foreign Governments'' dated September 
25, 1985. All requests for the release of such information will be 
referred to the Deputy Under Secretary for International Affairs.



Sec. 14.22  Availability of classified information to persons not employed by the Department of Labor.

    (a) Approval for access. Access to classified information in the 
possession or custody of the primary organizational units of the 
Department by individuals who are not employees of the executive branch 
shall be approved in advance by the DOL Document Security Officer.
    (b) Access to Top Secret material. Access to Top Secret Information 
within the primary organizational units of the DOL by employees of other 
Federal agencies must be approved in advance by the Top Secret Control 
Officer of the primary organizational unit.
    (c) Access to Secret and Confidential information. Secret and 
Confidential information may be made available to properly cleared 
employees of other Federal departments or outside agencies if authorized 
by the primary organizational units having custody of the information.



PART 15--ADMINISTRATIVE CLAIMS UNDER THE FEDERAL TORT CLAIMS ACT AND RELATED STATUTES--Table of Contents




 Subpart A--Claims Against the Government Under the Federal Tort Claims 
                                   Act

Sec.
15.1  Scope and purpose.
15.2  Definitions.
15.3  Administrative claim; who may file.
15.4  Administrative claim; where to file.
15.5  Administrative claim; evidence or information to substantiate.
15.6  Administrative action.
15.7  Determination of claims.
15.8  Referral to Department of Justice.
15.9  Final denial of claim.
15.10  Action on approved claimed.

 Subpart B--Claims Under the Military Personnel and Civilian Employee' 
                           Claims Act of 1964

15.20  General provisions.
15.21  Filing of claims.
15.22  Allowable claims.
15.23  Restrictions on certain claims.
15.24  Unallowable claims.
15.25  Claims involving carriers or insurers.
15.26  Claims procedures.
15.27  Computation of award and finality of settlement.
15.28  Attorney fees.
15.29  Reconsideration.

     Subpart C--Claims Arising Out of the Operation of the Job Corps

15.40  Scope and purpose.
15.41  Allowable claims.
15.42  Claim procedure.

    Authority: 28 U.S.C. 2672; 28 CFR 14.11; 31 U.S.C. 3721; 29 U.S.C. 
1706(b).

    Source: 60 FR 19658, Apr. 19, 1995, unless otherwise noted.



 Subpart A--Claims Against the Government Under the Federal Tort Claims 
                                   Act



Sec. 15.1  Scope and purpose.

    (a) The purpose of this subpart is to set forth regulations relating 
to claims asserted under the Federal Tort Claims Act, as amended, 
accruing on or after January 18, 1967, for money damages against the 
United States for injury to or loss of property or personal injury or 
death caused by the negligent or wrongful act or omission of an officer 
or employee of the Department of Labor while acting within the scope of 
his or her office or employment.
    (b) This subpart is issued subject to and consistent with applicable 
regulations on administrative claims under the Federal Tort Claims Act 
issued by the Attorney General (28 CFR part 14).



Sec. 15.2  Definitions.

    (a) Department means the Department of Labor.
    (b) Organizational unit means the jurisdictional area of each 
Assistant Secretary and each office head reporting directly to the 
Secretary.
    (c) Act means the Federal Tort Claims Act, as amended, (28 U.S.C. 
1346(b), 28 U.S.C. 2671, et seq.).

[[Page 164]]



Sec. 15.3  Administrative claim; who may file.

    (a) A claim for the injury to or loss of property may be presented 
by the owner of the property, his or her duly authorized agent, or his 
or her legal representative.
    (b) A claim for personal injury may be presented by the injured 
person, his or her duly authorized agent, or his or her legal 
representative.
    (c) A claim for death may be presented by the executor or 
administrator of the decedent's estate, or by any other person legally 
entitled to assert such a claim in accordance with applicable State law.
    (d) A claim for loss wholly compensated by an insurer with the 
rights of a subrogee may be presented by the insurer. A claim for loss 
partially compensated by an insurer with the rights of a subrogee may be 
presented by the insurer or the insured individually, as their 
respective interests appears, or jointly. Whenever an insurer presents a 
claim asserting the rights of a subrogee, it shall present with its 
claim appropriate evidence that it has the rights of a subrogee.
    (e) A claim presented by an agent or legal representative shall be 
presented in the name of the claimant, be signed by the agent or 
representative, show the title or legal capacity of the person signing 
and be accompanied by evidence of his or her authority to present a 
claim on behalf of the claimant as agent, executor, administrator, 
parent, guardian, or legal representative.



Sec. 15.4  Administrative claim; where to file.

    (a) For the purposes of this subpart, a claim shall be deemed to 
have been presented when the Department receives, at a place designated 
in paragraph (b) of this section, a properly executed ``Claim for 
Damage, Injury, or Death'' on Standard Form 95, or other written 
notification of an incident accompanied by a claim for money damages in 
a sum certain for injury to or loss of property or personal injury or 
death by reason of the incident.
    (b) In any case where the claim seeks damages in excess of $25,000 
or which involves an alleged act or omission of an employee of the 
Department whose official duty station is in Washington, D.C., a 
claimant shall mail or deliver his or her claim for money damages for 
injury to or loss of property or personal injury or death caused by the 
negligent or wrongful act or omission of any employee of the Department 
while acting within the scope of his or her office or employment 
hereunder to the Council for Claims and Compensation, Office of the 
Solicitor of Labor, U.S. Department of Labor, 200 Constitution Avenue, 
NW., Suite S4325, Washington, DC 20210.
    (c) In all other cases, the claimant shall address his or her claim 
to the official duty station of the employee whose act or omission forms 
the basis of the complaint.



Sec. 15.5  Administrative claim; evidence or information to substantiate.

    (a) Personal injury. In support of a claim for personal injury, 
including pain and suffering, the claimant is required to submit the 
following evidence or information:
    (1) A written report by the attending physician or dentist setting 
forth the nature and extent of the injury, nature and extent of 
treatment, any degree of temporary or permanent impairment, the 
prognosis, period of hospitalization, if any, and any diminished earning 
capacity. In addition, the claimant may be required to submit to a 
physical or mental examination by a physician employed or designated by 
the Department or another federal agency. A copy of the report of the 
examining physician shall be made available to the claimant upon the 
claimant's written request: Provided, That he or she has, upon request, 
furnished the report referred to in the first sentence of this 
subparagraph and has made, or agrees to make available to the 
Department, any other physician's report previously or thereafter made 
of the physical or mental condition which is the subject matter of the 
claim.
    (2) Itemized bills for medical, dental and hospital, or any other, 
expenses incurred or itemized receipts of payment for such expenses.
    (3) If the prognosis reveals the necessity for future treatment, a 
statement of expected expenses for such treatment.

[[Page 165]]

    (4) If a claim is made for loss of time from employment, a written 
statement from his or her employer showing actual time lost from 
employment, whether he or she is a full or part-time employee, and wages 
or salary actually lost.
    (5) If a claim is made for loss of income and the claimant is self-
employed, documentary evidence showing the amount of earnings lost. For 
example, income tax returns for several years prior to the injury in 
question and the year in which the injury occurred may be used to 
indicate or measure lost income; a statement of how much it did or would 
cost the claimant to hire someone else to do the same work he or she was 
doing at the time of injury might also be used in measuring lost income.
    (6) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the personal injury 
or the damages claimed.
    (b) Death. In support of a claim based on death, the claimant may be 
required to submit the following evidence or information:
    (1) An authenticated death certificate or other competent evidence 
showing cause of death, date of death, and age of the decedent.
    (2) Decedent's employment or occupation at the time of death, 
including his or her monthly or yearly salary or earnings (if any), and 
the duration of his or her last employment or occupation.
    (3) Full name, address, birth date, kinship and marital status of 
the decedent's survivors, including identification of those survivors 
who were dependent for support upon the decedent at the time of his or 
her death.
    (4) Degree of support afforded by the decedent to each survivor 
dependent upon him or her for support at the time of his or her death.
    (5) Decedent's general physical and mental condition before his or 
her death.
    (6) Itemized bills for medical and burial expenses incurred by 
reason of the incident causing death, or itemized receipts of payment 
for such expenses.
    (7) If damages for pain and suffering prior to death are claimed, a 
physician's detailed statement specifying the injuries suffered, 
duration of pain and suffering, any drugs administered for pain, and the 
decedent's physical condition in the interval between injury and death.
    (8) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the death or damages 
claimed.
    (c) Property damages. In support of a claim for injury to or loss of 
property, real or personal, the claimant may be required to submit the 
following evidence or information with respect to each item of property:
    (1) Proof of ownership.
    (2) A detailed statement of the amount claimed.
    (3) An itemized receipt of payment for necessary repairs or itemized 
written estimates of the cost of such repairs.
    (4) A statement listing date of purchase, purchase price, and 
salvage value where repair is not economical.
    (5) Any other evidence or information which may have a bearing on 
either the responsibility of the United States for the injury to or loss 
of property or the damages claimed.



Sec. 15.6  Administrative action.

    (a) Investigation. When an organizational unit learns of an incident 
that reasonably can be expected to result in an allegation of harm 
caused to an individual or organization by an alleged negligent act or 
omission by an employee of that organizational unit or when it learns of 
an administrative claim or of litigation alleging such harm, it has the 
responsibility to fully investigate the incident and to take all actions 
necessary to preserve all relevant documents and other evidence. Each 
organizational unit should institute appropriate procedures to ensure 
that notification of such incidents are reported to the office 
responsible for ensuring that evidence is preserved and investigation 
undertaken.
    (b) Notification. Upon receipt of an administrative claim under the 
Act or of notice of litigation seeking damages for an alleged negligent 
act or omission of an employee of the Department acting within the scope 
of his or her employment, the Office of the Solicitor

[[Page 166]]

shall notify the organizational unit responsible for the activity which 
gave rise to the claim or litigation and shall provide a copy of the 
administrative claim or the claim filed in the litigation.
    (c) Administrative Report. (1) Upon receiving notification of an 
administrative claim or litigation, the organizational unit or units 
involved in the circumstances of the claim or litigation shall be 
responsible for preparing an Administrative Report and forwarding it to 
the Office of the Solicitor in a timely manner. The Administrative 
Report shall be in the form of a single memorandum in narrative form 
with attachments. It should contain all of the following elements, 
unless permission is obtained from the Office of the Solicitor to 
dispense with a particular element:
    (i) a brief explanation of the organization and operation of the 
program involved including statutory authority and applicable 
regulations;
    (ii) a complete description of the events which gave rise to the 
claim or litigation, including a specific response to every allegation 
in the claim or litigation;
    (iii) any information available regarding the questions of whether 
the claimant or plaintiff actually suffered the harm alleged in the 
claim or litigation and what individual or organization caused any harm 
which appears to have occurred;
    (iv) any information available regarding the damages claimed;
    (v) any policy reasons which the organizational unit wishes to 
advance for or against settlement of the claim or litigation; and
    (vi) details of any claims the Department may have against the 
claimant or plaintiff, whether or not they appear to be related to the 
subject matter of the claim or litigation.
    (2) A copy of all documents relevant to the issues involved in the 
claim or litigation should be attached to each copy of the 
Administrative Report. Original records should not be forwarded to the 
Office of the Solicitor unless specifically requested. They should be 
preserved, however, and remain available for litigation if necessary.
    (3) Organizational units should ensure that all Administrative 
Reports are either prepared or reviewed by an official of the 
organizational unit who was not personally involved in the incident in 
question prior to filing of the claim or suit.
    (d) Litigation. During the course of any litigation, organizational 
units are responsible for providing assistance to the Office of the 
Solicitor in responding to discovery requests such as interrogatories 
and requests to produce documents, for providing assistance in analyzing 
factual and program issues, for providing witnesses for depositions and 
trials, and for assistance in producing affidavits and exhibits for use 
in the litigation.



Sec. 15.7  Determination of claims.

    (a) Authority to consider, ascertain, adjust, determine, compromise 
and settle claims. The Counsel for Claims and Compensation shall have 
the authority to consider, ascertain, adjust, determine, compromise and 
settle claims pursuant to the Federal Tort Claims Act which involve an 
alleged negligent or wrongful act or omission of an employee whose 
official duty station is the Department's national office in Washington, 
D.C., or which exceed $25,000 in amount, or which involve a new 
precedent, a new point of law, or a question of policy. Regional 
Solicitors and the Associate Regional Solicitors are authorized to 
consider, ascertain, adjust, determine, compromise and settle, claims 
arising in their respective jurisdictions pursuant to the Federal Tort 
Claims Act which do not exceed $25,000 in amount and which do not 
involve a new precedent, new point of law, or a question of policy.
    (b) Payment. Any award, compromise, or settlement in the amount of 
$2,500 or less made pursuant to this section shall be paid by the 
Secretary of Labor out of appropriations available to the Department. 
Payment of an award, compromise, or settlement in an amount in excess of 
$2,500 made pursuant to this subpart shall be made in accordance with 28 
CFR 14.10.

[[Page 167]]



Sec. 15.8  Referral to Department of Justice.

    An award, compromise or settlement of a claim under Sec. 2672 title 
28, United States Code, and this subpart, in excess of $25,000 may be 
effected only with the prior written approval of the Attorney General or 
his designee. For the purpose of this subpart, a principle claim and any 
derivative or subrogated claim shall be treated as a single claim.



Sec. 15.9  Final denial of claim.

    Final denial of an administrative claim under this subpart shall be 
in writing, and notification of denial shall be sent to the claimant, or 
his or her attorney or legal representative by certified or registered 
mail. The notification of final denial shall include a statement of the 
reasons for the denial and shall include a statement that, if the 
claimant is dissatisfied with the Department's action, he or she may 
file suit in an appropriate U.S. District Court not later than 6 months 
after the date of mailing of the notification.



Sec. 15.10  Action on approved claim.

    (a) Payment. Payment of a claim approved under this subpart is 
contingent upon claimant's execution of a ``Voucher for Payment Under 
Federal Tort Claims Act,'' Standard Form 1145. When a claimant is 
represented by an attorney, the voucher for payment shall designate both 
the claimant and his or her attorney as payees, and the check shall be 
delivered to the attorney whose address shall appear on the voucher.
    (b) Acceptance. Acceptance by the claimant, or his or her agent or 
legal representative, of an award, compromise, or settlement under 
Sec. 2672 or Sec. 2677 of title 28, U.S.C., is final and conclusive on 
the claimant, his or her agent or legal representative, and any other 
person on whose behalf or for whose benefit the claim has been presented 
and constitutes a complete release of any claim against the United 
States and against any officer or employee of the Government whose act 
or omission gave rise to the claim by reason of the same subject matter.



 Subpart B--Claims Under the Military Personnel and Civilian Employees' 
                           Claims Act of 1964



Sec. 15.20  General provisions.

    (a) Scope and Purpose. This subpart applies to all claims filed by 
or on behalf of employees of the Department for loss of or damage to 
personal property incident to their service with the Department under 
the Military Personnel and Civilian Employees' Claims Act of 1964, 
(hereinafter referred to as the Act). A claim must be substantiated and 
the possession of the property determined to be reasonable, useful or 
proper.
    (b) Payment. The maximum amount that can be paid for any claim under 
the Act is $40,000 and property may be replaced in kind at the option of 
the Government.
    (c) Policy. The Department is not an insurer and does not underwrite 
all personal property losses that an employee may sustain. Employees are 
encouraged to carry private insurance to the maximum extent practicable 
to avoid losses which may not be recoverable from the Department. The 
procedures set forth in this subpart are designed to enable the claimant 
to obtain the proper amount of compensation for the loss or damage. 
Failure of the claimant to comply with these procedures any reduce or 
preclude payment of the claim under this subpart.
    (d) Definition. Quarters means a house, apartment or other residence 
that is a Department employee's principal residence.



Sec. 15.21  Filing of claims.

    (a) Who may file. (1) A claim may be made pursuant to this subpart 
by an employee or by a spouse or authorized agent, or legal 
representative on behalf of the employee. If the employee is deceased, 
the claim may be filed by a survivor in the following order of 
preference: spouse, children, parent, brother or sister or the 
authorized agent or legal representative of such person or persons.
    (2) A claim may not be made hereunder by or for the benefit of a

[[Page 168]]

subrogee, assignee, conditional vendor or other third party.
    (b) Where to file. A claim hereunder must be presented in writing. 
If the claimant's official duty station is at the Department's national 
office in Washington, DC., or if the claim is for an amount in excess of 
$25,000, the claim should be filed with the Counsel for Claims and 
Compensation, Office of the Solicitor of Labor, U.S. Department of 
Labor, Suite S4325, 200 Constitution Avenue, NW., Washington, DC 20210. 
In all other cases the claimant shall address the claim to the regional 
or branch office of the Solicitor of Labor servicing the claimant's 
official duty station.
    (c) Evidence required. The claimant is responsible for 
substantiating ownership or possession, the facts surrounding the loss 
or damage, and the value of the property. Any claim filed hereunder must 
be accompanied by the following:
    (1) A written statement, signed by the claimant or his or her 
authorized agent, setting forth the circumstances under which the damage 
or loss occurred. This statement shall also include:
    (i) A description of the type, design, model number or other 
identification of the property.
    (ii) The date of purchase or acquisition and the original cost of 
the property.
    (iii) The location of the property when the loss or damage occurred.
    (iv) The value of the property when lost or damaged.
    (v) The actual or estimated cost of the repair of any damaged item.
    (vi) The purpose of and authority for travel, if the loss or damage 
occurred incident to transportation or to the use of a motor vehicle.
    (vii) Any and all available information as to the party responsible 
for the loss or damage, if such party is someone other than the 
claimant, and all information as to insurance contracts, whether held by 
the claimant or by the party responsible.
    (2) Copies of all available and appropriate documents such as bills 
of sale, estimates of repairs, or travel orders. In the case of an 
automobile, the claimant must file two estimates of repair or a 
certified paid bill showing the damage incurred and the cost of all 
parts, labor and other items necessary to the repair of the vehicle or a 
statement from an authorized dealer or repair garage showing that the 
cost of such repairs exceeds the value of the vehicle.
    (3) A copy of the power of attorney or other authorization if the 
claim is filed by someone other than the employee.
    (4) A statement from the employee's immediate supervisor confirming 
that possession of the property was reasonable, useful or proper under 
the circumstances and that the damage or loss was incident to service.
    (d) Time limitations. A claim under this part may be allowed only if 
it is filed in writing within 2 years after accrual of the claim. For 
the purpose of this part, a claim accrues at the later of:
    (1) the time of the accident or incident causing the loss or damage;
    (2) such time as the loss or damage should have been discovered by 
the claimant by the exercise of due diligence; or
    (3) such time as cause preventing filing no longer exists or as war 
or armed conflict ends, whichever is earlier, if a claim otherwise 
accrues during war or an armed conflict or has accrued within two years 
before war or an armed conflict begins, and for cause shown.



Sec. 15.22  Allowable claims.

    (a) A claim may be allowed only if the property involved was being 
used incident to service with the Department and:
    (l) The damage or loss was not caused wholly or partly by the 
negligent or wrongful act or omission of the claimant, his or her agent, 
the members of his or her family, or his or her private employee (the 
standard to be applied is that of reasonable care under the 
circumstances); and
    (2) The possession of the property lost or damaged and the quantity 
and the quality possessed is determined to have been reasonable, useful 
or proper under the circumstances; and
    (3) The claim is substantiated by proper and convincing evidence.
    (b) Claims which are otherwise allowable under this subpart shall 
not be

[[Page 169]]

disallowed solely because the claimant was not the legal owner of the 
property for which the claim is made.
    (c) Subject to the conditions in paragraph (a) of this section and 
the other provisions of this subpart, any claim for damage to, or loss, 
of personal property incident to service with the Department may be 
considered and allowed. For the purpose of subpart B of this part, an 
alternative work location at which an employee is performing duties 
pursuant to an approved Flexiplace agreement shall be considered an 
official duty station. The following are examples of the principal types 
of claims which may be allowed, but these examples are not exclusive and 
other types of claims may be allowed, unless hereinafter excluded:
    (1) Property or damage in quarters or other authorized places. 
Claims may be allowable for damage to, or loss of, property arising from 
fire, flood, hurricane, other natural disaster, theft, or other unusual 
occurrence, while such property is located at:
    (i) Quarters within the 50 States or the District of Columbia that 
were assigned to the claimant or otherwise provided in kind by the 
United States; or
    (ii) Quarters outside the 50 States and the District of Columbia 
that were occupied by the claimant, whether or not they were assigned or 
otherwise provided in kind by the United States, except when the 
claimant is a civilian employee who is a local inhabitant; or
    (iii) Any warehouse, office, working area or other place (except 
quarters) authorized or apparently authorized for the reception or 
storage of property.
    (2) Transportation or travel losses. Claims may be allowed for 
damage to, or loss of, property incident to transportation or storage 
pursuant to order or in connection with travel under orders, including 
property in the custody of a carrier, an agent or agency of the 
Government, or the claimant.
    (3) Mobile homes. Claims may be allowed for damage to, or loss of, 
mobile homes and their contents under the provisions of paragraph (c)(2) 
of this section. Claims for structural damage to mobile homes, other 
than that caused by collision, and damage to contents of mobile homes 
resulting from such structural damage, must contain conclusive evidence 
that the damage was not caused by structural deficiency of the mobile 
home and that it was not overloaded. Claims for damage to, or loss of, 
tires mounted on mobile homes will not be allowed, except in cases of 
collision, theft or vandalism.
    (4) Enemy action or public service. Claims may be allowed for damage 
to, or loss of, property as a direct consequence of:
    (i) Enemy action or threat thereof, or combat, guerrilla, 
brigandage, or other belligerent activity, or unjust confiscation by a 
foreign power or its nationals.
    (ii) Action by the claimant to quiet a civil disturbance or to 
alleviate a public disaster.
    (iii) Efforts by the claimant to save human life or Government 
property.
    (5) Property used for the benefit of the Government. Claims may be 
allowed for damage to, or loss, of property when used for the benefit of 
the Government at the request of, or with the knowledge and consent of 
superior authority.
    (6) Clothing and Accessories. Claims may be allowed for damage to, 
or loss of, clothing and accessories customarily worn on the person, 
such as eyeglasses, hearing aids, or dentures.
    (7) Expenses incident to repair. Claimants may be reimbursed for the 
payment of any sales tax incurred in connection with repairs to an item. 
The costs of obtaining estimates of repair (subject to the limitations 
set forth in Sec. 15.14(c)) are also allowable.



Sec. 15.23  Restrictions on certain claims.

    Claims of the type described in this section are only allowable 
subject to the restrictions noted:
    (a) Money or currency. Claims may be allowed for loss of money or 
currency (which includes coin collections) only when lost incident to 
fire, flood, hurricane, other natural disaster, or by theft from 
quarters (as limited by Sec. 15.22(c)(1)). In incidents of theft from 
quarters, it must be conclusively shown that the quarters were locked at 
the time of the theft. Reimbursement for loss of money or currency is 
limited to an amount which is determined to have been reasonable for the 
claimant

[[Page 170]]

to have had in his or her possession at the time of the loss.
    (b) Government property. Claims may only be allowed for property 
owned by the United States for which the claimant is financially 
responsible to an agency of the Government other than the Department.
    (c) Estimate fees. Claims may include fees paid to obtain estimates 
of repairs only when it is clear that an estimate could not have been 
obtained without paying a fee. In that case, the fee may be allowed only 
in an amount determined to be reasonable in relation to the value of the 
property or the cost of the repairs.
    (d) Automobiles and motor vehicles. Claims may only be allowed for 
damage to, or loss of automobiles and other motor vehicles if:
    (1) Such motor vehicles were required to be used for official 
Government business (official Government business, as used here, does 
not include travel, or parking incident thereto, between quarters and 
office, or use of vehicles for the convenience of the owner. However, it 
does include travel, and parking incident thereto, between quarters and 
an assigned place of duty specifically authorized by the employee's 
supervisor as being more advantageous to the Government); or
    (2) Shipment of such motor vehicles was being furnished or provided 
by the Government, subject to the provisions of Sec. 15.25.
    (e) Computers and Electronics. Claims may be allowed for loss of, or 
damage to, cellular phones, fax machines, computers and related hardware 
and software only when lost or damaged incident to fire, flood, 
hurricane, other natural disaster, or by theft from quarters (as limited 
by Sec. 15.22((c)(1)) or unless it is being shipped as a part of a 
change of duty station paid for by the Department. In incidents of theft 
from quarters, it must be conclusively shown that the quarters were 
locked at the time of the theft.



Sec. 15.24  Unallowable claims.

    Claims are not allowable for the following:
    (a) Unassigned quarters in United States. Property loss or damage in 
quarters occupied by the claimant within the 50 States or the District 
of Columbia that were not assigned to him or otherwise provided in kind 
by the United States.
    (b) Business property. Property used for business or profit.
    (c) Unserviceable property. Wornout or unserviceable property.
    (d) Illegal possession. Property acquired, possessed or transferred 
in violation of the law or in violation of applicable regulations or 
directives.
    (e) Articles of extraordinary value. Valuable articles, such as 
cameras, watches, jewelry, furs or other articles of extraordinary 
value. This prohibition does not apply to articles in the personal 
custody of the claimant or articles properly checked, if reasonable 
protection or security measures have been taken by claimant.
    (f) Intangible property. Loss of property that has no extrinsic and 
marketable value but is merely representative or evidence of value, such 
as non-negotiable stock certificates, promissory notes, bonds, bills of 
lading, warehouse receipts, insurance policies, baggage checks, and bank 
books, is not compensable. Loss of a thesis, or other similar item, is 
compensable only to the extent of the out-of-pocket expenses incurred by 
the claimant in preparing the item such as the cost of the paper or 
other materials. No compensation is authorized for the time spent by the 
claimant in its preparation or for supposed literary value.
    (g) Incidental expenses and consequential damages. The Act and this 
subpart authorize payment for loss of or damage to personal property 
only. Except as provided in Sec. 15.22(c)(7), consequential damages or 
other types of loss or incidental expenses (such as loss of use, 
interest, carrying charges, cost of lodging or food while awaiting 
arrival of shipment, attorney fees, telephone calls, cost of 
transporting claimant or family members, inconvenience, time spent in 
preparation of claim, or cost of insurance premiums) are not 
compensable.
    (h) Real property. Damage to real property is not compensable. In 
determining whether an item is considered to be an item of personal 
property, as opposed to real property, normally,

[[Page 171]]

any movable item is considered personal property even if physically 
joined to the land.
    (i) Commercial property. Articles acquired or held for sale or 
disposition by other commercial transactions on more than an occasional 
basis, or for use in a private profession or business enterprise.
    (j) Commercial storage. Property stored at a commercial facility for 
the convenience of the claimant and at his or her expense.
    (k) Minimum amount. Loss or damage amounting to less than $25.



Sec. 15.25  Claims involving carriers or insurers.

    In the event the property which is the subject of the claim was lost 
or damaged while in the possession of a commercial carrier or was 
insured, the following procedures will apply:
    (a) Whenever property is damaged, lost or destroyed while being 
shipped pursuant to authorized travel orders, the owner must file a 
written claim for reimbursement with the last commercial carrier known 
or believed to have handled the goods, or the carrier known to be in 
possession of the property when the damage or loss occurred, according 
to the terms of its bill of lading or contract, before submitting a 
claim against the Government under this subpart.
    (b) Whenever property is damaged, lost or destroyed incident to the 
claimant's service and is insured in whole or in part, the claimant must 
make demand in writing against the insurer for reimbursement under the 
terms and conditions of the insurance coverage, prior to the filing of 
the claim against the Government.
    (c) Failure to make a demand on a carrier or insurer or to make all 
reasonable efforts to protect and prosecute rights available against a 
carrier or insurer and to collect the amount recoverable from the 
carrier or insurer may result in reducing the amount recoverable from 
the Government by the maximum amount which would have been recoverable 
from the carrier or insurer had the claim been timely or diligently 
prosecuted.Sec. However, no deduction will be made where the 
circumstances of the claimant's service preclude reasonable filing of 
such a claim or diligent prosecution, or the evidence indicates a demand 
was impracticable or would have been unavailing.
    (d) Following the submission of the claim against the carrier or 
insurer, the claimant may immediately submit his claim against the 
Government in accordance with the provisions of this subpart, without 
waiting until either final approval or denial of the claim is made by 
the carrier or insurer.
    (1) Upon submitting his or her claim, the claimant shall certify in 
his claim that he or she has or has not gained any recovery from a 
carrier or insurer, and enclose all correspondence pertinent thereto.
    (2) If final action has not been taken by the carrier or insurer on 
the claim, the claimant shall immediately notify them to address all 
correspondence in regard to the claim to the appropriate Office of the 
Solicitor of Labor.
    (3) The claimant shall advise the appropriate Office of the 
Solicitor of any action taken by the carrier or insurer on the claim 
and, upon request, shall furnish all correspondence, documents, and 
other evidence pertinent to the matter.
    (e) The claimant shall assign to the United States, to the extent of 
any payment on the claim accepted by him or her, all rights, title and 
interest in any claim he or she may have against any carrier, insurer, 
or other party arising out of the incident on which the claim against 
the United States is based. After payment of the claim by the United 
States, the claimant shall, upon receipt of any payment from a carrier 
or insurer, pay the proceeds to the United States to the extent of the 
payment received by him or her from the United States.
    (f) Where a claimant recovers for the loss from the carrier or 
insurer before his or her claim under this subpart is settled, the 
amount of recovery shall be applied to the claim as follows:
    (1) When the amount recovered from a carrier, insurer, or other 
third party is greater than or equal to the claimant's total loss as 
determined under this part, no compensation is allowable under this 
subpart.

[[Page 172]]

    (2) When the amount recovered is less than such total loss, the 
allowable amount is determined by deducting the recovery from the amount 
of such total loss.
    (3) For this purpose, the claimant's total loss is to be determined 
without regard to the maximum payment limitations set forth in 
Sec. 15.20. However, if the resulting amount, after making this 
deduction exceeds the maximum payment limitations, the claimant shall be 
allowed only the maximum amount set forth in Sec. 15.20.



Sec. 15.26  Claims procedures.

    (a) Award. The Counsel for Claims and Compensation, the Regional 
Solicitors, and the Associate Regional Solicitors are authorized to 
consider, ascertain, adjust, determine, compromise and settle claims 
filed under this subpart that arose within their respective 
jurisdictions, except that any claim for an amount in excess of $25,000 
shall fall within the exclusive jurisdiction of the Counsel for Claims 
and Compensation.
    (b) Form of claim. Any writing received by the Office of the 
Solicitor within the time limits set forth in Sec. 15.21(d) will be 
accepted and considered a claim under the Act if it constitutes a demand 
for compensation from the Department. A demand is not required to be for 
a specific sum of money.
    (c) Notification. The determination upon the claim shall be provided 
to the claimant in writing by the deciding official.



Sec. 15.27  Computation of award and finality of settlement.

    (a) The amount allowable for damage to or loss of any item of 
property may not exceed the lowest of:
    (1) the amount requested by the claimant for the item as a result of 
its loss, damage or the cost of its repair;
    (2) the actual or estimated cost of its repair; or
    (3) the actual value at the time of its loss, damage, or 
destruction. The actual value is determined by using the current 
replacement cost or the depreciated value of the item since its 
acquisition, whichever is lower, less any salvage value of the item in 
question.
    (b) Depreciation in value is determined by considering the type of 
article involved, its cost, its condition when damaged or lost, and the 
time elapsed between the date of acquisition and the date of damage or 
loss.
    (c) Current replacement cost and depreciated value are determined by 
use of publicly available adjustment rates or through use of other 
reasonable methods at the discretion of the official authorized to issue 
a determination upon the claim in question.
    (d) Replacement of lost or damaged property may be made in kind 
wherever appropriate.
    (e) At the discretion of the official authorized to issue the 
determination upon the claim in question, a claimant may be required to 
turn over an item alleged to have been damaged beyond economical repair 
to the United States, in which case no deduction for salvage value will 
be made in the calculation of actual value.
    (f) Notwithstanding any other provisions of law, settlement of 
claims under the Act are final and conclusive.



Sec. 15.28  Attorney fees.

    No more than 10 per centum of the amount in settlement of each 
individual claim submitted and settled under this subpart shall be paid 
or delivered to or received by any agent or attorney on account of 
services rendered in connection with that claim.



Sec. 15.29  Reconsideration.

    (a) Deciding Official. While there is no appeal from the decision of 
the deciding official in regard to claims under the Act, the deciding 
official may always reconsider his or her determination of a claim.
    (b) Claimant. A claimant may request reconsideration from the 
deciding official by directing a written request for reconsideration to 
the deciding official within 180 days of the date of the original 
determination. The claimant must clearly state the factual or legal 
basis upon which he or she rests the request for a more favorable 
determination.
    (c) Notification. The determination upon the reconsideration will be 
provided to the claimant in writing by the deciding official.

[[Page 173]]



     Subpart C--Claims Arising Out of the Operation of the Job Corps



Sec. 15.40  Scope and purpose.

    (a) The purpose of this subpart is to set forth regulations relating 
to claims for damage to persons or property arising out of the operation 
of Job Corps which the Secretary of Labor finds to be a proper charge 
against the United States but which are not cognizable under the Federal 
Tort Claims Act.
    (b) This subpart further amplifies the regulatory provisions set 
forth in 20 CFR 638.526(b) regarding such claims.



Sec. 15.41  Allowable claims.

    (a)(1) A claim for damage to persons or property arising out of an 
act or omission of a student enrolled in the Job Corps may be considered 
pursuant to Sec. 436(b) of the Job Training Partnership Act (29 U.S.C. 
1706(b)):
    (i) if the act or omission which gave rise to the claim took place 
at the center to which the student involved was assigned, or
    (ii) if the student involved was not within the geographical limits 
of his hometown and was within 100 miles of the center to which he or 
she was assigned, or while he or she was on authorized travel to or from 
the center.
    (2) The claim may be paid if the deciding official, in his or her 
discretion, finds the claim to be a proper charge against the United 
States resulting from an act or omission of a student enrolled in the 
Job Corps.
    (b) A claim for damage to person or property hereunder may not be 
paid if the claim is cognizable under the Federal Tort Claims Act (28 
U.S.C. 2677).
    (c) A claim for damage to person or property may be adjusted and 
settled hereunder in an amount not exceeding $1500.



Sec. 15.42  Claim procedures.

    (a) Claim. A claim under this subpart must be in writing and signed 
by the claimant or by an authorized representative. It must be received 
by the Office of the Solicitor within two years of the date upon which 
the claim accrued.
    (b) Award. The Regional Solicitors and Associate Regional Solicitors 
are authorized to consider, ascertain, adjust, determine, compromise and 
settle claims filed under this subpart that arose within their 
respective jurisdictions.
    (c) Notification. The determination upon the claim shall be provided 
to the claimant in writing by the deciding official.
    (d) Reconsideration. Reconsideration of a determination under this 
subpart shall be available pursuant to the procedures and limitations 
set forth in Sec. 15.29.



PART 16--EQUAL ACCESS TO JUSTICE ACT--Table of Contents




                      Subpart A--General Provisions

Sec.
16.101  Purpose of these rules.
16.102  Definitions.
16.103  When the Act applies.
16.104  Proceedings covered.
16.105  Eligibility of applicants.
16.106  Standards for awards.
16.107  Allowable fees and expenses.
16.108  Awards against other agencies.

             Subpart B--Information Required From Applicants

16.201  Contents of application.
16.202  Net worth exhibit.
16.203  Documentation of fees and expenses.
16.204  When an application may be filed.

           Subpart C--Procedures for Considering Applications

16.301  Filing and service of documents.
16.302  Answer to application.
16.303  Settlement.
16.304  Further proceedings.
16.305  Decision.
16.306  Review by the Secretary.
16.307  Judicial review.
16.308  Payment of award.

    Authority: Pub. L. 96-481, 94 Stat. 2327 (5 U.S.C. 504).

    Source: 46 FR 63021, Dec. 29, 1981, unless otherwise noted.



                      Subpart A--General Provisions



Sec. 16.101  Purpose of these rules.

    Section 203(a)(1) of the Equal Access to Justice Act amends section 
504 of the Administrative Procedure Act to provide for the award of 
attorney fees and other expenses to eligible individuals and entities 
who are parties to

[[Page 174]]

certain administrative proceedings before the Department of Labor. An 
eligible party may receive an award when it prevails over an agency, 
unless the agency's position in the proceeding was substantially 
justified or special circumstances make an award unjust. The rules in 
this part describe the parties eligible for awards, the proceedings that 
are covered, how to apply for awards, and the standards under which 
awards will be granted.



Sec. 16.102  Definitions.

    As used in this part:
    (a) The Act means section 504 of title 5 U.S.C., as amended by 
section 203(a)(1) of the Equal Access to Justice Act, Public Law No. 96-
481.
    (b) Adversary adjudication means an adjudication under 5 U.S.C. 554 
or other proceeding required by statute to be determined on the record 
after an opportunity for an agency hearing, but excludes an adjudication 
for the purpose of establishing or fixing a rate or for the purpose of 
granting or renewing a license.
    (c) Adjudicative officer means the official who presides at the 
adversary adjudication, without regard to whether the official is 
designated as an administrative law judge, a hearing officer or 
examiner, or otherwise.
    (d) Department refers to the cognizant departmental component which 
is participating in the adversary adjudication, (e.g., Occupational 
Safety and Health Administration, Mine Safety and Health Administration, 
and Employment Standards Administration).
    (e) Proceeding means an adversary adjudication as defined in 
paragraph (b) of this section.



Sec. 16.103  When the Act applies.

    The Act applies to any adversary adjudication pending before the 
Department at any time between October 1, 1981 and September 30, 1984. 
This includes proceedings begun before October 1, 1981 if final agency 
action has not been taken before that date, and proceedings pending on 
September 30, 1984, regardless of when they were initiated or when final 
agency action occurs, except that it shall not apply in any case pending 
on October 1, 1981 in which a decision has been issued, but final agency 
action has not been taken by reason of an abatement.



Sec. 16.104  Proceedings covered.

    (a) The Act applies in adversary adjudications in which the position 
of the Department or another agency of the United States is presented by 
an attorney or other representative who enters an appearance and 
participates in the proceeding in an adversarial capacity. Any 
proceeding which prescribes a lawful present or future rate or is 
primarily rule-making is not covered. Proceedings to grant or renew 
licenses are also excluded, but proceedings to modify, suspend or revoke 
licenses are covered if they are otherwise adversary adjudications. The 
following types of proceedings are deemed to be adversarial 
adjudications which will be covered by the Act, when all other 
conditions in the Act and in these rules are met:
    (1) Hearings conducted by the Occupational Safety and Health Review 
Commission under the authority of 29 U.S.C. 661 of the Occupational 
Safety and Health Act; and hearings conducted by the Federal Mine Safety 
and Health Review Commission under the authority of 30 U.S.C. 823 of the 
Mine Safety and Health Act. In these proceedings, the rules of the 
respective Commissions rather than the instant rules will be applicable.
    (2) Wage and Hour Division, Employment Standards Administration:
    (i) Civil money penalties under the child labor provisions of the 
Fair Labor Standards Act at 29 U.S.C. 216(e) and 29 CFR part 579.
    (ii) Violations and debarment in Federal contracts under the Walsh-
Healey Act at 41 U.S.C. 39 and 41 CFR 50-203.1.
    (iii) Revocation, modification and suspension of licenses under the 
Farm Labor Contractor Registration Act at 7 U.S.C. 2045(b) and 29 CFR 
40.101.
    (iv) Civil money penalties under the Farm Labor Contractor 
Registration Act at 7 U.S.C. 2048(b)(2) and 29 CFR 40.101.
    (v) Revocation and suspension of certificates under the Migrant and 
Seasonal Agricultural Worker Protection Act at 29 U.S.C. 1813(b) and 29 
CFR 500.200.

[[Page 175]]

    (vi) Civil money penalties under the Migrant and Seasonal 
Agricultural Worker Protection Act at 29 U.S.C. 1853(b) and 29 CFR 
500.200.
    (3) Office of Federal Contract Compliance Programs, Employment 
Standards Administration hearings prior to the denial, withholding, 
termination or suspension of a government contract or any portion of a 
contract under title VII of the Civil Rights Act of 1964, as amended, at 
42 U.S.C. 2000e-17 and 41 CFR part 60-30.
    (4) Office of Civil Rights:
    (i) Fund termination under title VI of the Civil Rights Act at 42 
U.S.C. 2000d2 and 29 CFR part 31.
    (ii) Fund termination under the Age Discrimination in Federally 
Assisted Programs Act of 1975 at 42 U.S.C. 6104(a).
    (iii) Fund termination or refusal to grant because of discrimination 
under 20 U.S.C. 1682.
    (5) Employment and Training Administration:
    (i) Proceedings under the Comprehensive Employment and Training Act 
at 29 U.S.C. 818, where the Department determines that a recipient of 
CETA funds is failing to comply with the requirements of the Act and the 
implementing regulations.
    (ii) Conformity and compliance under the Federal Unemployment Tax 
Act at 26 U.S.C. 3303(b) and 3304(c).
    (iii) Proceedings under section 303(b) of the Social Security Act of 
1935, as amended, 42 U.S.C. 503(b).
    (6) Mine Safety and Health Administration:
    (i) Petitions for modification of a mandatory safety standard under 
the Mine Safety and Health Act at 30 U.S.C. 811(c) and 30 CFR 44.20.
    (7) Occupational Safety and Health Administration:
    (i) Exemptions, tolerances and variances under the Occupational 
Safety and Health Act at 29 U.S.C. 655 and 29 CFR 1905.3.
    (b) If a proceeding includes both matters covered by the Act and 
matters specifically excluded from coverage, any award made will include 
only fees and expenses related to the covered issues.

[46 FR 63021, Dec. 29, 1981, as amended at 48 FR 43322, Sept. 23, 1983]



Sec. 16.105  Eligibility of applicants.

    (a) To be eligible for an award of attorney fees and other expenses 
under the Act, the applicant must be a party, as that term is defined in 
5 U.S.C. 551(3), to an adversary adjudication for which it seeks an 
award; the applicant must prevail; and must meet all the conditions of 
eligibility set out in this subpart and subpart B.
    (b) To be eligible for an award, the applicant must be:
    (1) An individual with a net worth of not more than $1 million;
    (2) The sole owner of an unincorporated business which has a net 
worth of not more than $5 million, including both personal and business 
interests, and not more than 500 employees;
    (3) A charitable or other tax exempt organization described in 
section 501(c)(3) of the Internal Revenue Code (26 U.S.C. 501(c)(3)) 
with not more than 500 employees;
    (4) A cooperative association as defined in section 15(a) of the 
Agricultural Marketing Act (12 U.S.C. 1141j(a)) with not more than 500 
employees;
    (5) Any other partnership, corporation, association or public or 
private organization with a net worth of not more than $5 million and 
not more than 500 employees. A unit of state or local government is not 
a public organization within the meaning of this provision.
    (c) For purposes of eligibility, the net worth and number of 
employees of an applicant shall be determined as of the date the 
proceeding was initiated.
    (d) An applicant who owns an unincorporated business will be 
considered as an individual rather than a sole owner of an 
unincorporated business if the issues on which the applicant prevails 
are related primarily to personal interests rather than to business 
interests.
    (e) The employees of an applicant include all persons who perform 
services for remuneration for the applicant, under the applicant's 
direction and control. Part-time employees shall be included.
    (f) The net worth and number of employees of the applicant and all 
of its affiliates shall be aggregated to determine eligibility. Any 
individual, corporation or other entity that directly

[[Page 176]]

or indirectly controls or owns a majority of the voting shares of 
another business, or controls, in any manner, the election of a majority 
of that business' board of directors, trustees or other persons 
exercising similar functions, shall be considered an affiliate for 
purposes of this part, unless the adjudicative officer determines that 
such treatment would be unjust and contrary to the purposes of the Act 
in light of the actual relationship between the affiliated entities. In 
addition, the adjudicative officer may determine that financial 
relationships of the applicant other than those described in this 
paragraph constitute special circumstances that would make an award 
unjust.
    (g) An applicant that participates in a proceeding primarily on 
behalf of one or more other persons or entities that would be ineligible 
is not itself eligible for an award.



Sec. 16.106  Standards for awards.

    (a) A prevailing applicant may receive an award for fees and 
expenses incurred in connection with a proceeding, or in a significant 
and discrete substantive portion of the proceeding, unless the position 
of the Department as a party over which the applicant has prevailed was 
substantially justified or if special circumstances make the award 
sought unjust. No presumption arises that the Department's position was 
not substantially justified simply because the Department did not 
prevail.
    (b) An award will be reduced or denied if the applicant has unduly 
or unreasonably protracted the proceeding.



Sec. 16.107  Allowable fees and expenses.

    (a) The following fees and other expenses are allowable under the 
Act:
    (1) Reasonable expenses of expert witnesses;
    (2) Reasonable cost of any study, analysis, engineering report, 
test, or project necessary for the preparation of the party's case;
    (3) Reasonable attorney or agent fees;
    (b) Awards will be based on the prevailing market rates for the kind 
and quality of services furnished not to exceed the rates set forth in 
paragraph (c) of this section.
    (c) No award under these rules for the fee of an attorney or agent 
may exceed $75.00 per hour. No award to compensate an expert witness may 
exceed $24.09 per hour.
    (d) In determining the reasonableness of the fee sought, the 
adjudicative officer shall consider the following:
    (1) The prevailing rate for similar services in the community in 
which the attorney, agent or witness ordinarily performs services;
    (2) The time actually spent in the representation of the applicant;
    (3) The difficulty or complexity of the issues in the proceeding;
    (4) Such other factors as may bear on the value of the services 
performed.



Sec. 16.108  Awards against other agencies.

    If an applicant is entitled to an award because it prevails over 
another agency of the United States that participates in a proceeding 
before the Department of Labor and the other agency takes a position 
that is not substantially justified, the award or an appropriate portion 
of the award shall be made against that agency by the adjudicative 
officer for the Department of Labor.



             Subpart B--Information Required From Applicants



Sec. 16.201  Contents of application.

    (a) An application for an award of fees and expenses under the Act 
shall identify the applicant and the proceeding for which an award is 
sought. The application shall show that the applicant has prevailed and 
identify the position of an agency or agencies in the proceeding that 
the applicant alleges was not substantially justified. Unless the 
applicant is an individual, the application shall also state the number 
of employees of the applicant at the time the proceeding was instituted 
and describe briefly the type and purpose of its organization or 
business.
    (b) The application shall also include a statement that the 
applicant's net worth at the time the formal proceedings were instituted 
did not exceed $1 million (if an individual) or $5 million (for all 
other applicants, including

[[Page 177]]

their affiliates). However, an applicant may omit this statement if:
    (1) It attaches a copy of a ruling by the Internal Revenue Service 
that it qualifies as an organization described in section 501(c)(3) of 
the Internal Revenue Code (26 U.S.C. 501(c)(3)) or, in the case of a 
tax-exempt organization not required to obtain a ruling from the 
Internal Revenue Service on its exempt status, a statement that 
describes the basis for the applicant's belief that it qualifies under 
such section; or
    (2) It states that it is a cooperative association as defined in 
section 15(a) of the Agricultural Marketing Act (12 U.S.C. 1141j(a)).
    (c) If the applicant is a partnership, corporation, association, or 
organization, or a sole owner of an unincorporated business, the 
application shall certify that it did not have more than 500 employees 
at the time the formal proceedings were initiated, giving the number of 
its employees and describing briefly the type and purpose of its 
organization or business.
    (d) The application shall state the amount of fees and expenses for 
which an award is sought.
    (e) The application may also include any other matters that the 
applicant wishes the adjudicative officer to consider in determining 
whether and in what amount an award should be made.
    (f) The application shall be signed by the applicant with respect to 
the eligibility of the applicant and by the attorney of the applicant 
with respect to fees and expenses sought. It shall also contain or be 
accompanied by a written verification under oath or under penalty of 
perjury that the information provided in the application is true and 
correct.

(Approved by the Office of Management and Budget under control number 
1225-0013)

[46 FR 63021, Dec. 29, 1981, as amended at 47 FR 14696, Apr. 6, 1982]



Sec. 16.202  Net worth exhibit.

    (a) Each applicant except a qualified tax-exempt organization or 
cooperative association must provide with its application a detailed 
exhibit showing the net worth of the applicant and any affiliates (as 
defined in Sec. 16.105(f) of this part) as of the date when the 
proceeding was initiated, i.e. the date the complaint was filed. The 
exhibit may be in any form convenient to the applicant that provides 
full disclosure of the applicant's and its affiliates' assets and 
liabilities and is sufficient to determine whether the applicant 
qualifies under the standards in this part. The adjudicative officer may 
require an applicant to file additional information to determine its 
eligibility for an award.
    (b) The net worth exhibit shall be included in the public record of 
the proceeding in which an award is sought.

(Approved by the Office of Management and Budget under control number 
1225-0013)

[46 FR 63021, Dec. 29, 1981, as amended at 47 FR 14696, Apr. 6, 1982]



Sec. 16.203  Documentation of fees and expenses.

    (a) The application shall be accompanied by full documentation of 
the fees and expenses, including the cost of any study, analysis, 
engineering report, test, project or similar matter, for which an award 
is sought.
    (b) The document shall include an affidavit from each professional 
firm or individual whose services are covered by the application, 
showing the hours spent in connection with the proceeding by each 
individual, a description of the specific services performed, the rate 
at which each fee has been computed, any expenses for which 
reimbursement is sought, the total amount claimed, and the total amount 
paid or payable by the applicant or by any other person or entity for 
the services provided.
    (1) The affidavit shall itemize in detail the services performed by 
the date, number of hours per date and the services performed during 
those hours. In order to establish the hourly rate, the affidavit shall 
state the hourly rate which is billed and paid by the majority of 
clients during the relevant time periods.
    (2) If no hourly rate is paid by the majority of clients because, 
for instance, the attorney or agent represents most clients on a 
contingency basis, the attorney or agent shall provide affidavits from 
two attorneys or agents with similar experience, who perform similar 
work, stating the hourly rate which they bill and are

[[Page 178]]

paid by the majority of their clients during a comparable time period.
    (c) The documentation shall also include a description of any 
expenses for which reimbursement is sought and a statement of the 
amounts paid and payable by the applicant or by any other person or 
entity for the services provided.
    (d) The adjudicative officer may require the applicant to provide 
vouchers, receipts, or other substantiation for any expenses claimed.

(Approved by the Office of Management and Budget under control number 
1225-0013)

[46 FR 63021, Dec. 29, 1981, as amended at 47 FR 14696, Apr. 6, 1982]



Sec. 16.204  When an application may be filed.

    (a) An application may be filed whenever the applicant has prevailed 
in the proceeding or in a significant and discrete substantive portion 
of the proceeding, but in no case later than 30 days after the agency's 
final disposition of the proceeding.
    (b) If review or reconsideration is sought or taken of a decision as 
to which an applicant believes it has prevailed, matters related to the 
consideration of an award of fees and expenses shall be stayed pending 
final disposition of the underlying controversy.
    (c) For purposes of this rule final disposition means the later of: 
(1) The date on which an initial decision or other recommended 
disposition of the merits of the proceeding by an adjudicative officer 
or intermediate review board becomes administratively final; (2) 
issuance of an order disposing of any petitions for reconsideration of 
this agency's final order in the proceeding; (3) if no petition for 
reconsideration is filed, the last date on which such a petition could 
have been filed; or (4) issuance of a final order or any other final 
resolution of a proceeding, such as a settlement or voluntary dismissal, 
which is not subject to a petition for reconsideration, or, in the case 
of an abatement, the end of the abatement period or the date on which an 
order is issued terminating the abatement period.

(Approved by the Office of Management and Budget under control number 
1225-0013)

[46 FR 63021, Dec. 29, 1981, as amended at 47 FR 14696, Apr. 6, 1982]



           Subpart C--Procedures for Considering Applications



Sec. 16.301  Filing and service of documents.

    Any application for an award or other pleading or document related 
to an application shall be filed with the adjudicative officer and 
served on all parties to the proceeding in the same manner as other 
pleadings in the proceeding.



Sec. 16.302  Answer to application.

    (a) Within 30 days after service of an application, counsel 
representing the agency against which an award is sought may file an 
answer to the application. Unless agency counsel requests an extension 
of time for filing or files a statement of intent to negotiate under 
paragraph (b) of this section, failure to file an answer within the 30 
day period may be treated as a consent to the award requested.
    (b) If agency counsel and the applicant believe that the issues in 
the fee application can be settled, they may jointly file a statement of 
their intent to negotiate a settlement. The filing of this statement 
shall extend the time for filing an answer for an additional 30 days, 
and further extensions may be granted by the adjudicative officer upon 
request by agency counsel and the applicant.
    (c) The answer shall explain in detail any objections to the award 
requested and identify the facts relied on in support of agency 
counsel's position. If the answer is based on any alleged facts not 
already in the record of the proceeding, agency counsel shall include 
with the answer either supporting affidavits or a request for further 
proceedings under Sec. 16.304.

[[Page 179]]



Sec. 16.303  Settlement.

    The applicant and agency counsel may agree on a proposed settlement 
of the award before final action on the application, either in 
connection with a settlement of the underlying proceeding, or after the 
underlying proceeding has been concluded, in accordance with the 
agency's standard settlement procedure. If a prevailing party and agency 
counsel agree on a proposed settlement of an award before an application 
has been filed, the application shall be filed with the proposed 
settlement.



Sec. 16.304  Further proceedings.

    (a) Ordinarily, the determination of an award will be made on the 
basis of the written record. However, on request of either the applicant 
or agency counsel, or on his or her own initiative, the adjudicative 
officer may order further proceedings, such as an informal conference, 
oral argument, additional written submissions or an evidentiary hearing. 
Such further proceedings shall be held only when necessary for full and 
fair resolution of the issues arising from the application, and shall be 
conducted as promptly as possible.
    (b) A request that the adjudicative officer order further 
proceedings under this section shall specifically identify the 
information sought or the disputed issues and shall explain why the 
additional proceedings are necessary to resolve the issues.



Sec. 16.305  Decision.

    The adjudicative officer shall issue a recommended decision on the 
application which shall include written findings and conclusions on the 
applicant's eligibility and status as a prevailing party, and an 
explanation of the reasons for any difference between the amount 
requested and the amount awarded. The decisions shall also include, if 
at issue, findings on whether the agency's position was substantially 
justified, whether the applicant unduly protracted the proceedings, or 
whether special circumstances make an award unjust. If the applicant has 
sought an award against more than one agency, the decision shall 
allocate responsibility for payment of any award made among the 
agencies, and shall explain the reasons for the allocation made.



Sec. 16.306  Review by the Secretary.

    The Secretary, for purposes of this subsection, means the Secretary 
of Labor or a person, board or other organizational unit authorized to 
perform the review function. Either the applicant or agency counsel may 
seek review of the recommended decision on the fee application, or the 
Secretary may decide to review the decision on his or her own 
initiative, in accordance with the Department of Labor's regular review 
procedures. If neither the applicant nor agency counsel seeks review and 
the Secretary does not take review on his or her own initiative, the 
adjudicative officer's decision on the application shall become a final 
decision of the Department 45 days after it is issued. If review is 
taken, the Secretary will issue a final decision on the application or 
remand the application to the adjudicative officer for further 
proceedings.



Sec. 16.307  Judicial review.

    Judicial review of final agency decisions on awards may be sought as 
provided in 5 U.S.C. 504(c)(2).



Sec. 16.308  Payment of award.

    An applicant seeking payment of an award shall submit to the 
Comptroller for the Department of Labor a copy of the final decision 
granting the award, accompanied by a statement that the applicant will 
not seek review of the decision in the United States courts. The request 
for payment shall be addressed to: Comptroller, U.S. Department of 
Labor, Frances S. Perkins Building, 200 Constitution Avenue, NW., 
Washington, DC 20210.



PART 17--INTERGOVERNMENTAL REVIEW OF DEPARTMENT OF LABOR PROGRAMS AND ACTIVITIES--Table of Contents




Sec.
17.1  What is the purpose of these regulations?
17.2  What definitions apply to these regulations?

[[Page 180]]

17.3  What programs and activities of the Department are subject to 
          these regulations?
17.4  What are the Secretary's general responsibilities under the Order?
17.5  What is the Secretary's obligation with respect to Federal 
          interagency coordination?
17.6  What procedures apply to the selection of programs and activities 
          under these regulations?
17.7  How does the Secretary communicate with state and local officials 
          concerning the Department's programs and activities?
17.8  How does the Secretary provide states an opportunity to comment on 
          proposed Federal financial assistance?
17.9  How does the Secretary receive and respond to comments?
17.10  How does the Secretary make efforts to accommodate 
          intergovernmental concerns?
17.11  What are the Secretary's obligations in interstate situations?
17.12  How may a state simplify, consolidate, or substitute federally 
          required state plans?
17.13  May the Secretary waive any provision of these regulations?

    Authority: E.O. 12372, July 14, 1982 (47 FR 30959), as amended April 
8, 1983 (48 FR 15887): sec. 401 of the Intergovernmental Cooperation Act 
of 1968, as amended (31 U.S.C. 6506).

    Source: 48 FR 29258, June 24, 1983, unless otherwise noted.



Sec. 17.1  What is the purpose of these regulations?

    (a) The regulations in this part implement E.O. 12372, 
``Intergovernmental Review of Federal Programs,'' issued July 14, 1982 
and amended on April 8, 1983. These regulations also implement 
applicable provisions of section 401 of the Intergovernmental 
Cooperation Act of 1968.
    (b) These regulations are intended to foster an intergovernmental 
partnership and a strengthened Federalism by relying on state processes 
and on state, areawide, regional and local coordination for review of 
proposed Federal financial assistance and direct Federal development.
    (c) These regulations are intended to aid the internal management of 
the Department, and are not intended to create any right or benefit 
enforceable at law by a party against the Department or its officers.



Sec. 17.2  What definitions apply to these regulations?

    Department means the U.S. Department of Labor.
    Order means E.O. 12372, issued July 14, 1982, and amended April 8, 
1983 and titled ``Intergovernmental Review of Federal Programs.''
    Secretary means the Secretary of the U.S. Department of Labor or an 
official or employee of the Department acting for the Secretary under a 
delegation of authority.
    State means any of the 50 states, the District of Columbia, the 
Commonwealth of Puerto Rico, the Commonwealth of the Northern Mariana 
Islands, Guam, American Samoa, the U.S. Virgin Islands, or the Trust 
Territory of the Pacific Islands.



Sec. 17.3  What programs and activities of the Department are subject to these regulations?

    The Secretary publishes in the Federal Register a list of the 
Department's programs and activities that are subject to these 
regulations.



Sec. 17.4  What are the Secretary's general responsibilities under the Order?

    (a) The Secretary provides opportunities for consultation by elected 
officials of those state and local governments that would provide the 
non-Federal funds for, or that would be directly affected by, proposed 
Federal financial assistance from, or direct Federal development by, the 
Department.
    (b) If a state adopts a process under the Order to review and 
coordinate proposed Federal financial assistance and direct Federal 
development, the Secretary, to the extent permitted by law:
    (1) Uses the state process to determine official views of state and 
local elected officials;
    (2) Communicates with state and local elected officials as early in 
a program planning cycle as is reasonably feasible to explain specific 
plans and actions;
    (3) Makes efforts to accommodate state and local elected officials' 
concerns with proposed Federal financial assistance and direct Federal 
development that are communicated through the state process;

[[Page 181]]

    (4) Allows the states to simplify and consolidate existing federally 
required state plan submissions;
    (5) Where state planning and budgeting systems are sufficient and 
where permitted by law, encourages the substitution of state plans for 
federally required state plans;
    (6) Seeks the coordination of views of affected state and local 
elected officials in one state with those of another state when proposed 
Federal financial assistance or direct Federal development has an impact 
on interstate metropolitan urban centers or other interstate areas; and
    (7) Supports state and local governments by discouraging the 
reauthorization or creation of any planning organization which is 
federally-funded, which has a limited purpose, and which is not 
adequately representative of, or accountable to, state or local elected 
officials.



Sec. 17.5  What is the Secretary's obligation with respect to Federal interagency coordination?

    The Secretary, to the extent practicable, consults with and seeks 
advice from all other substantially affected Federal departments and 
agencies in an effort to assure full coordination between such agencies 
and the Department regarding programs and activities covered under these 
regulations.



Sec. 17.6  What procedures apply to the selection of programs and activities under these regulations?

    (a) A state may select any program or activity published in the 
Federal Register in accordance with Sec. 17.3 of this part for 
intergovernmental review under these regulations. Each state, before 
selecting programs and activities shall consult with local elected 
officials.
    (b) Each state that adopts a process shall notify the Secretary of 
the Department's programs and activities selected for that process.
    (c) A state may notify the Secretary of changes in its selections at 
any time. For each change, the state shall submit to the Secretary an 
assurance that the state has consulted with elected local officials 
regarding the change. The Department may establish deadlines by which 
states are required to inform the Secretary of changes in their program 
selections.
    (d) The Secretary uses a state's process as soon as feasible, 
depending on individual programs and activities, after the Secretary is 
notified of its selections.



Sec. 17.7  How does the Secretary communicate with state and local officials concerning the Department's programs and activities?

    (a) For those programs and activities covered by a state process 
under Sec. 17.6, the Secretary, to the extent permitted by law:
    (1) Uses the official state process to determine views of state and 
local elected officials; and,
    (2) Communicates with state and local elected officials, through the 
official state process, as early in a program planning cycle as is 
reasonably feasible to explain specific plans and actions.
    (b) The Secretary provides notice to directly affected state, 
areawide, regional, and local entities in a state of proposed Federal 
financial assistance if:
    (1) The state has not adopted a process under the Order; or
    (2) The assistance involves a program or activity not selected for 
the state process.

This notice may be made by publication in the Federal Register or other 
appropriate means, which the Department in its discretion deems 
appropriate.



Sec. 17.8  How does the Secretary provide states an opportunity to comment on proposal Federal financial assistance?

    (a) Except in unusual circumstances, the Secretary gives state 
processes or directly affected state, areawide, regional and local 
officials and entities:
    (1) At least 30 days from the date established by the Secretary to 
comment on proposed Federal financial assistance in the form of 
noncompeting continuation awards; and
    (2) At least 60 days from the date established by the Secretary to 
comment on proposed Federal financial assistance other than noncompeting 
continuation awards.

[[Page 182]]

    (b) This section also applies to comments in cases in which the 
review, coordination, and communication with the Department have been 
delegated.



Sec. 17.9  How does the Secretary receive and respond to comments?

    (a) The Secretary follows the procedures in Sec. 17.10 if:
    (1) A state office or official is designated to act as a single 
point of contact between a state process and all Federal agencies, and
    (2) That office or official transmits a state process recommendation 
for a program selected under Sec. 17.6.
    (b)(1) The single point of contact is not obligated to transmit 
comments from state, areawide, regional or local officials and entities 
where there is no state process recommendation.
    (2) If a state process recommendation is transmitted by a single 
point of contact, all comments from state, areawide, regional, and local 
officials and entities that differ from it must also be transmitted.
    (c) If a state has not established a process, or is unable to submit 
a state process recommendation, state, areawide, regional and local 
officials and entities may submit comments to the Department.
    (d) If a program or activity is not selected for a state process, 
state, areawide, regional and local officials and entities may submit 
comments to the Department. In addition, if a state process 
recommendation for a nonselected program or activity is transmitted to 
the Department by the single point of contact, the Secretary follows the 
procedures of Sec. 17.10 of this part.
    (e) The Secretary considers comments which do not constitute a state 
process recommendation submitted under these regulations and for which 
the Secretary is not required to apply the procedures of Sec. 17.10 of 
this part, when such comments are provided by a single point of contact, 
or directly to the Department by a commenting party.



Sec. 17.10  How does the Secretary make efforts to accommodate intergovernmental concerns?

    (a) If a state process provides a state process recommendation to 
the Department through its single point of contact, the Secretary 
either--
    (1) Accepts the recommendation;
    (2) Reaches a mutually agreeable solution with the state process; or
    (3) Provides the single point of contact with such written 
explanation of the decision, as the Secretary in his or her discretion 
deems appropriate. The Secretary may also supplement the written 
explanation by providing the explanation to the single point of contact 
by telephone, other telecommunication, or other means.
    (b) In any explanation under paragraph (a)(3) of this section, the 
Secretary informs the single point of contact that:
    (1) The Department will not implement its decision for at least ten 
days after the single point of contact receives the explanation; or
    (2) The Secretary has reviewed the decision and determined that, 
because of unusual circumstances, the waiting period of at least ten 
days is not feasible.
    (c) For purposes of computing the waiting period under paragraph 
(b)(1) of this section, a single point of contact is presumed to have 
received written notification 5 days after the date of mailing of such 
notification.



Sec. 17.11  What are the Secretary's obligations in interstate situations?

    (a) The Secretary is responsible for:
    (1) Identifying proposed Federal financial assistance that have an 
impact on interstate areas;
    (2) Notifying appropriate officials and entities in states which 
have adopted a process and which select the Department's program or 
activity.
    (3) Making efforts to identify and notify the affected state, 
areawide, regional, and local officials and entities in those states 
that have not adopted a process under the Order or do not select the 
Department's program or activity;
    (4) Responding pursuant to Sec. 17.10 of this part if the Secretary 
receives a recommendation from a designated areawide agency transmitted 
by a single point of contact, in cases in which the review, 
coordination, and communication with the Department have been delegated.

[[Page 183]]

    (b) The Secretary uses the procedures in Sec. 17.10 if a state 
process provides a state process recommendation to the Department 
through a single point of contact.



Sec. 17.12  How may a state simplify, consolidate, or substitute federally required state plans?

    (a) As used in this section:
    (1) Simplify means that a state may develop its own format, choose 
its own submission date, and select the planning period for a state 
plan.
    (2) Consolidate means that a state may meet statutory and regulatory 
requirements by combining two or more plans into one document and that 
the state can select the format, submission date, and planning period 
for the consolidated plan.
    (3) Substitute means that a state may use a plan or other document 
that it has developed for its own purposes to meet Federal requirements.
    (b) If not consistent with law, a state may decide to try to 
simplify, consolidate, or substitute federally required state plans 
without prior approval by the Secretary.
    (c) The Secretary reviews each state plan that a state has 
simplified, consolidated, or substituted and accepts the plan only if 
its contents meet Federal requirements.



Sec. 17.13  May the Secretary waive any provision of these regulations?

    In an emergency, the Secretary may waive any provision of these 
regulations.



PART 18--RULES OF PRACTICE AND PROCEDURE FOR ADMINISTRATIVE HEARINGS BEFORE THE OFFICE OF ADMINISTRATIVE LAW JUDGES--Table of Contents




                           Subpart A--General

Sec.
18.1  Scope of rules.
18.2  Definitions.
18.3  Service and filing of documents.
18.4  Time computations.
18.5  Responsive pleadings--answer and request for hearing.
18.6  Motions and requests.
18.7  Prehearing statements.
18.8  Prehearing conferences.
18.9  Consent order or settlement; settlement judge procedure.
18.10  Parties, how designated.
18.11  Consolidation of hearings.
18.12  Amicus curiae.
18.13  Discovery methods.
18.14  Scope of discovery.
18.15  Protective orders.
18.16  Supplementation of responses.
18.17  Stipulations regarding discovery.
18.18  Written interrogatories to parties.
18.19  Production of documents and other evidence; entry upon land for 
          inspection and other purposes; and physical and mental 
          examination.
18.20  Admissions.
18.21  Motion to compel discovery.
18.22  Depositions.
18.23  Use of depositions at hearings.
18.24  Subpoenas.
18.25  Designation of administrative law judge.
18.26  Conduct of hearings.
18.27  Notice of hearing.
18.28  Continuances.
18.29  Authority of administrative law judge.
18.30  Unavailability of administrative law judge.
18.31  Disqualification.
18.32  Separation of functions.
18.33  Expedition.
18.34  Representation.
18.35  Legal assistance.
18.36  Standards of conduct.
18.37  Hearing room conduct.
18.38  Ex parte communications.
18.39  Waiver of right to appear and failure to participate or to 
          appear.
18.40  Motion for summary decision.
18.41  Summary decision.
18.42  Expedited proceedings.
18.43  Formal hearings.
18.44  [Reserved]
18.45  Official notice.
18.46  In camera and protective orders.
18.47  Exhibits.
18.48  Records in other proceedings.
18.49  Designation of parts of documents.
18.50  Authenticity.
18.51  Stipulations.
18.52  Record of hearings.
18.53  Closing of hearings.
18.54  Closing the record.
18.55  Receipt of documents after hearing.
18.56  Restricted access.
18.57  Decision of the administrative law judge.
18.58  Appeals.
18.59  Certification of official record.

                      Subpart B--Rules of Evidence

                           General Provisions

18.101  Scope.
18.102  Purpose and construction.
18.103  Rulings on evidence.
18.104  Preliminary questions.

[[Page 184]]

18.105  Limited admissibility.
18.106  Remainder of or related writings or recorded statements.

                             Official Notice

18.201  Official notice of adjudicative facts.

                              Presumptions

18.301  Presumptions in general.
18.302  Applicability of state law.

                        Relevancy and Its Limits

18.401  Definition of relevant evidence.
18.402  Relevant evidence generally admissible; irrelevant evidence 
          inadmissible.
18.403  Exclusion of relevant evidence on grounds of confusion or waste 
          of time.
18.404  Character evidence not admissible to prove conduct; exceptions; 
          other crimes.
18.405  Methods of proving character.
18.406  Habit; routine practice.
18.407  Subsequent remedial measures.
18.408  Compromise and offers to compromise.
18.409  Payment of medical and similar expenses.
18.410  Inadmissibility of pleas, plea discussion, and related 
          statements.
18.411  Liability insurance.

                               Privileges

18.501  General rule.

                                Witnesses

18.601  General rule of competency.
18.602  Lack of personal knowledge.
18.603  Oath or affirmation.
18.604  Interpreters.
18.605  Competency of judge as witness.
18.606  [Reserved]
18.607  Who may impeach.
18.608  Evidence of character and conduct of witness.
18.609  Impeachment by evidence of conviction of crime.
18.610  Religious beliefs or opinions.
18.611  Mode and order of interrogation and presentation.
18.612  Writing used to refresh memory.
18.613  Prior statements of witnesses.
18.614  Calling and interrogation of witnesses by judge.
18.615  Exclusion of witnesses.

                      Opinions and Expert Testimony

18.701  Opinion testimony by lay witnesses.
18.702  Testimony by experts.
18.703  Bases of opinion testimony by experts.
18.704  Opinion on ultimate issue.
18.705  Disclosure of facts or data underlying expert opinion.
18.706  Judge appointed experts.

                                 Hearsay

18.801  Definitions.
18.802  Hearsay rule.
18.803  Hearsay exceptions; availability of declarant immaterial.
18.804  Hearsay exceptions; declarant unavailable.
18.805  Hearsay within hearsay.
18.806  Attacking and supporting credibility of declarant.

                    Authentication and Identification

18.901  Requirement of authentication or identification.
18.902  Self-authentication.
18.903  Subscribing witness' testimony unnecessary.

            Contents of Writings, Recordings, and Photographs

18.1001  Definitions.
18.1002  Requirement of original.
18.1003  Admissibility of duplicates.
18.1004  Admissibility of other evidence of contents.
18.1005  Public records.
18.1006  Summaries.
18.1007  Testimony or written admission of party.
18.1008  Functions of the judge.

                              Applicability

18.1101  Applicability of the rules.
18.1102  [Reserved]
18.1103  Title.
18.1104  Effective date.

Appendix to Subpart B--Reporter's Notes

    Authority: 5 U.S.C. 301; 5 U.S.C. 551-553; 5 U.S.C. 571 note; E.O. 
12778; 57 FR 7292.

    Source: 48 FR 32538, July 15, 1983, unless otherwise noted.



                           Subpart A--General



Sec. 18.1  Scope of rules.

    (a) General application. These rules of practice are generally 
applicable to adjudicatory proceedings before the Office of 
Administrative Law Judges, United States Department of Labor. Such 
proceedings shall be conducted expeditiously and the parties shall make 
every effort at each stage of a proceeding to avoid delay. To the extent 
that these rules may be inconsistent with a rule of special application 
as provided by statute, executive order, or regulation, the latter is 
controlling. The Rules of Civil Procedure for the District Courts of the 
United States shall be applied in any situation

[[Page 185]]

not provided for or controlled by these rules, or by any statute, 
executive order or regulation.
    (b) Waiver, modification, or suspension. Upon notice to all parties, 
the administrative law judge may, with respect to matters pending before 
him or her, modify or waive any rule herein upon a determination that no 
party will be prejudiced and that the ends of justice will be served 
thereby. These rules may, from time to time, be suspended, modified or 
revoked in whole or part.



Sec. 18.2  Definitions.

    For purposes of these rules:
    (a) Adjudicatory proceeding means a judicial-type proceeding leading 
to the formulation of a final order;
    (b) Administrative law judge means an administrative law judge 
appointed pursuant to the provisions of 5 U.S.C. 3105 (provisions of the 
rules in this part which refer to administrative law judges may be 
applicable to other Presiding Officers as well);
    (c) Administrative Procedure Act means those provisions of the 
Administrative Procedure Act, as codified, which are contained in 5 
U.S.C. 551 through 559;
    (d) Complaint means any document initiating an adjudicatory 
proceeding, whether designated a complaint, appeal or an order for 
proceeding or otherwise;
    (e) Hearing means that part of a proceeding which involves the 
submission of evidence, either by oral presentation or written 
submission;
    (f) Order means the whole or any part of a final procedural or 
substantive disposition of a matter by the administrative law judge in a 
matter other than rulemaking;
    (g) Party includes a person or agency named or admitted as a party 
to a proceeding;
    (h) Person includes an individual, partnership, corporation, 
association, exchange or other entity or organization;
    (i) Pleading means the complaint, the answer to the complaint, any 
supplement or amendment thereto, and any reply that may be permitted to 
any answer, supplement or amendment;
    (j) Respondent means a party to an adjudicatory proceeding against 
whom findings may be made or who may be required to provide relief or 
take remedial action;
    (k) Secretary means the Secretary of Labor and includes any 
administrator, commissioner, appellate body, board, or other official 
thereunder for purposes of appeal of recommended or final decisions of 
administrative law judges;
    (l) Complainant means a person who is seeking relief from any act or 
omission in violation of a statute, executive order or regulation;
    (m) The term petition means a written request, made by a person or 
party, for some affirmative action;
    (n) The term Consent Agreement means any written document containing 
a specified proposed remedy or other relief acceptable to all parties;
    (o) Commencement of Proceeding is the filing of a request for 
hearing, order of reference, or referral of a claim for hearing.



Sec. 18.3  Service and filing of documents.

    (a) Generally. Except as otherwise provided in this part, copies of 
all documents shall be served on all parties of record. All documents 
should clearly designate the docket number, if any, and short title of 
the matter. If the matter involves a program administered by the Office 
of Workers' Compensation Programs (OWCP), the document should contain 
the OWCP number in addition to the docket number. All documents to be 
filed shall be delivered or mailed to the Chief Docket Clerk, Office of 
Administrative Law Judges (OALJ), 800 K Street, NW., Suite 400, 
Washington, DC 20001-8002, or to the OALJ Regional Office to which the 
proceeding may have been transferred for hearing. Each document filed 
shall be clear and legible.
    (b) How made; by parties. All documents shall be filed with the 
Office of Administrative Law Judges, except that notices of deposition, 
depositions, interrogatories, requests for admissions, and answers and 
responses thereto, shall not be so filed unless the presiding judge so 
orders, the document is being offered into evidence, the document is 
submitted in support of a motion or a response to a motion, filing is 
required by a specialized rule, or there is some other compelling reason 
for its

[[Page 186]]

submission. Whenever under this part service by a party is required to 
be made upon a party represented by an attorney or other representative 
the service shall be made upon the attorney or other representative 
unless service upon the party is ordered by the presiding administrative 
law judge. Service of any document upon any party may be made by 
personal delivery or by mailing a copy to the last known address. The 
person serving the document shall certify to the manner and date of 
service.
    (c) By the Office of Administrative Law Judges. Service of notices, 
orders, decisions and all other documents, except complaints, shall be 
made by regular mail to the last known address.
    (d) Service of complaints. Service of complaints or charges in 
enforcement proceedings shall be made either: (1) By delivering a copy 
to the individual, partner, officer of a corporation, or attorney of 
record; (2) by leaving a copy at the principal office, place of 
business, or residence; (3) by mailing to the last known address of such 
individual, partner, officer or attorney. If done by certified mail, 
service is complete upon mailing. If done by regular mail, service is 
complete upon receipt by addressee.
    (e) Form of pleadings. (1) Every pleading shall contain a caption 
setting forth the name of the agency under which the proceeding is 
instituted, the title of the proceeding, the docket number assigned by 
the Office of Administrative Law Judges, and a designation of the type 
of pleading or paper (e.g., complaint, motion to dismiss, etc.). The 
pleading or papers shall be signed and shall contain the address and 
telephone number of the party or person representing the party. Although 
there are no formal specifications for documents, they should be 
typewritten when possible on standards size (8\1/2\ x 11) paper legal 
size (8\1/2\ x 14) paper will not be accepted after July 31, 1983.
    (2) Illegible documents, whether handwritten, typewritten, 
photocopied, or otherwise will not be accepted. Papers may be reproduced 
by any duplicating process, provided all copies are clear and legible.
    (f) Filing and service by facsimile.
    (1) Filing by a party; when permitted. Filings by a party may be 
made by facsimile (fax) when explicitly permitted by statute or 
regulation, or when directed or permitted by the administrative law 
judge assigned to the case. If prior permission to file by facsimile 
cannot be obtained because the presiding administrative law judge is not 
available, a party may file by facsimile and attach a statement of the 
circumstances requiring that the document be filed by facsimile rather 
than by regular mail. That statement does not ensure that the filing 
will be accepted, but will be considered by the presiding judge in 
determining whether the facsimile will be accepted nunc pro tunc as a 
filing.
    (2) Service by facsimile; when permitted. Service upon a party by 
another party or by the administrative law judge may be made by 
facsimile (fax) when explicitly permitted by statute or regulation, or 
when the receiving party consents to service by facsimile.
    (3) Service sheet and proof of service. Docments filed or served by 
facsimile (fax) shall include a service sheet which states the means by 
which filing and/or service was made. A facsimile transmission report 
generated by the sender's facsimile equipment and which indicates that 
the transmission was successful shall be presumed adequate proof of 
filing or service.
    (4) Cover sheet. Filings or service by facsimile (fax) shall include 
a cover sheet that identifies the sender, the total number of pages 
transmitted, and the caption and docket number of the case, if known.
    (5) Originals. Documents filed or served by facsimile (fax) shall be 
presumed to be accurate reproductions of the original document until 
proven otherwise. The party proferring the document shall retain the 
original in the event of a dispute over authenticity or the accuracy of 
the transmission. The original document need not be submitted unless so 
ordered by the presiding judge, or unless an original signature is 
required by statute or regulation. If an original signature is required 
to be filed, the date of the facsimile transmission shall govern the 
effective date of the filing provided that the document containing the

[[Page 187]]

original signature is filed within ten calendar days of the facsimile 
transmission.
    (6) Length of document. Documents filed by facsimile (fax) should 
not exceed 12 pages including the cover sheet, the service sheet and all 
accompanying exhibits or appendices, except that this page limitation 
may be exceeded if prior permission is granted by the presiding judge or 
if the document's length cannot be conformed because of statutory or 
regulatory requirements.
    (7) Hours for filing by facsimile. Filings by facsimile (fax) should 
normally be made between 8:00 am and 5:00 pm, local time at the 
receiving location.
    (g) Filing and service by courier service. Documents transmitted by 
courier service shall be deemed transmitted by regular mail in 
proceedings before the Office of Administrative Law Judges.

[48 FR 32538, July 15, 1983, as amended at 56 FR 54708, Oct. 22, 1991; 
59 FR 41876, Aug. 15, 1994; 60 FR 26970, May 19, 1995]



Sec. 18.4  Time computations.

    (a) Generally. In computing any period of time under these rules or 
in an order issued hereunder the time begins with the day following the 
act, event, or default, and includes the last day of the period, unless 
it is a Saturday, Sunday or legal holiday observed by the Federal 
Government in which case the time period includes the next business day. 
When the period of time prescribed is seven (7) days or less, 
intermediate Saturdays, Sundays, and holidays shall be excluded in the 
computation.
    (b) Date of entry of orders. In computing any period of time 
involving the date of the entry of an order, the date of entry shall be 
the date the order is served by the Chief Docket Clerk.
    (c) Computation of time for delivery by mail. (1) Documents are not 
deemed filed until received by the Chief Clerk at the Office of 
Administrative Law Judges. However, when documents are filed by mail, 
five (5) days shall be added to the prescribed period.
    (2) Service of all documents other than complaints is deemed 
effected at the time of mailing.
    (3) Whenever a party has the right or is required to take some 
action within a prescribed period after the service of a pleading, 
notice, or other document upon said party, and the pleading, notice or 
document is served upon said party by mail, five (5) days shall be added 
to the prescribed period.
    (d) Filing or service by facsimile. Filing or service by facsimile 
(fax) is effective upon receipt of the entire document by the receiving 
facsimile machine. For purposes of filings by facsimile the time printed 
on the transmission by the facsimile equipment constitutes the date 
stamp of the Chief Docket Clerk.

[48 FR 32538, July 15, 1983, as amended at 59 FR 41877, Aug. 15, 1994]



Sec. 18.5  Responsive pleadings--answer and request for hearing.

    (a) Time for answer. Within thirty (30) days after the service of a 
complaint, each respondent shall file an answer.
    (b) Default. Failure of the respondent to file an answer within the 
time provided shall be deemed to constitute a waiver of his right to 
appear and contest the allegations of the complaint and to authorize the 
administrative law judge to find the facts as alleged in the complaint 
and to enter an initial or final decision containing such findings, 
appropriate conclusions, and order.
    (c) Signature required. Every answer filed pursuant to these rules 
shall be signed by the party filing it or by at least one attorney, in 
his or her individual name, representing such party. The signature 
constitutes a certificate by the signer that he or she has read the 
answer; that to the best of his or her knowledge, information and belief 
there is good ground to support it; and that it is not interposed for 
delay.
    (d) Content of answer--(1) Orders to show cause. Any person to whom 
an order to show cause has been directed and served shall respond to the 
same by filing an answer in writing. Arguments opposing the proposed 
sanction should be supported by reference to specific circumstances or 
facts surrounding the basis for the order to show cause.
    (2) Complaints. Any respondent contesting any material fact alleged 
in a complaint, or contending that the amount of a proposed penalty or 
award is excessive or inappropriate or contending that he or she is 
entitled to

[[Page 188]]

judgment as a matter of law, shall file an answer in writing. An answer 
shall include:
    (i) A statement that the respondent admits, denies, or does not have 
and is unable to obtain sufficient information to admit or deny each 
allegation; a statement of lack of information shall have the effect of 
a denial; any allegation not expressly denied shall be deemed to be 
admitted;
    (ii) A statement of the facts supporting each affirmative defense.
    (e) Amendments and supplemental pleadings. If and whenever 
determination of a controversy on the merits will be facilitated 
thereby, the administrative law judge may, upon such conditions as are 
necessary to avoid prejudicing the public interest and the rights of the 
parties, allow appropriate amendments to complaints, answers, or other 
pleadings; provided, however, that a complaint may be amended once as a 
matter of right prior to the answer, and thereafter if the 
administrative law judge determines that the amendment is reasonably 
within the scope of the original complaint. When issues not raised by 
the pleadings are reasonably within the scope of the original complaint 
and are tried by express or implied consent of the parties, they shall 
be treated in all respects as if they had been raised in the pleadings, 
and such amendments may be made as necessary to make them conform to the 
evidence. The administrative law judge may, upon reasonable notice and 
such terms as are just, permit supplemental pleadings setting forth 
transactions, occurrences or events which have happened since the date 
of the pleadings and which are relevant to any of the issues involved.



Sec. 18.6  Motions and requests.

    (a) Generally. Any application for an order or any other request 
shall be made by motion which, unless made during a hearing or trial, 
shall be made in writing unless good cause is established to preclude 
such submission, shall state with particularity the grounds therefor, 
and shall set forth the relief or order sought. Motions or requests made 
during the course of any hearing or appearance before an administrative 
law judge shall be stated orally and made part of the transcript. 
Whether made orally or in writing, all parties shall be given reasonable 
opportunity to state an objection to the motion or request.
    (b) Answers to motions. Within ten (10) days after a motion is 
served, or within such other period as the administrative law judge may 
fix, any party to the proceeding may file an answer in support or in 
opposition to the motion, accompanied by such affidavits or other 
evidence as he or she desires to rely upon. Unless the administrative 
law judge provides otherwise, no reply to an answer, response to a 
reply, or any further responsive document shall be filed.
    (c) Oral arguments or briefs. No oral argument will be heard on 
motions unless the administrative law judge otherwise directs. Written 
memoranda or briefs may be filed with motions or answers to motions, 
stating the points and authorities relied upon in support of the 
position taken.
    (d) Motion for order compelling answer: sanctions. (1) A party who 
has requested admissions or who has served interrogatories may move to 
determine the sufficiency of the answers or objections thereto. Unless 
the objecting party sustains his or her burden of showing that the 
objection is justified, the administrative law judge shall order that an 
answer be served. If the administrative law judge determines that an 
answer does not comply with the requirements of these rules, he or she 
may order either that the matter is admitted or that an amended answer 
be served.
    (2) If a party or an officer or agent of a party fails to comply 
with a subpoena or with an order, including, but not limited to, an 
order for the taking of a deposition, the production of documents, or 
the answering of interrogatories, or requests for admissions, or any 
other order of the administrative law judge, the administrative law 
judge, for the purpose of permitting resolution of the relevant issues 
and disposition of the proceeding without unnecessary delay despite such 
failure, may take such action in regard thereto as is just, including 
but not limited to the following:
    (i) Infer that the admission, testimony, documents or other evidence

[[Page 189]]

would have been adverse to the non-complying party;
    (ii) Rule that for the purposes of the proceeding the matter or 
matters concerning which the order or subpoena was issued be taken as 
established adversely to the non-complying party;
    (iii) Rule that the non-complying party may not introduce into 
evidence or otherwise rely upon testimony by such party, officer or 
agent, or the documents or other evidence, in support of or in 
opposition to any claim or defense;
    (iv) Rule that the non-complying party may not be heard to object to 
introduction and use of secondary evidence to show what the withheld 
admission, testimony, documents, or other evidence should have shown.
    (v) Rule that a pleading, or part of a pleading, or a motion or 
other submission by the non-complying party, concerning which the order 
or subpoena was issued, be stricken, or that a decision of the 
proceeding be rendered against the non-complying party, or both.



Sec. 18.7  Prehearing statements.

    (a) At any time prior to the commencement of the hearing, the 
administrative law judge may order any party to file a prehearing 
statement of position.
    (b) A prehearing statement shall state the name of the party or 
parties on whose behalf it is presented and shall briefly set forth the 
following matters, unless otherwise ordered by the administrative law 
judge:
    (1) Issues involved in the proceeding;
    (2) Facts stipulated pursuant to the procedures together with a 
statement that the party or parties have communicated or conferred in a 
good faith effort to reach stipulation to the fullest extent possible;
    (3) Facts in dispute;
    (4) Witnesses, except to the extent that disclosure would be 
privileged, and exhibits by which disputed facts will be litigated;
    (5) A brief statement of applicable law;
    (6) The conclusion to be drawn;
    (7) Suggested time and location of hearing and estimated time 
required for presentation of the party's or parties' case;
    (8) Any appropriate comments, suggestions or information which might 
assist the parties in preparing for the hearing or otherwise aid in the 
disposition of the proceeding.



Sec. 18.8  Prehearing conferences.

    (a) Purpose and scope. (1) Upon motion of a party or upon the 
administrative law judge's own motion, the judge may direct the parties 
or their counsel to participate in a conference at any reasonable time, 
prior to or during the course of the hearing, when the administrative 
law judge finds that the proceeding would be expedited by a prehearing 
conference. Such conferences normally shall be conducted by conference 
telephonic communication unless, in the opinion of the administrative 
law judge, such method would be impractical, or when such conferences 
can be conducted in a more expeditious or effective manner by 
correspondence or personal appearance. Reasonable notice of the time, 
place and manner of the conference shall be given.
    (2) At the conference, the following matters shall be considered:
    (i) The simplification of issues;
    (ii) The necessity of amendments to pleadings;
    (iii) The possibility of obtaining stipulations of facts and of the 
authenticity, accuracy, and admissibility of documents, which will avoid 
unnecessary proof;
    (iv) The limitation of the number of expert or other witnesses;
    (v) Negotiation, compromise, or settlement of issues;
    (vi) The exchange of copies of proposed exhibits;
    (vii) The identification of documents or matters of which official 
notice may be requested;
    (viii) A schedule to be followed by the parties for completion of 
the actions decided at the conference; and
    (ix) Such other matters as may expedite and aid in the disposition 
of the proceeding.
    (b) Reporting. A prehearing conference will be stenographically 
reported, unless otherwise directed by the administrative law judge.

[[Page 190]]

    (c) Order. Actions taken as a result of a conference shall be 
reduced to a written order, unless the administrative law judge 
concludes that a stenographic report shall suffice, or, if the 
conference takes place within 7 days of the beginning of the hearing, 
the administrative law judge elects to make a statement on the record at 
the hearing summarizing the actions taken.



Sec. 18.9  Consent order or settlement; settlement judge procedure.

    (a) Generally. At any time after the commencement of a proceeding, 
the parties jointly may move to defer the hearing for a reasonable time 
to permit negotiation of a settlement or an agreement containing 
findings and an order disposing of the whole or any part of the 
proceeding. The allowance of such deferment and the duration thereof 
shall be in the discretion of the administrative law judge, after 
consideration of such factors as the nature of the proceeding, the 
requirements of the public interest, the representations of the parties 
and the probability of reaching an agreement which will result in a just 
disposition of the issues involved.
    (b) Content. Any agreement containing consent findings and an order 
disposing of a proceeding or any part thereof shall also provide:
    (1) That the order shall have the same force and effect as an order 
made after full hearing;
    (2) That the entire record on which any order may be based shall 
consist solely of the complaint, order of reference or notice of 
administrative determination (or amended notice, if one is filed), as 
appropriate, and the agreement;
    (3) A waiver of any further procedural steps before the 
administrative law judge; and
    (4) A waiver of any right to challenge or contest the validity of 
the order entered into in accordance with the agreement.
    (c) Submission. On or before the expiration of the time granted for 
negotiations, the parties or their authorized representative or their 
counsel may:
    (1) Submit the proposed agreement containing consent findings and an 
order for consideration by the administrative law judge, or
    (2) Notify the administrative law judge that the parties have 
reached a full settlement and have agreed to dismissal of the action, or
    (3) Inform the administrative law judge that agreement cannot be 
reached.
    (d) Disposition. In the event an agreement containing consent 
findings and an order is submitted within the time allowed therefor, the 
administrative law judge, within thirty (30) days thereafter, shall, if 
satisfied with its form and substance, accept such agreement by issuing 
a decision based upon the agreed findings.
    (e)(1) Settlement judge procedure; purpose. This paragraph 
establishes a voluntary process whereby the parties may use a settlement 
judge to mediate settlement negotiations. A settlement judge is an 
active or retired administrative law judge who convenes and presides 
over settlement conferences and negotiations, confers with the parties 
jointly and/or individually, and seeks voluntary resolution of issues. 
Unlike a presiding judge, a settlement judge does not render a formal 
judgment or decision in the case; his or her role is solely to 
facilitate fair and equitable solutions and to provide an assessment of 
the relative merits of the respective positions of the parties.
    (2) How initiated. A settlement judge may be appointed by the Chief 
Administrative Law judge upon a request by a party or the presiding 
administrative law judge. The Chief Administrative Law Judge has sole 
discretion to decide whether to appoint a settlement judge, except that 
a settlement judge shall not be appointed when--
    (i) A party objects to referral of the matter to a settlement judge;
    (ii) Such appointment is inconsistent with a statute, executive 
order, or regulation;
    (iii) The proceeding arises pursuant to Title IV of the Federal Mine 
Safety and Health Act, 30 U.S.C. 901 et seq., also known as the Black 
Lung Benefits Act.
    (3) Selection of settlement judge. (i) The selection of a settlement 
judge is at

[[Page 191]]

the sole discretion of the Chief Administrative Law Judge, provided that 
the individual selected--
    (A) is an active or retired administrative law judge, and
    (B) is not the administrative law judge assigned to hear and decide 
the case.
    (ii) The settlement judge shall not be appointed to hear and decide 
the case.
    (4) Duration of proceeding. Unless the Chief Administrative Law 
Judge directs otherwise, settlement negotiations under this section 
shall not exceed thirty days from the date of appointment of the 
settlement judge, except that with the consent of the parties, the 
settlement judge may request an extension from the Chief Administrative 
Law Judge. The negotiations will be terminated immediately if a party 
unambiguously indicates that it no longer wishes to participate, or if 
in the judgment of the settlement judge, further negotiations would be 
fruitless or otherwise inappropriate.
    (5) General powers of the settlement judge. The settlement judge has 
the power to convene settlement conferences; to require that parties, or 
representatives of the parties having the authority to settle, 
participate in conferences; and to impose other reasonable requirements 
on the parties to expedite an amicable resolution of the case, provided 
that all such powers shall terminate immediately if negotiations are 
terminated pursuant to paragraph (e)(4).
    (6) Suspension of discovery. Requests for suspension of discovery 
during the settlement negotiations shall be directed to the presiding 
administrative law judge who shall have sole discretion in granting or 
denying such requests.
    (7) Settlement conference. In general the settlement judge should 
communicate with the parties by telephone conference call. The 
settlement judge may, however, schedule a personal conference with the 
parties when:
    (i) The settlement judge is scheduled to preside in other 
proceedings in a place convenient to all parties and representatives 
involved;
    (ii) The offices of the attorneys or other representatives of the 
parties, and the settlement judge, are in the same metropolitan area; or
    (iii) The settlement judge, with the concurrence of the Chief 
Administrative Law Judge, determines that a personal meeting is 
necessary for a resolution of substantial issues, and represents a 
prudent use of resources.
    (8) Confidentiality of settlement discussions. All discussions 
between the parties and the settlement judge shall be off-the-record. No 
evidence regarding statements or conduct in the proceedings under this 
section is admissible in the instant proceeding or any subsequent 
administrative proceeding before the Department, except by stipulation 
of the parties. Documents disclosed in the settlement process may not be 
used in litigation unless obtained through appropriate discovery or 
subpoena. The settlement judge shall not discuss any aspect of the case 
with any administrative law judge or other person, nor be subpoenaed or 
called as a witness in any hearing of the case or any subsequent 
administrative proceedings before the Department with respect to any 
statement or conduct during the settlement discussions.
    (9) Contents of consent order or settlement agreement. Any agreement 
disposing of all or part of the proceeding shall be written and signed 
by a parties. Such agreement shall conform to the requirements of 
paragraph (b) of this section.
    (10) Report of the settlement. If a settlement is reached, the 
parties shall report to the presiding judge in writing within seven 
working days of the termination of negotiations. The report shall 
include a copy of the settlement agreement and/or proposed consent 
order. If a settlement is not reached, the parties shall report this to 
the presiding judge without further elaboration.
    (11) Review of agreement by presiding judge. A settlement agreement 
arrived at with the help of a settlement judge shall be treated by the 
presiding judge as would be any other settlement agreement.
    (12) Non-reviewable decisions. Decisions concerning whether a 
settlement judge should be appointed, the selection of a particular 
settlement judge, or the termination of proceedings

[[Page 192]]

under this section, are not subject to review by Department officials.

[48 FR 32538, July 15, 1983, as amended at 58 FR 38500, July 16, 1993; 
64 FR 47089, Aug. 27, 1999]



Sec. 18.10  Parties, how designated.

    (a) The term party whenever used in these rules shall include any 
natural person, corporation, association, firm, partnership, trustee, 
receiver, agency, public or private organization, or governmental 
agency. A party who seeks relief or other affirmative action shall be 
designated as plaintiff, complainant or claimant, as appropriate. A 
party against whom relief or other affirmative action is sought in any 
proceeding shall be designated as a defendant or respondent, as 
appropriate. When a party to the proceeding, the Department of Labor 
shall be either a party or party-in-interest.
    (b) Other persons or organizations shall have the right to 
participate as parties if the administrative law judge determines that 
the final decision could directly and adversely affect them or the class 
they represent, and if they may contribute materially to the disposition 
of the proceedings and their interest is not adequately represented by 
existing parties.
    (c) A person or organization wishing to participate as a party under 
this section shall submit a petition to the administrative law judge 
within fifteen (15) days after the person or organization has knowledge 
of or should have known about the proceeding. The petition shall be 
filed with the administrative law judge and served on each person or 
organization who has been made a party at the time of filing. Such 
petition shall concisely state: (1) Petitioner's interest in the 
proceeding, (2) how his or her participation as a party will contribute 
materially to the disposition of the proceeding, (3) who will appear for 
petitioner, (4) the issues on which petitioner wishes to participate, 
and (5) whether petitioner intends to present witnesses.
    (d) If objections to the petition are filed, the administrative law 
judge shall then determine whether petitioners have the requisite 
interest to be a party in the proceedings, as defined in paragraphs (a) 
and (b) of this section, and shall permit or deny participation 
accordingly. Where petitions to participate as parties are made by 
individuals or groups with common interests, the administrative law 
judge may request all such petitioners to designate a single 
representative, or he or she may recognize one or more of such 
petitioners. The administrative law judge shall give each such 
petitioner written notice of the decision on his or her petition. If the 
petition is denied, he or she shall briefly state the grounds for denial 
and shall then treat the petition as a request for participation as 
amicus curiae. The administrative law judge shall give written notice to 
each party of each petition granted.



Sec. 18.11  Consolidation of hearings.

    When two or more hearings are to be held, and the same or 
substantially similar evidence is relevant and material to the matters 
at issue at each such hearing, the Chief Administrative Law Judge or the 
administrative law judge assigned may, upon motion by any party or on 
his or her own motion, order that a consolidated hearing be conducted. 
Where consolidated hearings are held, a single record of the proceedings 
may be made and the evidence introduced in one matter may be considered 
as introduced in the others, and a separate or joint decision shall be 
made, at the discretion of the administrative law judge as appropriate.



Sec. 18.12  Amicus curiae.

    A brief of an amicus curiae may be filed only with the written 
consent of all parties, or by leave of the administrative law judge 
granted upon motion, or on the request of the administrative law judge, 
except that consent or leave shall not be required when the brief is 
presented by an officer of an agency of the United States, or by a 
state, territory or commonwealth. The amicus curiae shall not 
participate in any way in the conduct of the hearing, including the 
presentation of evidence and the examination of witnesses.



Sec. 18.13  Discovery methods.

    Parties may obtain discovery by one or more of the following 
methods: Depositions upon oral examination or

[[Page 193]]

written questions; written interrogatories; production of documents or 
other evidence for inspection and other purposes; and requests for 
admission. Unless the administrative law judge orders otherwise, the 
frequency or sequence of these methods is not limited.



Sec. 18.14  Scope of discovery.

    (a) Unless otherwise limited by order of the administrative law 
judge in accordance with these rules, the parties may obtain discovery 
regarding any matter, not privileged, which is relevant to the subject 
matter involved in the proceeding, including the existence, description, 
nature, custody, condition, and location of any books, documents, or 
other tangible things and the identity and location of persons having 
knowledge of any discoverable matter.
    (b) It is not ground for objection that information sought will not 
be admissible at the hearing if the information sought appears 
reasonably calculated to lead to the discovery of admissible evidence.
    (c) A party may obtain discovery of documents and tangible things 
otherwise discoverable under paragraph (a) of this section and prepared 
in anticipation of or for the hearing by or for another party's 
representative (including his or her attorney, consultant, surety, 
indemnitor, insurer, or agent) only upon a showing that the party 
seeking discovery has substantial need of the materials in the 
preparation of his or her case and that he or she is unable without 
undue hardship to obtain the substantial equivalent of the materials by 
other means. In ordering discovery of such materials when the required 
showing has been made, the administrative law judge shall protect 
against disclosure of the mental impressions, conclusions, opinions, or 
legal theories of an attorney or other representative of a party 
concerning the proceeding.



Sec. 18.15  Protective orders.

    (a) Upon motion by a party or the person from whom discovery is 
sought, and for good cause shown, the administrative law judge may make 
any order which justice requires to protect a party or person from 
annoyance, embarrassment, oppression, or undue burden or expense, 
including one or more of the following:
    (1) The discovery not be had;
    (2) The discovery may be had only on specified terms and conditions, 
including a designation of the time or place;
    (3) The discovery may be had only by a method of discovery other 
than that selected by the party seeking discovery;
    (4) Certain matters not relevant may not be inquired into, or that 
the scope of discovery be limited to certain matters;
    (5) Discovery be conducted with no one present except persons 
designated by the administrative law judge; or
    (6) A trade secret or other confidential research, development or 
commercial information may not be disclosed or be disclosed only in a 
designated way.



Sec. 18.16  Supplementation of responses.

    A party who has responded to a request for discovery with a response 
that was complete when made is under no duty to supplement his response 
to include information thereafter acquired, except as follows:
    (a) A party is under a duty to supplement timely his response with 
respect to any question directly addressed to:
    (1) The identity and location of persons having knowledge of 
discoverable matters; and
    (2) The identity of each person expected to be called as an expert 
witness at the hearing, the subject matter on which he or she is 
expected to testify and the substance of his or her testimony.
    (b) A party is under a duty to amend timely a prior response if he 
or she later obtains information upon the basis of which:
    (1) He or she knows the response was incorrect when made; or
    (2) He or she knows that the response though correct when made is no 
longer true and the circumstances are such that a failure to amend the 
response is in substance a knowing concealment.
    (c) A duty to supplement responses may be imposed by order of the 
administrative law judge or agreement of the parties.

[[Page 194]]



Sec. 18.17  Stipulations regarding discovery.

    Unless otherwise ordered, a written stipulation entered into by all 
the parties and filed with the Chief Administrative Law Judge or the 
administrative law judge assigned may: (a) Provide that depositions be 
taken before any person, at any time or place, upon sufficient notice, 
and in any manner and when so taken may be used like other depositions, 
and (b) modify the procedures provided by these rules for other methods 
of discovery.



Sec. 18.18  Written interrogatories to parties.

    (a) Any party may serve upon any other party written interrogatories 
to be answered in writing by the party served, or if the party served is 
a public or private corporation or a partnership or association or 
governmental agency, by any authorized officer or agent, who shall 
furnish such information as is available to the party. A copy of the 
interrogatories, answers, and all related pleadings shall be served on 
all parties to the proceeding. Copies of interrogatories and responses 
thereto shall not be filed with the Office of Administrative Law Judges 
unless the presiding judge so orders, the document is being offered into 
evidence, the document is submitted in support of a motion or a response 
to a motion, filing is required by a specialized rule, or there is some 
other compelling reason for its submission.
    (b) Each interrogatory shall be answered separately and fully in 
writing under oath or affirmation, unless it is objected to, in which 
event the reasons for objection shall be stated in lieu of an answer. 
The answers and objections shall be signed by the person making them. 
The party upon whom the interrogatories were served shall serve a copy 
of the answer and objections upon all parties to the proceeding within 
thirty (30) days after service of the interrogatories, or within such 
shorter or longer period as the administrative law judge may allow.
    (c) An interrogatory otherwise proper is not necessarily 
objectionable merely because an answer to the interrogatory involves an 
opinion or contention that relates to fact or the application of law to 
fact, but the administrative law judge may order that such an 
interrogatory need not be answered until after designated discovery has 
been completed or until a prehearing conference or other later time.

[48 FR 32538, July 15, 1983, as amended at 59 FR 41877, Aug. 15, 1994]



Sec. 18.19  Production of documents and other evidence; entry upon land for inspection and other purposes; and physical and mental examination.

    (a) Any party may serve on any other party a request to:
    (1) Produce and permit the party making the request, or a person 
acting on his or her behalf, to inspect and copy any designated 
documents, or to inspect and copy, test, or sample any tangible things 
which are in the possession, custody, or control of the party upon whom 
the request is served; or
    (2) Permit entry upon designated land or other property in the 
possession or control of the party upon whom the request is served for 
the purpose of inspection and measuring, photographing, testing, or for 
other purposes as stated in paragraph (a)(1) of this section.
    (3) Submit to a physical or mental examination by a physician.
    (b) The request may be served on any party without leave of the 
administrative law judge.
    (c) The request shall:
    (1) Set forth the items to be inspected either by individual item or 
by category;
    (2) Describe each item or category with reasonable particularity;
    (3) Specify a reasonable time, place, and manner of making the 
inspection and performing the related acts;
    (4) Specify the time, place, manner, conditions, and scope of the 
physical or mental examination and the person or persons by whom it is 
to be made. A report of examining physician shall be made in accordance 
with Rule 35(b) of the Federal Rules of Civil Procedure, title 28 
U.S.C., as amended.
    (d) The party upon whom the request is served shall serve on the 
party submitting the request a written response within thirty (30) days 
after service of the request.

[[Page 195]]

    (e) The response shall state, with respect to each item or category:
    (1) That inspection and related activities will be permitted as 
requested; or
    (2) That objection is made in whole or in part, in which case the 
reasons for objection shall be stated.
    (f) A copy of each request for production and each written response 
shall be served on all parties, but shall not be filed with the Office 
of Administrative Law Judges unless the presiding judge so orders, the 
document is being offered into evidence, the document is submitted in 
support of a motion or a response to a motion, filing is required by a 
specialized rule, or there is some other compelling reason for its 
submission.

[48 FR 32538, July 15, 1983, as amended at 59 FR 41877, Aug. 15, 1994]



Sec. 18.20  Admissions.

    (a) A party may serve upon any other party a written request for the 
admission, for purposes of the pending action only, of the genuineness 
and authenticity of any relevant document described in or attached to 
the request, or for the admission of the truth of any specified relevant 
matter of fact.
    (b) Each matter of which an admission is requested is admitted 
unless, within thirty (30) days after service of the request or such 
shorter or longer time as the administrative law judge may allow, the 
party to whom the request is directed serves on the requesting party:
    (1) A written statement denying specifically the relevant matters of 
which an admission is requested;
    (2) A written statement setting forth in detail the reasons why he 
or she can neither truthfully admit nor deny them; or
    (3) Written objections on the ground that some or all of the matters 
involved are privileged or irrelevant or that the request is otherwise 
improper in whole or in part.
    (c) An answering party may not give lack of information or knowledge 
as a reason for failure to admit or deny unless the party states that he 
or she has made reasonable inquiry and that the information known or 
readily obtainable by him or her is insufficient to enable the party to 
admit or deny.
    (d) The party who has requested the admissions may move to determine 
the sufficiency of the answers or objections. Unless the administrative 
law judge determines that an objection is justified, he or she shall 
order that an answer be served. If the administrative law judge 
determines that an answer does not comply with the requirements of this 
section, he or she may order either that the matter is admitted or that 
an amended answer be served. The administrative law judge may, in lieu 
of these orders, determine that final disposition of the request be made 
at a prehearing conference or at a designated time prior to hearing.
    (e) Any matter admitted under this section is conclusively 
established unless the administrative law judge on motion permits 
withdrawal or amendment of the admission.
    (f) Any admission made by a party under this section is for the 
purpose of the pending action only and is not an admission by him or her 
for any other purpose nor may it be used against him or her in any other 
proceeding.
    (g) A copy of each request for admission and each written response 
shall be served on all parties, but shall not be filed with the Office 
of Administrative Law Judges unless the presiding judge so orders, the 
document is being offered into evidence, the document is submitted in 
support of a motion or a response to a motion, filing is required by a 
specialized rule, or there is some other compelling reason for its 
submission.

[48 FR 32538, July 15, 1983, as amended at 59 FR 41877, Aug. 15, 1994]



Sec. 18.21  Motion to compel discovery.

    (a) If a deponent fails to answer a question propounded or a party 
upon whom a request is made pursuant to Secs. 18.18 through 18.20, or a 
party upon whom interrogatories are served fails to respond adequately 
or objects to the request, or any part thereof, or fails to permit 
inspection as requested, the discovering party may move the 
administrative law judge for an order compelling a response or 
inspection in accordance with the request.
    (b) The motion shall set forth:

[[Page 196]]

    (1) The nature of the questions or request;
    (2) The response or objections of the party upon whom the request 
was served; and
    (3) Arguments in support of the motion.
    (c) For purposes of this section, an evasive answer or incomplete 
answer or response shall be treated as a failure to answer or respond.
    (d) In ruling on a motion made pursuant to this section, the 
administrative law judge may make and enter a protective order such as 
he or she is authorized to enter on a motion made pursuant to 
Sec. 18.15(a).



Sec. 18.22  Depositions.

    (a) When, how, and by whom taken. The deposition of any witness may 
be taken at any stage of the proceeding at reasonable times. Depositions 
may be taken by oral examination or upon written interrogatories before 
any person having power to administer oaths.
    (b) Application. Any party desiring to take the deposition of a 
witness shall indicate to the witness and all other parties the time 
when, the place where, and the name and post office address of the 
person before whom the deposition is to be taken; the name and address 
of each witness; and the subject matter concerning which each such 
witness is expected to testify.
    (c) Notice. Notice shall be given for the taking of a deposition, 
which shall not be less than five (5) days written notice when the 
deposition is to be taken within the continental United States and not 
less than twenty (20) days written notice when the deposition is to be 
taken elsewhere. A copy of the Notice shall not be filed with the Office 
of Administrative Law Judges unless the presiding judge so orders, the 
document is being offered into evidence, the document is submitted in 
support of a motion or a response to a motion, filing is required by a 
specialized rule, or there is some other compelling reason for its 
submission.
    (d) Taking and receiving in evidence. Each witness testifying upon 
deposition shall be sworn, and any other party shall have the right to 
cross-examine. The questions propounded and the answers thereto, 
together with all objections made, shall be reduced to writing; read by 
or to, and subscribed by the witness; and certified by the person 
administering the oath. Subject to such objections to the questions and 
answers as were noted at the time of taking the deposition and which 
would have been valid if the witness were personally present and 
testifying, such deposition may be read and offered in evidence by the 
party taking it as against any party who was present or represented at 
the taking of the deposition or who had due notice thereof.
    (e) Motion to terminate or limit examination. During the taking of a 
deposition, a party or deponent may request suspension of the deposition 
on grounds of bad faith in the conduct of the examination, oppression of 
a deponent or party or improper questions propounded. The deposition 
will then be adjourned. However, the objecting party or deponent must 
immediately move the administrative law judge for a ruling on his or her 
objections to the deposition conduct or proceedings. The administrative 
law judge may then limit the scope or manner of the taking of the 
deposition.

[48 FR 32538, July 15, 1983; 49 FR 2739, Jan. 20, 1984; 59 FR 41877, 
Aug. 15, 1994]



Sec. 18.23  Use of depositions at hearings.

    (a) Generally. At the hearing, any part or all of a deposition, so 
far as admissible under the rules of evidence, may be used against any 
party who was present or represented at the taking of the deposition or 
who had due notice thereof in accordance with any one of the following 
provisions:
    (1) Any deposition may be used by any party for the purpose of 
contradicting or impeaching the testimony of the deponent as a witness.
    (2) The deposition of expert witnesses, particularly the deposition 
of physicians, may be used by any party for any purpose, unless the 
administrative law judge rules that such use would be unfair or a 
violation of due process.
    (3) The deposition of a party or of anyone who at the time of taking 
the deposition was an officer, director, or duly authorized agent of a 
public or

[[Page 197]]

private corporation, partnership, or association which is a party, may 
be used by any other party for any purpose.
    (4) The deposition of a witness, whether or not a party, may be used 
by any party for any purpose if the presiding officer finds:
    (i) That the witness is dead; or
    (ii) That the witness is out of the United States or more than 100 
miles from the place of hearing unless it appears that the absence of 
the witness was procured by the party offering the deposition; or
    (iii) That the witness is unable to attend to testify because of 
age, sickness, infirmity, or imprisonment; or
    (iv) That the party offering the deposition has been unable to 
procure the attendance of the witness by subpoena; or
    (v) Upon application and notice, that such exceptional circumstances 
exist at to make it desirable, in the interest of justice and with due 
regard to the importance of presenting the testimony of witnesses orally 
in open hearing, to allow the deposition to be used.
    (5) If only part of a deposition is offered in evidence by a party, 
any other party may require him or her to introduce all of it which is 
relevant to the part introduced, and any party may introduce any other 
parts.
    (6) Substitution of parties does not affect the right to use 
depositions previously taken; and, when a proceeding in any hearing has 
been dismissed and another proceeding involving the same subject matter 
is afterward brought between the same parties or their representatives 
or successors in interest, all depositions lawfully taken and duly filed 
in the former proceeding may be used in the latter as if originally 
taken therefor.
    (b) Objections to admissibility. Except as provided in this 
paragraph, objection may be made at the hearing to receiving in evidence 
any deposition or part thereof for any reason which would require the 
exclusion of the evidence if the witness were then present and 
testifying.
    (1) Objections to the competency of a witness or to the competency, 
relevancy, or materiality of testimony are not waived by failure to make 
them before or during the taking of the deposition, unless the ground of 
the objection is one which might have been obviated or removed if 
presented at that time.
    (2) Errors and irregularities occurring at the oral examination in 
the manner of taking the deposition, in the form of the questions or 
answers, in the oath or affirmation, or in the conduct of parties and 
errors of any kind which might be obviated, removed, or cured if 
promptly presented, are waived unless reasonable objection thereto is 
made at the taking of the deposition.
    (3) Objections to the form or written interrogatories are waived 
unless served in writing upon the party propounding them.
    (c) Effect of taking or using depositions. A party shall not be 
deemed to make a person his or her own witness for any purpose by taking 
his or her deposition. The introduction in evidence of the deposition or 
any part thereof for any purpose other than that of contradicting or 
impeaching the deponent makes the deponent the witness of the party 
introducing the deposition, but this shall not apply to the use by any 
other party of a deposition as described in paragraph (a)(2) of this 
section. At the hearing, any party may rebut any relevant evidence 
contained in a deposition whether introduced by him or her or by any 
other party.



Sec. 18.24  Subpoenas.

    (a) Except as provided in paragraph (b) of this section, the Chief 
Administrative Law Judge or the presiding administrative law judge, as 
appropriate, may issue subpoenas as authorized by statute or law upon 
written application of a party requiring attendance of witnesses and 
production of relevant papers, books, documents, or tangible things in 
their possession and under their control. A subpoena may be served by 
certified mail or by any person who is not less than 18 years of age. A 
witness, other than a witness for the Federal Government, may not be 
required to attend a deposition or hearing unless the mileage and 
witness fee applicable to witnesses in courts of the United States for 
each date of attendance is paid in advance of the date of the 
proceeding.

[[Page 198]]

    (b) If a party's written application for subpoena is submitted three 
(3) working days or less before the hearing to which it relates, a 
subpoena shall issue at the discretion of the Chief Administrative Law 
Judge or presiding administrative law judge, as appropriate.
    (c) Motion to quash or limit subpoena. Within ten (10) days of 
receipt of a subpoena but no later than the date of the hearing, the 
person against whom it is directed may file a motion to quash or limit 
the subpoena, setting forth the reasons why the subpoena should be 
withdrawn or why it should by limited in scope. Any such motion shall be 
answered within ten (10) days of service, and shall be ruled on 
immediately thereafter. The order shall specify the date, if any, for 
compliance with the specifications of the subpoena.
    (d) Failure to comply. Upon the failure of any person to comply with 
an order to testify or a subpoena, the party adversely affected by such 
failure to comply may, where authorized by statute or by law, apply to 
the appropriate district court for enforcement of the order or subpoena.



Sec. 18.25  Designation of administrative law judge.

    Hearings shall be held before an administrative law judge appointed 
under 5 U.S.C. 3105 and assigned to the Department of Labor. The 
presiding judge shall be designated by the Chief Administrative Law 
Judge.



Sec. 18.26  Conduct of hearings.

    Unless otherwise required by statute or regulations, hearings shall 
be conducted in conformance with the Administrative Procedure Act, 5 
U.S.C. 554.



Sec. 18.27  Notice of hearing.

    (a) Generally. Except when hearings are scheduled by calendar call, 
the administrative law judge to whom the matter is referred shall notify 
the parties by mail of a day, time, and place set for hearing thereon or 
for a prehearing conference, or both. No date earlier than fifteen (15) 
days after the date of such notice shall be set for such hearing or 
conference, except by agreement of the parties. Service of such notice 
shall be made by regular, first-class mail, unless under the 
circumstances it appears to the administrative law judge that certified 
mail, mailgram, telephone, or any combination of these methods should be 
used instead.
    (b) Change of date, time and place. The Chief Administrative Law 
Judge or the administrative law judge assigned to the case may change 
the time, date and place of the hearing, or temporarily adjourn a 
hearing, on his or her own motion or for good cause shown by a party. 
The parties shall be given not less than ten (10) days notice of the new 
hearing date, unless they agree to such change without such notice.
    (c) Place of hearing. Unless otherwise required by statute or 
regulation, due regard shall be given to the convenience of the parties 
and the witnesses in selecting a place for the hearing.



Sec. 18.28  Continuances.

    (a) When granted. Continuances will only by granted in cases of 
prior judicial commitments or undue hardship, or a showing of other good 
cause.
    (b) Time limit for requesting. Except for good cause arising 
thereafter, requests for continuances must be filed within fourteen (14) 
days prior to the date set for hearing.
    (c) How filed. Motions for continuances shall be in writing. At 
least 3"x3\1/2\" of blank space shall be provided on the last page of 
the motion to permit space for the entry of an order by the 
administrative law judge. Copies shall be served on all parties. Any 
motions for continuances made within ten (10) days of the date of the 
scheduled proceeding shall, in addition to the written request, be 
telephonically conveyed to the administrative law judge or a member of 
his or her staff and to all other parties. Motions for continuances, 
based on reasons not reasonably ascertainable prior thereto, may also be 
made on the record at calendar calls, prehearing conferences or 
hearings.
    (d) Ruling. Time permitting, the administrative law judge shall 
issue a written order in advance of the scheduled proceeding date which 
either allows or denies the request. Otherwise

[[Page 199]]

the ruling may be made orally by telephonic communication to the party 
requesting same who shall be responsible for telephonically notifying 
all other parties. Oral orders shall be confirmed in writing.

[48 FR 32538, July 15, 1983; 49 FR 2739, Jan. 20, 1984]



Sec. 18.29  Authority of administrative law judge.

    (a) General powers. In any proceeding under this part, the 
administrative law judge shall have all powers necessary to the conduct 
of fair and impartial hearings, including, but not limited to, the 
following:
    (1) Conduct formal hearings in accordance with the provisions of 
this part;
    (2) Administer oaths and examine witnesses;
    (3) Compel the production of documents and appearance of witnesses 
in control of the parties;
    (4) Compel the appearance of witnesses by the issuance of subpoenas 
as authorized by statute or law;
    (5) Issue decisions and orders;
    (6) Take any action authorized by the Administrative Procedure Act;
    (7) Exercise, for the purpose of the hearing and in regulating the 
conduct of the proceeding, such powers vested in the Secretary of Labor 
as are necessary and appropriate therefor;
    (8) Where applicable, take any appropriate action authorized by the 
Rules of Civil Procedure for the United States District Courts, issued 
from time to time and amended pursuant to 28 U.S.C. 2072; and
    (9) Do all other things necessary to enable him or her to discharge 
the duties of the office.
    (b) Enforcement. If any person in proceedings before an adjudication 
officer disobeys or resists any lawful order or process, or misbehaves 
during a hearing or so near the place thereof as to obstruct the same, 
or neglects to produce, after having been ordered to do so, any 
pertinent book, paper or document, or refuses to appear after having 
been subpoenaed, or upon appearing refuses to take the oath as a 
witness, or after having taken the oath refuses to be examined according 
to law, the administrative law judge responsible for the adjudication, 
where authorized by statute or law, may certify the facts to the Federal 
District Court having jurisdiction in the place in which he or she is 
sitting to request appropriate remedies.



Sec. 18.30  Unavailability of administrative law judge.

    In the event the administrative law judge designated to conduct the 
hearing becomes unavailable, the Chief Administrative Law Judge may 
designate another administrative law judge for the purpose of further 
hearing or other appropriate action.



Sec. 18.31  Disqualification.

    (a) When an administrative law judge deems himself or herself 
disqualified to preside in a particular proceeding, such judge shall 
withdraw therefrom by notice on the record directed to the Chief 
Administrative Law Judge.
    (b) Whenever any party shall deem the administrative law judge for 
any reason to be disqualified to preside, or to continue to preside, in 
a particular proceeding, that party shall file with the administrative 
law judge a motion to recuse. The motion shall be supported by an 
affidavit setting forth the alleged grounds for disqualification. The 
administrative law judge shall rule upon the motion.
    (c) In the event of disqualification or recusal of an administrative 
law judge as provided in paragraph (a) or (b) of this section, the Chief 
Administrative Law Judge shall refer the matter to another 
administrative law judge for further proceedings.



Sec. 18.32  Separation of functions.

    No officer, employee, or agent of the Federal Government engaged in 
the performance of investigative or prosecutorial functions in 
connection with any proceeding shall, in that proceeding or a factually 
related proceeding, participate or advise in the decision of the 
administrative law judge, except as a witness or counsel in the 
proceedings.



Sec. 18.33  Expedition.

    Hearings shall proceed with all reasonable speed, insofar as 
practicable

[[Page 200]]

and with due regard to the convenience of the parties.



Sec. 18.34  Representation.

    (a) Appearances. Any party shall have the right to appear at a 
hearing in person, by counsel, or by other representative, to examine 
and cross-examine witnesses, and to introduce into the record 
documentary or other relevant evidence, except that the participation of 
any intervenor shall be limited to the extent prescribed by the 
administrative law judge.
    (b) Each attorney or other representative shall file a notice of 
appearance. Such notice shall indicate the name of the case or 
controversy, the docket number if assigned, and the party on whose 
behalf the appearance is made.
    (c) Rights of parties. Every party shall have the right of timely 
notice and all other rights essential to a fair hearing, including, but 
not limited to, the rights to present evidence, to conduct such cross-
examination as may be necessary for a full and complete disclosure of 
the facts, and to be heard by objection, motion, and argument.
    (d) Rights of participants. Every participant shall have the right 
to make a written or oral statement of position. At the discretion of 
the administrative law judge, participants may file proposed findings of 
fact, conclusions of law and a post hearing brief.
    (e) Rights of witnesses. Any person compelled to testify in a 
proceeding in response to a subpoena may be accompanied, represented, 
and advised by counsel or other representative, and may purchase a 
transcript of his or her testimony.
    (f) Office of the Solicitor. The Department of Labor shall be 
represented by the Solicitor of Labor or his or her designee and shall 
participate to the degree deemed appropriate by the Solicitor.
    (g) Qualifications--(1) Attorneys. An attorney at law who is 
admitted to practice before the Federal courts or before the highest 
court of any State, the District of Columbia, or any territory or 
commonwealth of the United States, may practice before the Office of 
Administrative Law Judges. An attorney's own representation that he or 
she is in good standing before any of such courts shall be sufficient 
proof thereof, unless otherwise ordered by the administrative law judge. 
Any attorney of record must file prior notice in writing of intent to 
withdraw as counsel.
    (2) Persons not attorneys. Any citizen of the United States who is 
not an attorney at law shall be admitted to appear in a representative 
capacity in an adjudicative proceeding. An application by a person not 
an attorney at law for admission to appear in a proceeding shall be 
submitted in writing to the Chief Administrative Law Judge prior to the 
hearing in the proceedings or to the administrative law judge assigned 
at the commencement of the hearing. The application shall state 
generally the applicant's qualifications to appear in the proceedings. 
The administrative law judge may, at any time, inquire as to the 
qualification or ability of such person to render legal assistance.
    (3) Denial of authority to appear. The administrative law judge may 
deny the privilege of appearing to any person, within applicable 
statutory constraints, e.g. 5 U.S.C. 555, who he or she finds after 
notice of and opportunity for hearing in the matter does not possess the 
requisite qualifications to represent others; or is lacking in character 
or integrity; has engaged in unethical or improper professional conduct; 
or has engaged in an act involving moral turpitude. No provision hereof 
shall apply to any person who appears on his or her own behalf or on 
behalf of any corporation, partnership, or association of which the 
person is a partner, officer, or regular employee.
    (h) Authority for representation. Any individual acting in a 
representative capacity in any adjudicative proceeding may be required 
by the administrative law judge to show his or her authority to act in 
such capacity. A regular employee of a party who appears on behalf of 
the party may be required by the administrative law judge to show his or 
her authority to so appear.

[48 FR 32538, July 15, 1983; 49 FR 2739, Jan. 20, 1984]

[[Page 201]]



Sec. 18.35  Legal assistance.

    The Office of Administrative Law Judges does not have authority to 
appoint counsel, nor does it refer parties to attorneys.



Sec. 18.36  Standards of conduct.

    (a) All persons appearing in proceedings before an administrative 
law judge are expected to act with integrity, and in an ethical manner.
    (b) The administrative law judge may exclude parties, participants, 
and their representatives for refusal to comply with directions, 
continued use of dilatory tactics, refusal to adhere to reasonable 
standards of orderly and ethical conduct, failure to act in good faith, 
or violation of the prohibition against ex parte communications. The 
administrative law judge shall state in the record the cause for 
suspending or barring an attorney or other representative from 
participation in a particular proceeding. Any attorney or other 
representative so suspended or barred may appeal to the Chief Judge but 
no proceeding shall be delayed or suspended pending disposition of the 
appeal; provided, however, that the administrative law judge shall 
suspend the proceeding for a reasonable time for the purpose of enabling 
the party to obtain another attorney or representative.



Sec. 18.37  Hearing room conduct.

    Proceedings shall be conducted in an orderly manner. The consumption 
of food or beverage, smoking, or rearranging of courtroom furniture, 
unless specifically authorized by the administrative law judge, are 
prohibited.

[48 FR 32538, July 15, 1983; 49 FR 2739, Jan. 20, 1984]



Sec. 18.38  Ex parte communications.

    (a) The administrative law judge shall not consult any person, or 
party, on any fact in issue unless upon notice and opportunity for all 
parties to participate. Communications by the Office of Administrative 
Law Judges, the assigned judge, or any party for the sole purpose of 
scheduling hearings or requesting extensions of time are not considered 
ex-parte communications, except that all other parties shall be notified 
of such request by the requesting party and be given an opportunity to 
respond thereto.
    (b) Sanctions. A party or participant who makes a prohibited ex 
parte communication, or who encourages or solicits another to make any 
such communication, may be subject to any appropriate sanction or 
sanctions, including, but not limited to, exclusion from the proceedings 
and adverse ruling on the issue which is the subject of the prohibited 
communication.



Sec. 18.39  Waiver of right to appear and failure to participate or to appear.

    (a) Waiver of right to appear. If all parties waive their right to 
appear before the administrative law judge or to present evidence or 
argument personally or by representative, it shall not be necessary for 
the administrative law judge to give notice of and conduct an oral 
hearing. A waiver of the right to appear and present evidence and 
allegations as to facts and law shall be made in writing and filed with 
the Chief Administrative Law Judge or the administrative law judge. 
Where such a waiver has been filed by all parties and they do not appear 
before the administrative law judge personally or by representative, the 
administrative law judge shall make a record of the relevant written 
evidence submitted by the parties, together with any pleadings they may 
submit with respect to the issues in the case. Such documents shall be 
considered as all of the evidence in the case, and the decision shall be 
based on them.
    (b) Dismissal--Abandonment by Party. A request for hearing may be 
dismissed upon its abandonment or settlement by the party or parties who 
filed it. A party shall be deemed to have abandoned a request for 
hearing if neither the party nor his or her representative appears at 
the time and place fixed for the hearing and either (a) prior to the 
time for hearing such party does not show good cause as to why neither 
he or she nor his or her representative can appear or (b) within ten 
(10) days after the mailing of a notice to him or her by the 
administrative law judge to show cause, such party does not show good 
cause for such failure to appear and fails to notify the administrative 
law judge prior to the time fixed for

[[Page 202]]

hearing that he or she cannot appear. A default decision, under 
Sec. 18.5(b), may be entered against any party failing, without good 
cause, to appear at a hearing.



Sec. 18.40  Motion for summary decision.

    (a) Any party may, at least twenty (20) days before the date fixed 
for any hearing, move with or without supporting affidavits for a 
summary decision on all or any part of the proceeding. Any other party 
may, within ten (10) days after service of the motion, serve opposing 
affidavits or countermove for summary decision. The administrative law 
judge may set the matter for argument and/or call for submission of 
briefs.
    (b) Filing of any documents under paragraph (a) of this section 
shall be with the administrative law judge, and copies of such documents 
shall be served on all parties.
    (c) Any affidavits submitted with the motion shall set forth such 
facts as would be admissible in evidence in a proceeding subject to 5 
U.S.C. 556 and 557 and shall show affirmatively that the affiant is 
competent to testify to the matters stated therein. When a motion for 
summary decision is made and supported as provided in this section, a 
party opposing the motion may not rest upon the mere allegations or 
denials of such pleading. Such response must set forth specific facts 
showing that there is a genuine issue of fact for the hearing.
    (d) The administrative law judge may enter summary judgment for 
either party if the pleadings, affidavits, material obtained by 
discovery or otherwise, or matters officially noticed show that there is 
no genuine issue as to any material fact and that a party is entitled to 
summary decision. The administrative law judge may deny the motion 
whenever the moving party denies access to information by means of 
discovery to a party opposing the motion.



Sec. 18.41  Summary decision.

    (a) No genuine issue of material fact. (1) Where no genuine issue of 
a material fact is found to have been raised, the administrative law 
judge may issue a decision to become final as provided by the statute or 
regulations under which the matter is to be heard. Any final decision 
issued as a summary decision shall conform to the requirements for all 
final decisions.
    (2) An initial decision and a final decision made under this 
paragraph shall include a statement of:
    (i) Findings of fact and conclusions of law, and the reasons 
therefor, on all issues presented; and
    (ii) Any terms and conditions of the rule or order.
    (3) A copy of any initial decision and final decision under this 
paragraph shall be served on each party.
    (b) Hearings on issue of fact. Where a genuine question of material 
fact is raised, the administrative law judge shall, and in any other 
case may, set the case for an evidentiary hearing.



Sec. 18.42  Expedited proceedings.

    (a) When expedited proceedings are required by statute or 
regulation, or at any time after commencement of a proceeding, any party 
may move to advance the scheduling of a proceeding.
    (b) Except when such proceedings are required or as otherwise 
directed by the Chief Administrative Law Judge or the administrative law 
judge assigned, any party filing a motion under this section shall:
    (1) Make the motion in writing;
    (2) Describe the circumstances justifying advancement;
    (3) Describe the irreparable harm that would result if the motion is 
not granted; and
    (4) Incorporate in the motion affidavits to support any 
representations of fact.
    (c) Service of a motion under this section shall be accomplished by 
personal delivery or by telephonic or telegraphic communication followed 
by mail. Service is complete upon personal delivery or mailing.
    (d) Except when such proceedings are required, or unless otherwise 
directed by the Chief Administrative Law Judge or the administrative law 
judge assigned, all parties to the proceeding in which the motion is 
filed shall have ten (10) days from the date of service of the motion to 
file an opposition in response to the motion.
    (e) Following the timely receipt by the administrative law judge of 
statements in response to the motion, the

[[Page 203]]

administrative law judge may advance pleading schedules, prehearing 
conferences, and the hearing, as deemed appropriate: provided, however, 
that a hearing on the merits shall not be scheduled with less than five 
(5) working days notice to the parties, unless all parties consent to an 
earlier hearing.
    (f) When expedited hearings are required by statute or regulation, 
such hearing shall be scheduled within sixty (60) days from the receipt 
of request for hearing or order of reference. The decision of the 
administrative law judge shall be issued within twenty (20) days after 
receipt of the transcript of any oral hearing or within twenty (20) days 
after the filing of all documentary evidence if no oral hearing is 
conducted.



Sec. 18.43  Formal hearings.

    (a) Public. Hearings shall be open to the public. However, in 
unusual circumstances, the administrative law judge may order a hearing 
or any part thereof closed, where to do so would be in the best 
interests of the parties, a witness, the public or other affected 
persons. Any order closing the hearing shall set forth the reasons for 
the decision. Any objections thereto shall be made a part of the record.
    (b) Jurisdiction. The administrative law judge shall have 
jurisdiction to decide all issues of fact and related issues of law.
    (c) Amendments to conform to the evidence. When issues not raised by 
the request for hearing, prehearing stipulation, or prehearing order are 
tried by express or implied consent of the parties, they shall be 
treated in all respects as if they had been raised in the pleadings. 
Such amendment of the pleadings as may be necessary to cause them to 
conform to the evidence may be made on motion of any party at any time; 
but failure to so amend does not affect the result of the hearing of 
these issues. The administrative law judge may grant a continuance to 
enable the objecting party to meet such evidence.



Sec. 18.44  [Reserved]



Sec. 18.45  Official notice.

    Official notice may be taken of any material fact, not appearing in 
evidence in the record, which is among the traditional matters of 
judicial notice: Provided, however, that the parties shall be given 
adequate notice, at the hearing or by reference in the administrative 
law judge's decision, of the matters so noticed, and shall be given 
adequate opportunity to show the contrary.



Sec. 18.46  In camera and protective orders.

    (a) Privileges. Upon application of any person the administrative 
law judge may limit discovery or introduction of evidence or issue such 
protective or other orders as in his or her judgment may be consistent 
with the objective of protecting privileged communications.
    (b) Classified or sensitive matter. (1) Without limiting the 
discretion of the administrative law judge to give effect to any other 
applicable privilege, it shall be proper for the administrative law 
judge to limit discovery or introduction of evidence or to issue such 
protective or other orders as in his or her judgment may be consistent 
with the objective of preventing undue disclosure of classified or 
sensitive matter. Where the administrative law judge determines that 
information in documents containing sensitive matter should be made 
available to a respondent, he or she may direct the party to prepare an 
unclassified or nonsensitive summary or extract of the original. The 
summary or extract may be admitted as evidence in the record.
    (2) If the administrative law judge determines that this procedure 
is inadequate and that classified or otherwise sensitive matter must 
form part of the record in order to avoid prejudice to a party, he or 
she may advise the parties and provide opportunity for arrangements to 
permit a party or a representative to have access to such matter. Such 
arrangements may include obtaining security clearances or giving counsel 
for a party access to sensitive information and documents subject to 
assurances against further disclosure.



Sec. 18.47  Exhibits.

    (a) Identification. All exhibits offered in evidence shall be 
numbered and marked with a designation identifying

[[Page 204]]

the party or intervenor by whom the exhibit is offered.
    (b) Exchange of exhibits. When written exhibits are offered in 
evidence, one copy must be furnished to each of the parties at the 
hearing, and one copy to the administrative law judge, unless the 
parties previously have been furnished with copies or the administrative 
law judge directs otherwise. If the administrative law judge has not 
fixed a time for the exchange of exhibits the parties shall exchange 
copies of exhibits at the earliest practicable time, preferably before 
the hearing, or at the latest at the commencement of the hearing.
    (c) Substitution of copies for original exhibits. The administrative 
law judge may permit a party to withdraw original documents offered in 
evidence and substitute true copies in lieu thereof.



Sec. 18.48  Records in other proceedings.

    In case any portion of the record in any other proceeding or civil 
or criminal action is offered in evidence, a true copy of such portion 
shall be presented for the record in the form of an exhibit unless the 
administrative law judge directs otherwise.



Sec. 18.49  Designation of parts of documents.

    Where relevant and material matter offered in evidence is embraced 
in a document containing other matter not material or relevant and not 
intended to be put in evidence, the participant offering the same shall 
plainly designate the matter so offered, segregating and excluding 
insofar as practicable the immaterial or irrelevant parts. If other 
matter in such document is in such bulk or extent as would necessarily 
encumber the record, such document will not be received in evidence, but 
may be marked for identification, and if properly authenticated, the 
relevant and material parts thereof may be read into the record, or if 
the administrative law judge so directs, a true copy of such matter in 
proper form shall be received in evidence as an exhibit, and copies 
shall be delivered by the participant offering the same to the other 
parties or their attorneys appearing at the hearing, who shall be 
afforded an opportunity to examine the entire document and to offer in 
evidence in like manner other material and relevant portions thereof.



Sec. 18.50  Authenticity.

    The authenticity of all documents submitted as proposed exhibits in 
advance of the hearing shall be deemed admitted unless written objection 
thereto is filed prior to the hearing, except that a party will be 
permitted to challenge such autheniticity at a later time upon a clear 
showing of good cause for failure to have filed such written objection.



Sec. 18.51  Stipulations.

    The parties may by stipulation in writing at any stage of the 
proceeding, or orally made at hearing, agree upon any pertinent facts in 
the proceeding. It is desirable that the facts be thus agreed upon so 
far as and whenever practicable. Stipulations may be received in 
evidence at a hearing or prior thereto, and when received in evidence, 
shall be binding on the parties thereto.



Sec. 18.52  Record of hearings.

    (a) All hearings shall be mechanically or stenographically reported. 
All evidence upon which the administrative law judge relies for decision 
shall be contained in the transcript of testimony, either directly or by 
appropriate reference. All exhibits introduced as evidence shall be 
marked for identification and incorporated into the record. Transcripts 
may be obtained by the parties and the public from the official reporter 
at rates not to exceed the applicable rates fixed by the contract with 
the reporter.
    (b) Corrections. Corrections to the official transcript will be 
permitted upon motion. Motions for correction must be submitted within 
ten (10) days of the receipt of the transcript unless additional time is 
permitted by the administrative law judge. Corrections of the official 
transcript will be permitted only when errors of substance are involved 
and only upon approval of the administrative law judge.



Sec. 18.53  Closing of hearings.

    The administrative law judge may hear arguments of counsel and may 
limit the time of such arguments at his

[[Page 205]]

or her discretion, and may allow briefs to be filed on behalf of either 
party but shall closely limit the time within which the briefs for both 
parties shall be filed, so as to avoid unreasonable delay.



Sec. 18.54  Closing the record.

    (a) When there is a hearing, the record shall be closed at the 
conclusion of the hearing unless the administrative law judge directs 
otherwise.
    (b) If any party waives a hearing, the record shall be closed on the 
date set by the administrative law judge as the final date for the 
receipt of submissions of the parties to the matter.
    (c) Once the record is closed, no additional evidence shall be 
accepted into the record except upon a showing that new and material 
evidence has become available which was not readily available prior to 
the closing of the record. However, the administrative law judge shall 
make part of the record, any motions for attorney fees authorized by 
statutes, and any supporting documentation, any determinations thereon, 
and any approved correction to the transcript.



Sec. 18.55  Receipt of documents after hearing.

    Documents submitted for the record after the close of the hearing 
will not be received in evidence except upon ruling of the 
administrative law judge. Such documents when submitted shall be 
accompanied by proof that copies have been served upon all parties, who 
shall have an opportunity to comment thereon. Copies shall be received 
not later than twenty (20) days after the close of the hearing except 
for good cause shown, and not less than ten (10) days prior to the date 
set for filing briefs. Exhibit numbers should be assigned by counsel or 
the party.



Sec. 18.56  Restricted access.

    On his or her own motion, or on the motion of any party, the 
administrative law judge may direct that there be a restricted access 
portion of the record to contain any material in the record to which 
public access is restricted by law or by the terms of a protective order 
entered in the proceedings. This portion of the record shall be place in 
a separate file and clearly marked to avoid improper disclosure and to 
identify it as a portion of the official record in the proceedings.



Sec. 18.57  Decision of the administrative law judge.

    (a) Proposed findings of fact, conclusions, and order. Within twenty 
(20) days of filing of the transcript of the testimony or such 
additional time as the administrative law judge may allow, each party 
may file with the administrative law judge, subject to the judge's 
discretion under Sec. 18.55, proposed findings of fact, conclusions of 
law, and order together with a supporting brief expressing the reasons 
for such proposals. Such proposals and brief shall be served on all 
parties, and shall refer to all portions of the record and to all 
authorities relied upon in support of each proposal.
    (b) Decision of the administrative law judge. Within a reasonable 
time after the time allowed for the filing of the proposed findings of 
fact, conclusions of law, and order, or within thirty (30) days after 
receipt of an agreement containing consent findings and order disposing 
of the disputed matter in whole, the administrative law judge shall make 
his or her decision. The decision of the administrative law judge shall 
include findings of fact and conclusions of law, with reasons therefor, 
upon each material issue of fact or law presented on the record. The 
decision of the administrative law judge shall be based upon the whole 
record. It shall be supported by reliable and probative evidence. Such 
decision shall be in accordance with the regulations and rulings of the 
statute or regulation conferring jurisdiction.



Sec. 18.58  Appeals.

    The procedures for appeals shall be as provided by the statute or 
regulation under which hearing jurisdiction is conferred. If no 
provision is made therefor, the decision of the administrative law judge 
shall become the final administrative decision of the Secretary.

[[Page 206]]



Sec. 18.59  Certification of official record.

    Upon timely receipt of either a notice or a petition, the Chief 
Administrative Law Judge shall promptly certify and file with the 
reviewing authority, appellate body, or appropriate United States 
District Court, a full, true, and correct copy of the entire record, 
including the transcript of proceedings.



                      Subpart B--Rules of Evidence

    Source: 55 FR 13219, Apr. 9, 1990, unless otherwise noted.

                           General Provisions



Sec. 18.101  Scope.

    These rules govern formal adversarial adjudications of the United 
States Department of Labor conducted before a presiding officer.
    (a) Which are required by Act of Congress to be determined on the 
record after opportunity for an administrative agency hearing in 
accordance with the Administrative Procedure Act, 5 U.S.C. 554, 556 and 
557, or
    (b) Which by United States Department of Labor regulation are 
conducted in conformance with the foregoing provisions, to the extent 
and with the exceptions stated in Sec. 18.1101. Presiding officer, 
referred to in these rules as the judge, means an Administrative Law 
Judge, an agency head, or other officer who presides at the reception of 
evidence at a hearing in such an adjudication.



Sec. 18.102  Purpose and construction.

    These rules shall be construed to secure fairness in administration, 
elimination of unjustifiable expense and delay, and promotion of growth 
and development of the law of evidence to the end that the truth may be 
ascertained and proceedings justly determined.



Sec. 18.103  Rulings on evidence.

    (a) Effect of erroneous ruling. Error may not be predicated upon a 
ruling which admits or excludes evidence unless a substantial right of 
the party is affected, and
    (1) Objection. In case the ruling is one admitting evidence, a 
timely objection or motion to strike appears of record, stating the 
specific ground of objection, if the specific ground was not apparent 
from the context; or
    (2) Offer of proof. In case the ruling is one excluding evidence, 
the substance of the evidence was made known to the judge by offer or 
was apparent from the context within which questions were asked. A 
substantial right of the party is affected unless it is more probably 
true than not true that the error did not materially contribute to the 
decision or order of the judge. Properly objected to evidence admitted 
in error does not affect a substantial right if explicitly not relied 
upon by the judge in support of the decision or order.
    (b) Record of offer and ruling. The judge may add any other or 
further statement which shows the character of the evidence, the form in 
which it was offered, the objection made, and the ruling thereon. The 
judge may direct the making of an offer in question and answer form.
    (c) Plain error. Nothing in this rule precludes taking notice of 
plain errors affecting substantial rights although they were not brought 
to the attention of the judge.



Sec. 18.104  Preliminary questions.

    (a) Questions of admissibility generally. Preliminary questions 
concerning the qualification of a person to be a witness, the existence 
of a privilege, or the admissibility of evidence shall be determined by 
the judge, subject to the provisions of paragraph (b) of this section. 
In making such determination the judge is not bound by the rules of 
evidence except those with respect to privileges.
    (b) Relevance conditioned on fact. When the relevancy of evidence 
depends upon the fulfillment of a condition of fact, the judge shall 
admit it upon, or subject to, the introduction of evidence sufficient to 
support a finding of the fulfillment of the condition.
    (c) Weight and credibility. This rule does not limit the right of a 
party to introduce evidence relevant to weight or credibility.



Sec. 18.105  Limited admissibility.

    When evidence which is admissible as to one party or for one purpose 
but not

[[Page 207]]

admissible as to another party or for another purpose is admitted, the 
judge, upon request, shall restrict the evidence to its proper scope.



Sec. 18.106  Remainder of or related writings or recorded statements.

    When a writing or recorded statement or part thereof is introduced 
by a party, an adverse party may require the introduction at that time 
of any other part or any other writing or recorded statement which ought 
in fairness to be considered contemporaneously with it.

                             Official Notice



Sec. 18.201  Official notice of adjudicative facts.

    (a) Scope of rule. This rule governs only official notice of 
adjudicative facts.
    (b) Kinds of facts. An officially noticed fact must be one not 
subject to reasonable dispute in that it is either:
    (1) Generally known within the local area,
    (2) Capable of accurate and ready determination by resort to sources 
whose accuracy cannot reasonably be questioned, or
    (3) Derived from a not reasonably questioned scientific, medical or 
other technical process, technique, principle, or explanatory theory 
within the administrative agency's specialized field of knowledge.
    (c) When discretionary. A judge may take official notice, whether 
requested or not.
    (d) When mandatory. A judge shall take official notice if requested 
by a party and supplied with the necessary information.
    (e) Opportunity to be heard. A party is entitled, upon timely 
request, to an opportunity to be heard as to the propriety of taking 
official notice and the tenor of the matter noticed. In the absence of 
prior notification, the request may be made after official notice has 
been taken.
    (f) Time of taking notice. Official notice may be taken at any stage 
of the proceeding.
    (g) Effect of official notice. An officially noticed fact is 
accepted as conclusive.

                              Presumptions



Sec. 18.301  Presumptions in general.

    Except as otherwise provided by Act of Congress, or by rules or 
regulations prescribed by the administrative agency pursuant to 
statutory authority, or pursuant to executive order, a presumption 
imposes on the party against whom it is directed the burden of going 
forward with evidence to rebut or meet the presumption, but does not 
shift to such party the burden of proof in the sense of the risk of 
nonpersuasion, which remains throughout the trial upon the party on whom 
it was originally cast.



Sec. 18.302  Applicability of state law.

    The effect of a presumption respecting a fact which is an element of 
a claim or defense as to which State law supplies the rule of decision 
is determined in accordance with State law.

                        Relevancy and its Limits



Sec. 18.401  Definition of relevant evidence.

    Relevant evidence means evidence having any tendency to make the 
existence of any fact that is of consequence to the determination of the 
action more probable or less probable than it would be without the 
evidence.



Sec. 18.402  Relevant evidence generally admissible; irrelevant evidence inadmissible.

    All relevant evidence is admissible, except as otherwise provided by 
the Constitution of the United States, by Act of Congress, pursuant to 
executive order, by these rules, or by other rules or regulations 
prescribed by the administrative agency pursuant to statutory authority. 
Evidence which is not relevant is not admissible.



Sec. 18.403  Exclusion of relevant evidence on grounds of confusion or waste of time.

    Although relevant, evidence may be excluded if its probative value 
is substantially outweighed by the danger of confusion of issues, or 
misleading the judge as trier of fact, or by considerations of undue 
delay, waste of time, or

[[Page 208]]

needless presentation of cumulative evidence.



Sec. 18.404  Character evidence not admissible to prove conduct; exceptions; other crimes.

    (a) Character evidence generally. Evidence of a person's character 
or a trait of character is not admissible for the purpose of proving 
action in conformity therewith on a particular occasion, except evidence 
of the character of a witness, as provided in Secs. 18.607, 18.608, and 
18.609.
    (b) Other crimes, wrongs, or acts. Evidence of other crimes, wrongs, 
or acts is not admissible to prove the character of a person in order to 
show action in conformity therewith. It may, however, be admissible for 
other purposes, such as proof of motive, opportunity, intent, 
preparation, plan, knowledge, identity, or absence of mistake or 
accident.



Sec. 18.405  Methods of proving character.

    (a) Reputation of opinion. In all cases in which evidence of 
character or a trait of character of a person is admissible, proof may 
be made by testimony as to reputation or by testimony in the form of an 
opinion. On cross-examination, inquiry is allowable into relevant 
specific instances of conduct.
    (b) Specific instances of conduct. In cases in which character or a 
trait of character of a person is an essential element of a claim or 
defense, proof may also be made of specific instances of that person's 
conduct.



Sec. 18.406  Habit; routine practice.

    Evidence of the habit of a person or of the routine practice of an 
organization, whether corroborated or not and regardless of the presence 
of eyewitnesses, is relevant to prove that the conduct of the person or 
organization on a particular occasion was in conformity with the habit 
or routine practice.



Sec. 18.407  Subsequent remedial measures.

    When, after an event, measures are taken which, if taken previously, 
would have made the event less likely to occur, evidence of the 
subsequent measures is not admissible to prove negligence or culpable 
conduct in connection with the event. This rule does not require the 
exclusion of evidence of subsequent measures when offered for another 
purpose, such as proving ownership, control, or feasibility of 
precautionary measures, if controverted, or impeachment.



Sec. 18.408  Compromise and offers to compromise.

    Evidence of furnishing or offering or promising to furnish, or of 
accepting or offering or promising to accept, a valuable consideration 
in compromising or attempting to compromise a claim which was disputed 
as to either validity or amount, is not admissible to prove liability 
for or invalidity of the claim or its amount. Evidence of conduct or 
statements made in compromise negotiations is likewise not admissible. 
This rule does not require the exclusion of any evidence otherwise 
discoverable merely because it is presented in the course of compromise 
negotiations. This rule does not require exclusion when the evidence is 
offered for another purpose, such as proving bias or prejudice of a 
witness, or negativing a contention of undue delay.



Sec. 18.409  Payment of medical and similar expenses.

    Evidence of furnishing or offering or promising to pay medical, 
hospital, or similar expenses occasioned by an injury is not admissible 
to prove liability for the injury.



Sec. 18.410  Inadmissibility of pleas, plea discussion, and related statements.

    Except as otherwise provided in this rule, evidence of the following 
is not admissible against the defendant who made the plea or was a 
participant in the plea discussions:
    (a) A plea of guilty which was later withdrawn;
    (b) A plea of nolo contendere;
    (c) Any statement made in the course of any proceedings under Rule 
11 of the Federal Rules of Criminal Procedure or comparable state 
procedure regarding either of the foregoing pleas; or
    (d) Any statement made in the course of plea discussions with an 
attorney for the prosecuting authority which do not

[[Page 209]]

result in a plea of guilty or which result in a plea of guilty later 
withdrawn. However, such a statement is admissible in any proceeding 
wherein another statement made in the course of the same plea 
discussions has been introduced and the statement ought in fairness be 
considered contemporaneously with it.



Sec. 18.411  Liability insurance.

    Evidence that a person was or was not insured against liability is 
not admissible upon the issue whether the person acted negligently or 
otherwise wrongfully. This rule does not require the exclusion of 
evidence of insurance against liability when offered for another 
purpose, such as proof of agency, ownership, or control, or bias or 
prejudice of a witness.

                               Privileges



Sec. 18.501  General rule.

    Except as otherwise required by the Constitution of the United 
States, or provided by Act of Congress, or by rules or regulations 
prescribed by the administrative agency pursuant to statutory authority, 
or pursuant to executive order, the privilege of a witness, person, 
government, State, or political subdivision thereof shall be governed by 
the principles of the common law as they may be interpreted by the 
courts of the United States in the light of reason and experience. 
However with respect to an element of a claim or defense as to which 
State law supplies the rule of decision, the privilege of a witness, 
person, government, State, or political subdivision thereof shall be 
determined in accordance with State law.

                                Witnesses



Sec. 18.601  General rule of competency.

    Every person is competent to be a witness except as otherwise 
provided in these rules. However with respect to an element of a claim 
or defense as to which State law supplies the rule of decision, the 
competency of a witness shall be determined in accordance with State 
law.



Sec. 18.602  Lack of personal knowledge.

    A witness may not testify to a matter unless evidence is introduced 
sufficient to support a finding that the witness has personal knowledge 
of the matter. Evidence to prove personal knowledge may, but need not, 
consist of the witness' own testimony. This rule is subject to the 
provisions of Sec. 18.703, relating to opinion testimony by expert 
witnesses.



Sec. 18.603  Oath or affirmation.

    Before testifying, every witness shall be required to declare that 
the witness will testify truthfully, by oath or affirmation administered 
in a form calculated to awaken the witness' conscience and impress the 
witness' mind with the duty to do so.



Sec. 18.604  Interpreters.

    An interpreter is subject to the provisions of these rules relating 
to qualification as an expert and the administration of an oath or 
affirmation to make a true translation.



Sec. 18.605  Competency of judge as witness.

    The judge presiding at the hearing may not testify in that hearing 
as a witness. No objection need be made in order to preserve the point.



Sec. 18.606  [Reserved]



Sec. 18.607  Who may impeach.

    The credibility of a witness may be attacked by any party, including 
the party calling the witness.



Sec. 18.608  Evidence of character and conduct of witness.

    (a) Opinion and reputation evidence of character. The credibility of 
a witness may be attacked or supported by evidence in the form of 
opinion or reputation, but subject to these limitations:
    (1) The evidence may refer only to character for truthfulness or 
untruthfulness, and
    (2) Evidence of truthful character is admissible only after the 
character of the witness for truthfulness has been attacked by opinion 
or reputation evidence or otherwise.

[[Page 210]]

    (b) Specific instances of conduct. Specific instances of the conduct 
of a witness, for the purpose of attacking or supporting the witness' 
credibility, other than conviction of crime as provided in Sec. 18.609, 
may not be proved by extrinsic evidence. They may, however, in the 
discretion of the judge, if probative of truthfulness or untruthfulness, 
be inquired into on cross-examination of the witness, concerning the 
witness' character for truthfulness or untruthfulness, or concerning the 
character for truthfulness or untruthfulness of another witness as to 
which character the witness being cross-examined has testified.
    The giving of testimony by any witness does not operate as a waiver 
of the witness' privilege against self-incrimination when examined with 
respect to matters which relate only to credibility.



Sec. 18.609  Impeachment by evidence of conviction of crime.

    (a) General rule. For the purpose of attacking the credibility of a 
witness, evidence that the witness has been convicted of a crime shall 
be admitted if the crime was punishable by death or imprisonment in 
excess of one year under the law under which the witness was convicted, 
or involved dishonesty or false statement, regardless of the punishment.
    (b) Time limit. Evidence of a conviction under this rule is not 
admissible if a period of more than ten years has elapsed since the date 
of the conviction or of the release of the witness from the confinement 
imposed for that conviction, whichever is the later date.
    (c) Effect of pardon, annulment, or certificate of rehabilitation. 
Evidence of a conviction is not admissible under this rule if:
    (1) The conviction has been the subject of a pardon, annulment, 
certificate of rehabilitation, or other equivalent procedure based on a 
finding of the rehabilitation of the person convicted, and that person 
has not been convicted of a subsequent crime which was punishable by 
death or imprisonment in excess of one year, or
    (2) The conviction has been the subject of a pardon, annulment, or 
other equivalent procedure based on a finding of innocence.
    (d) Juvenile adjudications. Evidence of juvenile adjudications is 
not admissible under this rule.
    (e) Pendency of appeal. The pendency of an appeal therefrom does not 
render evidence of a conviction inadmissible. Evidence of the pendency 
of an appeal is admissible.

[55 FR 13219, Apr. 9, 1990; 55 FR 14033, Apr. 13, 1990]



Sec. 18.610  Religious beliefs or opinions.

    Evidence of the beliefs or opinions of a witness on matters of 
religion is not admissible for the purpose of showing that by reason of 
their nature the witness' credibility is impaired or enhanced.



Sec. 18.611  Mode and order of interrogation and presentation.

    (a) Control by judge. The judge shall exercise reasonable control 
over the mode and order of interrogating witnesses and presenting 
evidence so as to:
    (1) Make the interrogation and presentation effective for the 
ascertainment of the truth,
    (2) Avoid needless consumption of time, and
    (3) Protect witnesses from harassment or undue embarrassment.
    (b) Scope of cross-examination. Cross-examination should be limited 
to the subject matter of the direct examination and matters affecting 
the credibility of the witness. The judge may, in the exercise of 
discretion, permit inquiry into additional matters as if on direct 
examination.
    (c) Leading questions. Leading questions should not be used on the 
direct examination of a witness except as may be necessary to develop 
the witness' testimony. Ordinarily leading questions should be permitted 
on cross-examination. When a party calls a hostile witness, an adverse 
party, or a witness identified with an adverse party, interrogation may 
be by leading questions.



Sec. 18.612  Writing used to refresh memory.

    If a witness uses a writing to refresh memory for the purpose of 
testifying,

[[Page 211]]

either while testifying, or before testifying if the judge in the 
judge's discretion determines it is necessary in the interest of 
justice, an adverse party is entitled to have the writing produced at 
the hearing, to inspect it, to cross-examine the witness thereon, and to 
introduce in evidence those portions which relate to the testimony of 
the witness. If it is claimed that the writing contains matters not 
related to the subject matter of the testimony the judge shall examine 
the writing in camera, excise any portion not so related, and order 
delivery of the remainder to the party entitled thereto. Any portion 
withheld over objections shall be preserved and made available in the 
event of review. If a writing is not produced or delivered pursuant to 
order under this rule, the judge shall make any order justice requires.



Sec. 18.613  Prior statements of witnesses.

    (a) Examining witness concerning prior statement. In examining a 
witness concerning a prior statement made by the witness, whether 
written or not, the statement need not be shown nor its contents 
disclosed to the witness at that time, but on request the same shall be 
shown or disclosed to opposing counsel.
    (b) Extrinsic evidence of prior inconsistent statement of witness. 
Extrinsic evidence of a prior inconsistent statement by a witness is not 
admissible unless the witness is afforded an opportunity to explain or 
deny the same and the opposite party is afforded an opportunity to 
interrogate the witness thereon, or the interests of justice otherwise 
require. This provision does not apply to admissions of a party-opponent 
as defined in Sec. 18.801(d)(2).



Sec. 18.614  Calling and interrogation of witnesses by judge.

    (a) Calling by the judge. The judge may, on the judge's own motion 
or at the suggestion of a party, call witnesses, and all parties are 
entitled to cross-examine witnesses thus called.
    (b) Interrogation by the judge. The judge may interrogate witnesses, 
whether called by the judge or by a party.
    (c) Objections. Objections to the calling of witnesses by the judge 
or to interrogation by the judge must be timely.



Sec. 18.615  Exclusion of witnesses.

    At the request of a party the judge shall order witnesses excluded 
so that they cannot hear the testimony of other witnesses, and the judge 
may make the order of the judge's own motion. This rule does not 
authorize exclusion of a party who is a natural person, or an officer or 
employee of a party which is not a natural person designated as its 
representative by its attorney, or a person whose presence is shown by a 
party to be essential to the presentation of the party's cause.

                      Opinions and Expert Testimony



Sec. 18.701  Opinion testimony by lay witnesses.

    If the witness is not testifying as an expert, the witness' 
testimony in the form of opinions or inferences is limited to those 
opinions or inferences which are rationally based on the perception of 
the witness and helpful to a clear understanding of the witness' 
testimony or the determination of a fact in issue.



Sec. 18.702  Testimony by experts.

    If scientific, technical, or other specialized knowledge will assist 
the judge as trier of fact to understand the evidence or to determine a 
fact in issue, a witness qualified as an expert by knowledge, skill, 
experience, training, or education, may testify thereto in the form of 
an opinion or otherwise.



Sec. 18.703  Bases of opinion testimony by experts.

    The facts or data in the particular case upon which an expert bases 
an opinion or inference may be those perceived by or made known to the 
expert at or before the hearing. If of a type reasonably relied upon by 
experts in the particular field in forming opinions or inferences upon 
the subject, the facts or data need not be admissible in evidence.



Sec. 18.704  Opinion on ultimate issue.

    Testimony in the form of an opinion or inference otherwise 
admissible is not objectionable because it embraces

[[Page 212]]

an ultimate issue to be decided by the judge as trier of fact.



Sec. 18.705  Disclosure of facts or data underlying expert opinion.

    The expert may testify in terms of opinion or inference and give 
reasons therefor without prior disclosure of the underlying facts or 
data, unless the judge requires otherwise. The expert may in any event 
be required to disclose the underlying facts or data on cross-
examination.



Sec. 18.706  Judge appointed experts.

    (a) Appointment. The judge may on the judge's own motion or on the 
motion of any party enter an order to show cause why expert witnesses 
should not be appointed, and may request the parties to submit 
nominations. The judge may appoint any expert witnesses agreed upon by 
the parties, and may appoint expert witnesses of the judge's own 
selection. An expert witness shall not be appointed by the judge unless 
the witness consents to act. A witness so appointed shall be informed of 
the witness' duties by the judge in writing, a copy of which shall be 
filed with the clerk, or at a conference in which the parties shall have 
an opportunity to participate. A witness so appointed shall advise the 
parties of the witness' findings, if any; the witness' deposition may be 
taken by any party; and the witness may be called to testify by the 
judge or any party. The witness shall be subject to cross-examination by 
each party, including a party calling the witness.
    (b) Compensation. Expert witnesses so appointed are entitled to 
reasonable compensation in whatever sum the judge may allow. The 
compensation thus fixed is payable from funds which may be provided by 
law in hearings involving just compensation under the fifth amendment. 
In other hearings the compensation shall be paid by the parties in such 
proportion and at such time as the judge directs, and thereafter charged 
in like manner as other costs.
    (c) Parties' experts of own selection. Nothing in this rule limits 
the parties in calling expert witnesses of their own selection.

                                 Hearsay



Sec. 18.801  Definitions.

    (a) Statement. A statement is (1) an oral or written assertion, or 
(2) nonverbal conduct of a person, if it is intended by the person as an 
assertion.
    (b) Declarant. A declarant is a person who makes a statement.
    (c) Hearsay. Hearsay is a statement, other than one made by the 
declarant while testifying at the hearing, offered in evidence to prove 
the truth of the matter asserted.
    (d) Statements which are not hearsay. A statement is not hearsay if:
    (1) Prior statement by witness. The declarant testifies at the 
hearing and is subject to cross-examination concerning the statement, 
and the statement is--
    (i) Inconsistent with the declarant's testimony, or
    (ii) Consistent with the declarant's testimony and is offered to 
rebut an express or implied charge against the declarant of recent 
fabrication or improper influence or motive, or
    (iii) One of identification of a person made after perceiving the 
person; or
    (2) Admission by party-opponent. The statement is offered against a 
party and is--
    (i) The party's own statement in either an individual or a 
representative capacity, or
    (ii) A statement of which the party has manifested an adoption or 
belief in its truth, or
    (iii) A statement by a person authorized by the party to make a 
statement concerning the subject, or
    (iv) A statement by the party's agent or servant concerning a matter 
within the scope of the agency or employment, made during the existence 
of the relationship, or
    (v) A statement by a co-conspirator of a party during the course and 
in furtherance of the conspiracy.



Sec. 18.802  Hearsay rule.

    Hearsay is not admissible except as provided by these rules, or by 
rules or regulations of the administrative agency prescribed pursuant to 
statutory authority, or pursuant to executive order, or by Act of 
Congress.

[[Page 213]]



Sec. 18.803  Hearsay exceptions; availability of declarant immaterial.

    (a) The following are not excluded by the hearsay rule, even though 
the declarant is available as a witness:
    (1) Present sense impression. A statement describing or explaining 
an event or condition made while the declarant was perceiving the event 
or condition, or immediately thereafter.
    (2) Excited utterance. A statement relating to a startling event or 
condition made while the declarant was under the stress of excitement 
caused by the event or condition.
    (3) Then existing mental, emotional, or physical condition. A 
statement of the declarant's then existing state of mind, emotion, 
sensation, or physical condition (such as intent, plan, motive, design, 
mental feeling, pain, and bodily health), but not including a statement 
of memory or belief to prove the fact remembered or believed unless it 
relates to the execution, revocation, identification, or terms of 
declarant's will.
    (4) Statements for purposes of medical diagnosis or treatment. 
Statements made for purposes of medical diagnosis or treatment and 
describing medical history, or past or present symptoms, pain, or 
sensations or the inception or general character of the cause or 
external source thereof insofar as reasonably pertinent to diagnosis or 
treatment.
    (5) Recorded recollection. A memorandum or record concerning a 
matter about which a witness once had knowledge but now has insufficient 
recollection to enable the witness to testify fully and accurately, 
shown to have been made or adopted by the witness when the matter was 
fresh in the witness' memory and to reflect that knowledge correctly.
    (6) Records of regularly conducted activity. A memorandum, report, 
record, or data compilation, in any form, of acts, events, conditions, 
opinions, or diagnoses, made at or near the time by, or from information 
transmitted by, a person with knowledge, if kept in the course of a 
regularly conducted business activity, and if it was the regular 
practice of that business activity to make the memorandum, report, 
record, or data compilation, all as shown by the testimony of the 
custodian or other qualified witness, unless the source of information 
or the method or circumstances of preparation indicate lack of 
trustworthiness. The term business as used in this paragraph includes 
business, institution, association, profession, occupation, and calling 
of every kind, whether or not conducted for profit.
    (7) Absence of entry in records kept in accordance with the 
provisions of paragraph (6). Evidence that a matter is not included in 
the memoranda reports, records, or data compilations, in any form, kept 
in accordance with the provisions of paragraph (6), to prove the 
nonoccurrence or nonexistence of the matter, if the matter was of a kind 
of which a memorandum, report, record, or data compilation was regularly 
made and preserved, unless the sources of information or other 
circumstances indicate lack of trustworthiness.
    (8) Public records and reports. Records, reports, statements, or 
data compilations, in any form, of public offices or agencies, setting 
forth--
    (i) The activities of the office or agency, or
    (ii) Matters observed pursuant to duty imposed by law as to which 
matters there was a duty to report, or
    (iii) Factual findings resulting from an investigation made pursuant 
to authority granted by law, unless the sources of information or other 
circumstances indicate lack of trustworthiness.
    (9) Records of vital statistics. Records or data compilations, in 
any form, of births, fetal deaths, deaths, or marriages, if the report 
thereof was made to a public office pursuant to requirements of law.
    (10) Absence of public record or entry. To prove the absence of a 
record, report, statement, or data compilation, in any form, or the 
nonoccurrence or nonexistence of a matter of which a record, report, 
statement, or data compilation, in any form, was regularly made and 
preserved by a public office or agency, evidence in the form of a 
certification in accordance with Sec. 18.902, or testimony, that 
diligent search failed to disclose the record, report, statement, or 
date compilation, or entry.

[[Page 214]]

    (11) Records of religious organizations. Statements of births, 
marriages, divorces, deaths, legitimacy, ancestry, relationship by blood 
or marriage, or other similar facts of personal or family history, 
contained in a regularly kept record of a religious organization.
    (12) Marriage, baptismal, and similar certificates. Statements of 
fact contained in a certificate that the maker performed a marriage or 
other ceremony or administered a sacrament, made by a clergyman, public 
official, or other person authorized by the rules or practices of a 
religious organization or by law to perform the act certified, and 
purporting to have been issued at the time of the act or within a 
reasonable time thereafter.
    (13) Family records. Statements of fact concerning personal or 
family history contained in family Bibles, genealogies, charts, 
engravings on rings, inscriptions on family portraits, engravings on 
urns, crypts, or tombstones, or the like.
    (14) Records of documents affecting an interest in property. The 
record of a document purporting to establish or affect an interest in 
property, as proof of the content of the original recorded document and 
its execution and delivery by each person by whom it purports to have 
been executed, if the record is a record of a public office and an 
applicable statute authorizes the recording of documents of that kind in 
that office.
    (15) Statements in documents affecting an interest in property. A 
statement contained in a document purporting to establish or affect an 
interest in property if the matter stated was relevant to the purpose of 
the document, unless dealings with the property since the document was 
made have been inconsistent with the truth of the statement or the 
purport of the document.
    (16) Statements in ancient documents. Statements in a document in 
existence twenty years or more the authenticity of which is established.
    (17) Market reports, commercial publications. Market quotations, 
tabulations, lists, directories, or other published compilations, 
generally used and relied upon by the public or by persons in particular 
occupations.
    (18) Learned treatises. To the extent called to the attention of an 
expert witness upon cross-examination or relied upon by the expert 
witness in direct examination, statements contained in published 
treatises, periodicals, or pamphlets on a subject of history, medicine, 
or other science or art, established as a reliable authority by the 
testimony or admission of the witness or by other expert testimony or by 
official notice.
    (19) Reputation concerning personal or family history. Reputation 
among members of a person's family by blood, adoption, or marriage, or 
among a person's associates, or in the community, concerning a person's 
birth, adoption, marriage, divorce, death, legitimacy, relationship by 
blood, adoption, or marriage, ancestry, or other similar fact of 
personal or family history.
    (20) Reputation concerning boundaries or general history. Reputation 
in a community, arising before the controversy, as to boundaries of or 
customs affecting lands in the community, and reputation as to events of 
general history important to the community or State or nation in which 
located.
    (21) Reputation as to character. Reputation of a person's character 
among associates or in the community.
    (22) Judgment of previous conviction. Evidence of a final judgment, 
entered after a trial or upon a plea of guilty (but not upon a plea of 
nolo contendere), adjudging a person guilty of a crime punishable by 
death or imprisonment in excess of one year, to prove any fact essential 
to sustain the judgment. The pendency of an appeal may be shown but does 
not affect admissibility.
    (23) Judgment as to personal, family, or general history, or 
boundaries. Judgments as proof of matters of personal, family or general 
history, or boundaries, essential to the judgment, if the same would be 
provable by evidence of reputation.
    (24) Other exceptions. A statement not specifically covered by any 
of the foregoing exceptions but having equivalent circumstantial 
guarantees of trustworthiness to the aforementioned hearsay exceptions, 
if the judge determines that (i) the statement is offered as evidence of 
a material fact; (ii) the statement is more probative on the point for

[[Page 215]]

which it is offered than any other evidence which the proponent can 
procure through reasonable efforts; and (iii) the general purposes of 
these rules and the interests of justice will best be served by 
admission of the statement into evidence. However, a statement may not 
be admitted under this exception unless the proponent of it makes known 
to the adverse party sufficiently in advance of the hearing to provide 
the adverse party with a fair opportunity to prepare to meet it, the 
proponent's intention to offer the statement and the particulars of it, 
including the name and address of the declarant.
    (25) Self-authentication. The self-authentication of documents and 
other items as provided in Sec. 18.902.
    (26) Bills, estimates and reports. In actions involving injury, 
illness, disease, death, disability, or physical or mental impairment, 
or damage to property, the following bills, estimates, and reports as 
relevant to prove the value and reasonableness of the charges for 
services, labor and materials stated therein and, where applicable, the 
necessity for furnishing the same, unless the sources of information or 
other circumstances indicate lack of trustworthiness, provided that a 
copy of said bill, estimate, or report has been served upon the adverse 
party sufficiently in advance of the hearing to provide the adverse 
party with a fair opportunity to prepare to object or meet it:
    (i) Hospital bills on the official letterhead or billhead of the 
hospital, when dated and itemized.
    (ii) Bills of doctors and dentists, when dated and containing a 
statement showing the date of each visit and the charge therefor.
    (iii) Bills of registered nurses, licensed practical nurses and 
physical therapists, or other licensed health care providers when dated 
and containing an itemized statement of the days and hours of service 
and charges therefor.
    (iv) Bills for medicine, eyeglasses, prosthetic device, medical 
belts or similar items, when dated and itemized.
    (v) Property repair bills or estimates, when dated and itemized, 
setting forth the charges for labor and material. In the case of an 
estimate, the party intending to offer the estimate shall forward with 
his notice to the adverse party, together with a copy of the estimate, a 
statement indicating whether or not the property was repaired, and, if 
so, whether the estimated repairs were made in full or in part and by 
whom, the cost thereof, together with a copy of the bill therefore.
    (vi) Reports of past earnings, or of the rate of earnings and time 
lost from work or lost compensation, prepared by an employer on official 
letterhead, when dated and itemized. The adverse party may not dispute 
the authenticity, the value or reasonableness of such charges, the 
necessity therefore or the accuracy of the report, unless the adverse 
party files and serves written objection thereto sufficiently in advance 
of the hearing stating the objections, and the grounds thereof, that the 
adverse party will make if the bill, estimate, or reports is offered at 
the time of the hearing. An adverse party may call the author of the 
bill, estimate, or report as a witness and examine the witness as if 
under cross-examination.
    (27) Medical reports. In actions involving injury, illness, disease, 
death, disability, or physical or mental impairment, doctor, hospital, 
laboratory and other medical reports, made for purposes of medical 
treatment, unless the sources of information or other circumstances 
indicate lack of trustworthiness, provided that a copy of the report has 
been filed and served upon the adverse party sufficiently in advance of 
the hearing to provide the adverse party with a fair opportunity to 
prepare to object or meet it. The adverse party may not object to the 
admissibility of the report unless the adverse party files and serves 
written objection thereto sufficiently in advance of the hearing stating 
the objections, and the grounds therefor, that the adverse party will 
make if the report is offered at the time of the hearing. An adverse 
party may call the author of the medical report as a witness and examine 
the witness as if under cross-examination.
    (28) Written reports of expert witnesses. Written reports of an 
expert witness prepared with a view toward litigation,

[[Page 216]]

including but not limited to a diagnostic report of a physician, 
including inferences and opinions, when on official letterhead, when 
dated, when including a statement of the expert's qualifications, when 
including a summary of experience as an expert witness in litigation, 
when including the basic facts, data, and opinions forming the basis of 
the inferences or opinions, and when including the reasons for or 
explanation of the inferences and opinions, so far as admissible under 
rules of evidence applied as though the witness was then present and 
testifying, unless the sources of information or the method or 
circumstances of preparation indicate lack of trustworthiness, provided 
that a copy of the report has been filed and served upon the adverse 
party sufficiently in advance of the hearing to provide the adverse 
party with a fair opportunity to prepare to object or meet it. The 
adverse party may not object to the admissibility of the report unless 
the adverse party files and serves written objection thereto 
sufficiently in advance of the hearing stating the objections, and the 
grounds therefor, that the adverse party will make if the report is 
offered at the time of the hearing. An adverse party may call the expert 
as a witness and examine the witness as if under cross-examination.
    (29) Written statements of lay witnesses. Written statements of a 
lay witness made under oath or affirmation and subject to the penalty of 
perjury, so far as admissible under the rules of evidence applied as 
though the witness was then present and testifying, unless the sources 
of information or the method or circumstances of preparation indicate 
lack of trustworthiness provided that (i) a copy of the written 
statement has been filed and served upon the adverse party sufficiently 
in advance of the hearing to provide the adverse party with a fair 
opportunity to prepare to object or meet it, and (ii) if the declarant 
is reasonably available as a witness, as determined by the judge, no 
adverse party has sufficiently in advance of the hearing filed and 
served upon the noticing party a written demand that the declarant be 
produced in person to testify at the hearing. An adverse party may call 
the declarant as a witness and examine the witness as if under cross-
examination.
    (30) Deposition testimony. Testimony given as a witness in a 
deposition taken in compliance with law in the course of the same 
proceeding, so far as admissible under the rules of evidence applied as 
though the witness was then present and testifying, if the party against 
whom the testimony is now offered had an opportunity and similar motive 
to develop the testimony by direct, cross, or redirect examination, 
provided that a notice of intention to offer the deposition in evidence, 
together with a copy thereof if not otherwise previously provided, has 
been served upon the adverse party sufficiently in advance of the 
hearing to provide the adverse party with a fair opportunity to prepare 
to object or meet it. An adverse party may call the deponent as a 
witness and examine the witness as if under cross-examination.
    (b) [Reserved]



Sec. 18.804  Hearsay exceptions; declarant unavailable.

    (a) Definition of unavailability. Unavailability as a witness 
includes situations in which the declarant:
    (1) Is exempted by ruling of the judge on the ground of privilege 
from testifying concerning the subject matter of the declarant's 
statement; or
    (2) Persists in refusing to testify concerning the subject matter of 
the declarant's statement despite an order of the judge to do so; or
    (3) Testifies to a lack of memory of the subject matter of the 
declarant's statement; or
    (4) Is unable to be present or to testify at the hearing because of 
death or then existing physical or mental illness or infirmity; or
    (5) Is absent from the hearing and the proponent of a statement has 
been unable to procure the declarant's attendance (or in the case of a 
hearsay exception under paragraph (b) (2), (3), or (4) of this section, 
the declarant's attendance or testimony) by process or other reasonable 
means.

A declarant is not unavailable as a witness if exemption, refusal, claim 
of lack of memory, inability, or absence is due to the procurement or 
wrongdoing of the proponent of a statement

[[Page 217]]

for the purpose of preventing the witness from attending or testifying.
    (b) Hearsay exceptions. The following are not excluded by the 
hearsay rule if the declarant is unavailable as a witness:
    (1) Former testimony. Testimony given as a witness at another 
hearing of the same or a different proceeding, or in a deposition taken 
in compliance with law in the course of the same or another proceeding, 
if the party against whom the testimony is now offered, or a predecessor 
in interest, had an opportunity and similar motive to develop the 
testimony by direct, cross, or redirect examination.
    (2) Statement under belief of impending death. A statement made by a 
declarant while believing that the declarant's death was imminent, 
concerning the cause or circumstances of what the declarant believed to 
be impending death.
    (3) Statement against interest. A statement which was at the time of 
its making so far contrary to the declarant's pecuniary or proprietary 
interest, or so far tended to subject the declarant to civil or criminal 
liability, or to render invalid a claim by the declarant against 
another, that a reasonable person in the declarant's position would not 
have made the statement unless believing it to be true.
    (4) Statement of personal or family history. (i) A statement 
concerning the declarant's own birth, adoption, marriage, divorce, 
legitimacy, relationship by blood, adoption, or marriage, ancestry, or 
other similar fact of personal or family history, even though declarant 
had no means of acquiring personal knowledge of the matter stated; or
    (ii) A statement concerning the foregoing matters, and death also, 
of another person, if the declarant was related to the other by blood, 
adoption, or marriage or was so intimately associated with the other's 
family as to be likely to have accurate information concerning the 
matter declared.
    (5) Other exceptions. A statement not specifically covered by any of 
the foregoing exceptions but having equivalent circumstantial guarantees 
of trustworthiness to the aforementioned hearsay exceptions, if the 
judge determines that--
    (i) The statement is offered as evidence of a material fact;
    (ii) The statement is more probative on the point for which it is 
offered than any other evidence which the proponent can procure through 
reasonable efforts; and
    (iii) The general purposes of these rules and the interests of 
justice will best be served by admission of the statement into evidence. 
However, a statement may not be admitted under this exception unless the 
proponent of it makes known to the adverse party sufficiently in advance 
of the hearing to provide the adverse party with a fair opportunity to 
prepare to meet it, the proponent's intention to offer the statement and 
the particulars of it, including the name and address of the declarant.



Sec. 18.805  Hearsay within hearsay.

    Hearsay included within hearsay is not excluded under the hearsay 
rule if each part of the combined statements conforms with an exception 
to the hearsay rule provided in these rules.



Sec. 18.806  Attacking and supporting credibility of declarant.

    When a hearsay statement, or a statement defined in 
Sec. 18.801(d)(2), (iii), (iv), or (v), has been admitted in evidence, 
the credibility of the declarant may be attacked, and if attacked may be 
supported, by any evidence which would be admissible for those purposes 
if declarant had testified as a witness. Evidence of a statement or 
conduct by the declarant at any time, inconsistent with the declarant's 
hearsay statement, is not subject to any requirement that the declarant 
may have been afforded an opportunity to deny or explain. If the party 
against whom a hearsay statement has been admitted calls the declarant 
as a witness, the party is entitled to examine the declarant on the 
statement as if under cross-examination.

                    Authentication and Identification



Sec. 18.901  Requirement of authentication or identification.

    (a) General provision. The requirement of authentication or 
identification as a condition precedent to admissibility is

[[Page 218]]

satisfied by evidence sufficient to support a finding that the matter in 
question is what its proponent claims.
    (b) Illustrations. By way of illustration only, and not by way of 
limitation, the following are examples of authentication or 
identification conforming with the requirements of this rule:
    (1) Testimony of witness with knowledge. Testimony that a matter is 
what it is claimed to be.
    (2) Nonexpert opinion on handwriting. Nonexpert opinion as to the 
genuineness of handwriting, based upon familiarity not acquired for 
purposes of litigation.
    (3) Comparison by judge or expert witness. Comparison by the judge 
as trier of fact or by expert witnesses with specimens which have been 
authenticated.
    (4) Distinctive characteristics and the like. Appearance, contents, 
substance, internal patterns, or other distinctive characteristics, 
taken in conjunction with circumstances.
    (5) Voice identification. Identification of a voice, whether heard 
firsthand or through mechanical or electronic transmission or recording, 
by opinion based upon hearing the voice at any time under circumstances 
connecting it with the alleged speaker.
    (6) Telephone conversations. Telephone conversations, by evidence 
that a call was made to the number assigned at the time by the telephone 
company to a particular person or business, if--
    (i) In the case of a person, circumstances, including self-
identification, show the person answering to be the one called, or
    (ii) In the case of a business, the call was made to a place of 
business and the conversation related to business reasonably transacted 
over the telephone.
    (7) Public records or reports. Evidence that a writing authorized by 
law to be recorded or filed and in fact recorded or filed in a public 
office, or a purported public record, report, statement, or data 
compilation, in any form, is from the public office where items of this 
nature are kept.
    (8) Ancient documents or data compilation. Evidence that a document 
or data compilation, in any form,
    (i) Is in such condition as to create no suspicion concerning its 
authenticity,
    (ii) Was in a place where it, if authentic, would likely be, and
    (iii) Has been in existence 20 years or more at the time it is 
offered.
    (9) Process or system. Evidence describing a process or system used 
to produce a result and showing that the process or system produces an 
accurate result.
    (10) Methods provided by statute or rule. Any method of 
authentication or identification provided by Act of Congress, or by rule 
or regulation prescribed by the administrative agency pursuant to 
statutory authority, or pursuant to executive order.



Sec. 18.902  Self-authentication.

    (a) Extrinsic evidence of authenticity as a condition precedent to 
admissibility is not required with respect to the following:
    (1) Domestic public documents under seal. A document bearing a seal 
purporting to be that of the United States, or of any State, district, 
Commonwealth, territory, or insular possession thereof, or the Panama 
Canal Zone, or the Trust Territory of the Pacific Islands, or of a 
political subdivision, department, officer, or agency thereof, and a 
signature purporting to be an attestation or execution.
    (2) Domestic public documents not under seal. A document purporting 
to bear the signature in the official capacity of an officer or employee 
of any entity included in paragraph (a)(1) of this section, having no 
seal, if a public officer having a seal and having official duties in 
the district or political subdivision of the officer or employee 
certifies under seal that the signer has the official capacity and that 
the signature is genuine.
    (3) Foreign public documents. A document purporting to be executed 
or attested in an official capacity by a person authorized by the laws 
of a foreign country to make the execution or attestation, and 
accompanied by a final certification as to the genuineness of the 
signature and official position--
    (i) Of the executing or attesting person, or

[[Page 219]]

    (ii) Of any foreign official whose certificate of genuineness of 
signature and official position relates to the execution or attestation 
or is in a chain of certificates of genuineness of signature and 
official position relating to the execution or attestation. A final 
certification may be made by a secretary of embassy or legation, consul, 
vice consul, or consular agent of the United States, or a diplomatic or 
consular official of the foreign country assigned or accredited to the 
United States. If reasonable opportunity has been given to all parties 
to investigate the authenticity and accuracy of official documents, the 
judge may, for good cause shown, order that they be treated as 
presumptively authentic without final certification or permit them to be 
evidenced by an attested summary with or without final certification.
    (4) Certified copies of public records. A copy of an official record 
or report or entry therein, or of a document authorized by law to be 
recorded or filed and actually recorded or filed in a public office, 
including data compilations in any form, certified as correct by the 
custodian or other person authorized to make the certification, by 
certificate complying with paragraph (a) (1), (2), or (3) of this 
section, with any Act of Congress, or with any rule or regulation 
prescribed by the administrative agency pursuant to statutory authority, 
or pursuant to executive order.
    (5) Official publications. Books, pamphlets, or other publications 
purporting to be issued by public authority.
    (6) Newspapers and periodicals. Printed materials purporting to be 
newspapers or periodicals.
    (7) Trade inscriptions and the like. Inscriptions, signs, tags, or 
labels purporting to have been affixed in the course of business and 
indicating ownership, control, or origin.
    (8) Acknowledged documents. Documents accompanied by a certificate 
of acknowledgment executed in the manner provided by law by a notary 
public or other officer authorized by law to take acknowledgments.
    (9) Commercial paper and related documents. Commercial paper, 
signatures thereon, and documents relating thereto to the extent 
provided by general commercial law.
    (10) Presumptions under Acts of Congress or administrative agency 
rules or regulations. Any signature, document, or other matter declared 
by Act of Congress or by rule or regulation prescribed by the 
administrative agency pursuant to statutory authority or pursuant to 
executive order to be presumptively or prima facie genuine or authentic.
    (11) Certified records of regularly conducted activity. The original 
or a duplicate of a record of regularly conducted activity, within the 
scope of Sec. 18.803(6), which the custodian thereof or another 
qualified individual certifies
    (i) Was made, at or near the time of the occurrence of the matters 
set forth, by, or from information transmitted by, a person with 
knowledge of those matters,
    (ii) Is kept in the course of the regularly conducted activity, and
    (iii) Was made by the regularly conducted activity as a regular 
practice, unless the sources of information or the method or 
circumstances of preparation indicate lack of trustworthiness. A record 
so certified is not self-authenticating under this paragraph unless the 
proponent makes an intention to offer it known to the adverse party and 
makes it available for inspection sufficiently in advance of its offer 
in evidence to provide the adverse party with a fair opportunity to 
object or meet it. As used in this subsection, certifies means, with 
respect to a domestic record, a written declaration under oath subject 
to the penalty of perjury and, with respect to a foreign record, a 
written declaration signed in a foreign country which, if falsely made, 
would subject the maker to criminal penalty under the laws of that 
country.
    (12) Bills, estimates, and reports. In actions involving injury, 
illness, disease, death, disability, or physical or mental impairment, 
or damage to property, the following bills, estimates, and reports 
provided that a copy of said bill, estimate, or report has been served 
upon the adverse party sufficiently in advance of the hearing to provide 
the adverse party with a fair opportunity to prepare to object or meet 
it:

[[Page 220]]

    (i) Hospital bills on the official letterhead or billhead of the 
hospital, when dated and itemized.
    (ii) Bills of doctors and dentists, when dated and containing a 
statement showing the date of each visit and the charge therefor.
    (iii) Bills of registered nurses, licensed practical nurses and 
physical therapists or other licensed health care providers, when dated 
and containing an itemized statement of the days and hours of service 
and the charges therefor.
    (iv) Bills for medicine, eyeglasses, prosthetic devices, medical 
belts or similar items, when dated and itemized.
    (v) Property repair bills or estimates, when dated and itemized, 
setting forth the charges for labor and material. In the case of an 
estimate, the party intending to offer the estimate shall forward with 
his notice to the adverse party, together with a copy of the estimate, a 
statement indicating whether or not the property was repaired, and, if 
so, whether the estimated repairs were made in full or in part and by 
whom, the cost thereof, together with a copy of the bill therefor.
    (vi) Reports of past earnings, or of the rate of earnings and time 
lost from work or lost compensation, prepared by an employer on official 
letterhead, when dated and itemized. The adverse party may not dispute 
the authenticity, therefor, unless the adverse party files and serves 
written objection thereto sufficiently in advance of the hearing stating 
the objections, and the grounds therefor, the adverse party will make if 
the bill, estimate, or report is offered at the time of the hearing. An 
adverse party may call the authors of the bill, estimate, or report as a 
witness and examine the witness as if under cross-examination.
    (13) Medical reports. In actions involving injury, illness, disease, 
death, disability or physical or mental impairment, doctor, hospital, 
laboratory and other medical reports made for purposes of medical 
treatment, provided that a copy of the report has been filed and served 
upon the adverse party sufficiently in advance of the hearing to provide 
the adverse party with a fair opportunity to prepare to object or meet 
it. The adverse party may not object to the authenticity of the report 
unless the adverse party files and serves written objection thereto 
sufficiently in advance of the hearing stating the objections, and the 
grounds therefor, that the adverse party will make if the report is 
offered at the time of the hearing. An adverse party may call the author 
of the medical report as a witness and examine the witness as if under 
cross-examination.
    (14) Written reports of expert witnesses. Written reports of an 
expert witness prepared with a view toward litigation including but not 
limited to a diagnostic report of a physician, including inferences and 
opinions, when on official letterhead, when dated, when including a 
statement of the experts qualifications, when including a summary of 
experience as an expert witness in litigation, when including the basic 
facts, data, and opinions forming the basis of the inferences or 
opinions, and when including the reasons for or explanation of the 
inferences or opinions, so far as admissible under the rules of evidence 
applied as though the witness was then present and testifying, provided 
that a copy of the report has been filed and served upon the adverse 
party sufficiently in advance of the hearing to provide the adverse 
party with a fair opportunity to prepare to object or meet it. The 
adverse party may not object to the authenticity of the report unless 
the adverse party files and serves written objection thereto 
sufficiently in advance of the hearing stating the objections, and the 
grounds therefor, that the adverse party will make if the report is 
offered at the time of the hearing. An adverse party may call the expert 
as a witness and examine the witness as if under cross-examination.
    (15) Written statements of lay witnesses. Written statements of a 
lay witness made under oath or affirmation and subject to the penalty of 
perjury, so far as admissible under the rules of evidence applied as 
though the witness was then present and testifying, provided that:
    (i) A copy of the written statement has been filed and served upon 
the adverse party sufficiently in advance of the hearing to provide the 
adverse

[[Page 221]]

party with a fair opportunity to prepare to object or meet it, and
    (ii) If the declarant is reasonably available as a witness, as 
determined by the judge, no adverse party has sufficiently in advance of 
the hearing filed and served upon the noticing party a written demand 
that the declarant be produced in person to testify at the hearing. An 
adverse party may call the declarant as a witness and examine the 
witness as if under cross-examination.
    (16) Deposition testimony. Testimony given as a witness in a 
deposition taken in compliance with law in the course of the same 
proceeding, so far as admissible under the rules of evidence applied as 
though the witness was then present and testifying, if the party against 
whom the testimony is now offered had an opportunity and similar motive 
to develop the testimony by direct, cross, or redirect examination, 
provided that a notice of intention to offer the deposition in evidence, 
together with a copy thereof if not otherwise previously provided, has 
been served upon the adverse party sufficiently in advance of the 
hearing to provide the adverse party with a fair opportunity to prepare 
to object or meet it. An adverse party may call the deponent as a 
witness and examine the witness as if under cross-examination.
    (b) [Reserved]



Sec. 18.903  Subscribing witness' testimony unnecessary.

    The testimony of a subscribing witness is not necessary to 
authenticate a writing unless required by the laws of the jurisdiction 
whose laws govern the validity of the writing.

            Contents of Writings, Recordings, and Photographs



Sec. 18.1001  Definitions.

    (a) For purposes of this article the following definitions are 
applicable:
    (1) Writings and recordings. Writings and recordings consist of 
letters, words, or numbers, or their equivalent, set down by 
handwriting, typewriting, printing, photostating, photographing, 
magnetic impulse, mechanical or electronic recording, or other form of 
data compilation.
    (2) Photographs. Photographs include still photographs, X-ray films, 
video tapes, and motion pictures.
    (3) Original. An original of a writing or recording is the writing 
or recording itself or any counterpart intended to have the same effect 
by a person executing or issuing it. An original of a photograph 
includes the negative or, other than with respect of X-ray films, any 
print therefrom. If data are stored in a computer or similar device, any 
printout or other output readable by sight, shown to reflect the data 
accurately, is an original.
    (4) Duplicate. A duplicate is a counterpart produced by the same 
impression as the original, or from the same matrix, or by means of 
photography, including enlargements and miniatures, or by mechanical or 
electronic rerecording, or by chemical reproduction, or by other 
equivalent techniques which accurately reproduces the original.
    (b) [Reserved]



Sec. 18.1002  Requirement of original.

    To prove the content of a writing, recording, or photograph, the 
original writing, recording, or photograph is required, except as 
otherwise provided in these rules, or by rule or regulation prescribed 
by the administrative agency pursuant to statutory authority, or 
pursuant to executive order, or by Act of Congress.



Sec. 18.1003  Admissibility of duplicates.

    A duplicate is admissible to the same extent as an original unless a 
genuine question is raised as to the authenticity of the original, or in 
the circumstances it would be unfair to admit the duplicate in lieu of 
the original.



Sec. 18.1004  Admissibility of other evidence of contents.

    (a) The original is not required, and other evidence of the contents 
of a writing, recording, or photograph is admissible if:
    (1) Originals lost or destroyed. All originals are lost or have been 
destroyed, unless the proponent lost or destroyed them in bad faith; or
    (2) Original not obtainable. No original can be obtained by any 
available judicial process or procedure; or

[[Page 222]]

    (3) Original in possession of opponent. At a time when an original 
was under the control of the party against whom offered, that party was 
put on notice, by the pleading or otherwise, that the contents would be 
a subject of proof at the hearing, and that party does not produce the 
original at the hearing; or
    (4) Collateral matters. The writing, recording, or photograph is not 
closely related to a controlling issue.
    (b) [Reserved]



Sec. 18.1005  Public records.

    The contents of an official record, or of a document authorized to 
be recorded or filed and actually recorded or filed, including data 
compilations in any form, if otherwise admissible, may be proved by 
copy, certified as correct in accordance with Sec. 18.902 or testified 
to be correct by a witness who has compared it with the original. If a 
copy which complies with the foregoing cannot be obtained by the 
exercise of reasonable diligence, then other evidence of the contents 
may be given.



Sec. 18.1006  Summaries.

    The contents of voluminous writings, recordings, or photographs 
which cannot conveniently be examined at the hearing may be presented in 
the form of a chart, summary, or calculation. The originals, or 
duplicates, shall be made available for examination or copying, or both, 
by other parties at reasonable time and place. The judge may order that 
they be produced at the hearing.



Sec. 18.1007  Testimony or written admission of party.

    Contents of writings, recordings, or photographs may be proved by 
the testimony or deposition of the party against whom offered or by that 
party's written admission, without accounting for the nonproduction of 
the original.



Sec. 18.1008  Functions of the judge.

    When the admissibility of other evidence of contents of writings, 
recordings, or photographs under these rules depends upon the 
fulfillment of a condition of fact, the question whether the condition 
has been fulfilled is ordinarily for the judge to determine in 
accordance with the provisions of Sec. 18.104(a). However, when an issue 
is raised whether the asserted writing ever existed; or whether another 
writing, recording, or photograph produced at the hearing is the 
original; or whether other evidence of contents correctly reflects the 
contents, the issue is for the judge as trier of fact to determine as in 
the case of other issues of fact.

                              Applicability



Sec. 18.1101  Applicability of rules.

    (a) General provision. These rules govern formal adversarial 
adjudications conducted by the United States Department of Labor before 
a presiding officer.
    (1) Which are required by Act of Congress to be determined on the 
record after opportunity for an administrative agency hearing in 
accordance with the Administrative Procedure Act, 5 U.S.C. 554, 556 and 
557, or
    (2) Which by United States Department of Labor regulation are 
conducted in conformance with the foregoing provisions. Presiding 
officer, referred to in these rules as the judge, means an 
Administrative Law Judge, an agency head, or other officer who presides 
at the reception of evidence at a hearing in such an adjudication.
    (b) Rules inapplicable. The rules (other than with respect to 
privileges) do not apply in the following situations:
    (1) Preliminary questions of fact. The determination of questions of 
fact preliminary to admissibility of evidence when the issue is to be 
determined by the judge under Sec. 18.104.
    (2) Longshore, black lung, and related acts. Other than with respect 
to Secs. 18.403, 18.611(a), 18.614 and without prejudice to current 
practice, hearings held pursuant to the Longshore and Harbor Workers' 
Compensation Act, 33 U.S.C. 901; the Federal Mine Safety and Health Act 
(formerly the Federal Coal Mine Health and Safety Act) as amended by the 
Black Lung Benefits Act, 30 U.S.C. 901; and acts such as the Defense 
Base Act, 42 U.S.C. 1651; the District of Columbia Workmen's 
Compensation Act, 36 DC Code 501; the Outer Continental Shelf Lands Act, 
43 U.S.C. 1331;

[[Page 223]]

and the Nonappropriated Fund Instrumentalities Act, 5 U.S.C. 8171, which 
incorporate section 23(a) of the Longshore and Harbor Workers' 
Compensation Act by reference.
    (c) Rules inapplicable in part. These rules do not apply to the 
extent inconsistent with, in conflict with, or to the extent a matter is 
otherwise specifically provided by an Act of Congress, or by a rule or 
regulation of specific application prescribed by the United States 
Department of Labor pursuant to statutory authority, or pursuant to 
executive order.



Sec. 18.1102  [Reserved]



Sec. 18.1103  Title.

    These rules may be known as the United States Department of Labor 
Rules of Evidence and cited as 29 CFR 18.____ (1989).



Sec. 18.1104  Effective date.

    These rules are effective thirty days after date of publication with 
respect to formal adversarial adjudications as specified in Sec. 18.1101 
except that with respect to hearings held following an investigation 
conducted by the United States Department of Labor, these rules shall be 
effective only where the investigation commenced thirty days after 
publication.

                 Appendix to Subpart B--Reporter's Notes

                      Reporter's Introductory Note

    The Rules of Evidence for the United States Department of Labor 
modify the Federal Rules of Evidence for application in formal 
adversarial adjudications conducted by the United States Department of 
Labor. The civil nonjury nature of the hearings and the broad underlying 
values and goals of the administrative process are given recognition in 
these rules.

                     Reporter's Note to Sec. 18.102

    In all formal adversarial adjudications of the United States 
Department of Labor governed by these rules, and in particular such 
adjudications in which a party appears without the benefit of counsel, 
the judge is required to construe these rules and to exercise discretion 
as provided in the rules, see, e.g., Sec. 18.403, to secure fairness in 
administration and elimination of unjustifiable expense and delay to the 
end that the truth may be ascertained and the proceedings justly 
determined, Sec. 18.102. The judge shall also exercise reasonable 
control over the mode and order of interrogating witnesses and 
presenting evidence so as to (1) make the interrogation and presentation 
effective for the ascertainment of the truth, (2) avoid needless 
consumption of time, and (3) protect witnesses from harassment or undue 
embarrassment, Sec. 18.611(a).

                     Reporter's Note to Sec. 18.103

    Section 18.103(a) provides that error is not harmless, i.e., a 
substantial right is affected, unless on review it is determined that it 
is more probably true than not true that the error did not materially 
contribute to the decision or order of the court. The more probably true 
than not true test is the most liberal harmless error standard. See 
Haddad v. Lockheed California Corp., 720 F.2d 1454, 1458-59 (9th Cir. 
1983):
    The purpose of a harmless error standard is to enable an appellate 
court to gauge the probability that the trier of fact was affected by 
the error. See R. Traynor, [The Riddle of Harmless Error] at 29-30. 
Perhaps the most important factor to consider in fashioning such a 
standard is the nature of the particular fact-finding process to which 
the standard is to be applied. Accordingly, a crucial first step in 
determining how we should gauge the probability that an error was 
harmless is recognizing the distinction between civil and criminal 
trials. See Kotteakos v. United States, 328 U.S. 750, 763, 66 S.Ct. 
1239, 1247, 90 L.Ed. 1557 (1946); Valle-Valdez, 544 F.2d at 914-15. This 
distinction has two facets, each of which reflects the differing burdens 
of proof in civil and criminal cases. First, the lower burden of proof 
in civil cases implies a larger margin of error. The danger of the 
harmless error doctrine is that an appellate court may usurp the jury's 
function, by merely deleting improper evidence from the record and 
assessing the sufficiency of the evidence to support the verdict below. 
See Kotteakos, 328 U.S. at 764-65, 66 S.Ct. at 1247-48; R. Traynor, 
supra, at 18-22. This danger has less practical importance where, as in 
most civil cases, the jury verdict merely rests on a more probable than 
not standard of proof.
    The second facet of the distinction between errors in civil and 
criminal trials involves the differing degrees of certainty owed to 
civil and criminal litigants. Whereas a criminal defendant must be found 
guilty beyond a reasonable doubt, a civil litigant merely has a right to 
a jury verdict that more probably than not corresponds to the truth.
The term materially contribute was chosen as the most appropriate in 
preference to substantially swayed, Kotteakos v. United States, 328 U.S. 
750, 66 S.Ct. 1239, 90 L.Ed 1557 (1946) or material effect. Holloway v. 
Arkansas, 435 U.S. 475, 98 S.Ct. 1173, 55 L.Ed.2d 426 (1978). The word 
contribute was employed in Schneble

[[Page 224]]

v. Florida, 405 U.S. 427, 92 S.Ct. 1056, 31 L.Ed.2d 340 (1972) and 
United States v. Hastings, 461 U.S. 499, 103 S.Ct. 1974, 76 L.Ed.2d 96 
(1983).
    Error will not be considered in determining whether a substantial 
right of a party was affected if the evidence was admitted in error 
following a properly made objection, Sec. 18.103(a)(1), and the judge 
explicitly states that he or she does not rely on such evidence in 
support of the decision or order. The judge must explicitly decline to 
rely upon the improperly admitted evidence. The alternative of simply 
assuming nonreliance unless the judge explicitly states reliance, goes 
too far toward emasculating the benefits flowing from rules of evidence.
    The question addressed in Richardson v. Perales, 402 U.S. 389, 91 
S.Ct. 1420, 28 L.Ed.2d 842 (1971) of whether substantial evidence as 
specified in Sec. 556(d) of the Administrative Procedure Act requires 
that there be a residuum of legally admissible evidence to support an 
agency determination is of no concern with respect to these rules; only 
properly admitted evidence is to be considered in determining whether 
the substantial evidence requirement has been satisfied.

                     Reporter's Note to Sec. 18.104

    As to the standard on review with respect to questions of 
admissibility generally, section 18.104(a), see In re Japanese 
Electronic Products Antitrust Litigation, 723 F.2d 238, 265-66 (3d Cir. 
1983) (``The scope of review of the trial court's trustworthiness 
determination depends on the basis for the ruling. When the trial court 
makes Sec. 18.104(a) findings of historical fact about the manner in 
which a report containing findings was compiled we review by the clearly 
erroneous standard of Fed.R.Civ.P. 52. But a determination of 
untrustworthiness, if predicated on factors properly extraneous to such 
a determination, would be an error of law * * * * There is no discretion 
to rely on improper factors. Such an error of law might, of course, in a 
given instance be harmless within the meaning of Fed.R.Civ.P. 61. In 
weighing factors which we consider proper, the trial court exercises 
discretion and we review for abuse of discretion. Giving undue weight to 
trustworthiness factors of slight relevance while disregarding factors 
more significant, for example, might be an abuse of discretion.''). 
Accord, United States v. Wilson, 798 F.2d 509 (lst Cir. 1986).
    As to the standard on review with respect to relevancy, conditional 
relevancy and the exercise of discretion, see, e.g., United States v. 
Abel, 469 U.S. 45, 54, 105 S.Ct. 465, 470, 83 L.Ed.2d 450 (1984) (``A 
district court is accorded a wide discretion in determining the 
admissibility of evidence under the Federal Rules. Assessing the 
probative value of common membership in any particular group, and 
weighing any factors counselling against admissibility is a matter first 
for the district court's sound judgment under Rules 401 and 403 and 
ultimately, if the evidence is admitted, for the trier of fact.''); 
Alford v. United States, 282 U.S. 687, 694, 51 S.Ct. 218, 220, 75 L.Ed 
624 (1931) (``The extent of cross-examination with respect to an 
appropriate subject of inquiry is within the sound discretion of the 
trial court. It may exercise a reasonable judgment in determining when 
the subject is exhausted.''); Hill v. Bache Halsey Stuart Shields Inc., 
790 F.2d 817, 825 (10th Cir. 1986) (``We recognize that a trial court 
has broad discretion to determine whether evidence is relevant, and its 
decision will not be reversed on appeal absent a showing of clear abuse 
of that discretion. Beacham v. Lee-Norse, 714 F.2d 1010, 1014 (10th Cir. 
1983). The same standard of review applies to a trial court's 
determination, under Fed.R.Evid. 403, that the probative value of the 
evidence is outweighed by its potential to prejudice or confuse the 
jury, or to lead to undue delay. Id.'').

                     Reporter's Note to Sec. 18.201

    A.P.A. section 556(e) provides that ``when an agency decision rests 
on official notice of a material fact not appearing in the evidence in 
the record, a party is entitled, on timely request, to an opportunity to 
show the contrary.'' No definition of ``official notice'' is provided. 
An administrative agency may take official notice of any adjudicative 
fact that could be judicially noticed by a court. In addition ``the rule 
is now clearly emerging that an administrative agency may take official 
notice of any generally recognized technical or scientific facts within 
the agency's specialized knowledge, subject always to the proviso that 
the parties must be given adequate advance notice of the facts which the 
agency proposes to note, and given adequate opportunity to show the 
inaccuracy of the facts or the fallacy of the conclusions which the 
agency proposes tentatively to accept without proof. To satisfy this 
requirement, it is necessary that a statement of the facts noticed must 
be incorporated into the record. The source material on which the agency 
relies should, on request, be made available to the parties for their 
examination.'' 1 Cooper, State Administrative Law 412-13 (1965). Accord, 
Uniform Law Commissioners' Model State Administrative Procedure Act 
section 10(4) (1961) (``Notice may be taken of judicially cognizable 
facts. In addition, notice may be taken of generally recognized 
technical or scientific facts within the agency's specialized knowledge. 
Parties shall be notified either before or during the hearing, or by 
reference in preliminary reports or otherwise, of the material noticed, 
including any staff memoranda or data, and they shall be afforded an 
opportunity to contest the material so noticed. The agency's experience, 
technical competence, and specialized

[[Page 225]]

knowledge may be utilized in the evaluation of the evidence.''); 
Schwartz, Administrative Law Sec. 7.16 at 375 (2d ed. 1984) (``Clearly 
an agency may take notice of the same kinds of fact of which a court 
takes judicial notice. It has, however, been recognized that the 
differences between agencies and courts * * * may justify a broader 
approach. Under it, an agency may be permitted to take `official notice' 
not only of facts that are obvious and notorious to the average man but 
also of those that are obvious and notorious to an expert in the given 
field.'' ``A commission that regulates gas companies may take notice of 
the fact that a well-managed gas company loses no more than 7 percent of 
its gas through leakage, condensation, expansion, or contraction, where 
its regulation of gas companies, over the years has made the amount of 
`unaccounted for gas' without negligence obvious and notorious to it as 
the expert in gas regulation. A workers' compensation commission may 
similarly reject a claim that an inguinal hernia was traumatic in origin 
where the employee gave no indication of pain and continued work for a 
month after the alleged accident. The agency had dealt with numerous 
hernia cases and was as expert in diagnosing them as any doctor would 
be. Its experience taught it that where a hernia was traumatic in 
origin, there was immediate discomfort, outward evidences of pain 
observable to fellow employees, and at least temporary suspension from 
work. The agency could notice this fact based upon its knowledge as an 
expert and reject uncontradicted opinion testimony that its own 
expertise renders unpersuasive.''). Compare Uniform Law Commissioners' 
Model State Administrative Procedure Act section 4-212(f) (1981) 
(``Official notice may be taken of (i) any fact that could be judicially 
noticed in the courts of this State, (ii) the record of other 
proceedings before the agency, (iii) technical or scientific matters 
within the agency's specialized knowledge, and (iv) codes or standards 
that have been adopted by an agency of the United States, of this State 
or of another state, or by a nationally recognized organization or 
association. Parties must be notified before or during the hearing, or 
before the issuance of any initial or final order that is based in whole 
or in part on facts or materials noticed, of the specific facts or 
material noticed and the source thereof, including any staff memoranda 
and data, and be afforded an opportunity to contest and rebut the facts 
or materials so noticed.''). Contra Davis, Official Notice, 62 Harv. L. 
Rev. 537, 539 (1949) (``To limit official notice to facts which are 
beyond the realm of dispute would virtually emasculate the 
administrative process. The problem of official notice should not be one 
of drawing lines between disputable and indisputable facts. Nor should 
it even be one of weighing the importance of basing decisions upon all 
available information against the importance of providing full and fair 
hearings in the sense of permitting parties to meet all materials that 
influence decision. The problem is the intensely practical one of 
devising a procedure which will provide both informed decisions and fair 
hearings without undue inconvenience or expense.'').
    Section 18.201 adopts the philosophy of Federal Rule of Evidence 
201. The Advisory Committee's Note to Fed.R.Evid. 201 (b) states:
    With respect to judicial notice of adjudicative facts, the tradition 
has been one of caution in requiring that the matter be beyond 
reasonable controversy. This tradition of circumspection appears to be 
soundly based, and no reason to depart from it is apparent. As Professor 
Davis says: 
    ``The reason we use trial-type procedure, I think, is that we make 
the practical judgment, on the basis of experience, that taking 
evidence, subject to cross-examination and rebuttal, is the best way to 
resolve controversies involving disputes of adjudicative facts, that is, 
facts pertaining to the parties. The reason we require a determination 
on the record is that we think fair procedure in resolving disputes of 
adjudicative facts calls for giving each party a chance to meet in the 
appropriate fashion the facts that come to the tribunal's attention, and 
the appropriate fashion for meeting disputed adjudicative facts includes 
rebuttal evidence, cross-examination, usually confrontation, and 
argument (either written or oral or both). The key to a fair trial is 
opportunity to use the appropriate weapons (rebuttal evidence, cross-
examination, and argument) to meet adverse materials that come to the 
tribunal's attention.'' A System of Judicial Notice Based on Fairness 
and Convenience, in Perspectives of Law 69, 93 (1964).
    The rule proceeds upon the theory that these considerations call for 
dispensing with traditional methods of proof only in clear cases. 
Compare Professor Davis' conclusion that judicial notice should be a 
matter of convenience, subject to requirements of procedural fairness. 
Id., 94. Section 18.201 of the Federal Rules of Evidence incorporated 
the Morgan position on judicial notice. The contrary position, expressed 
by Wigmore and Thayer, and advocated by Davis, was rejected. See 
McNaughton, Judicial Notice-Excerpts Relating to the Morgan-Wigmore 
Controversy, 14 Vand. L. Rev. 779 (1961) (``They do not differ with 
respect to the application of the doctrine to `law'. Nor do they reveal 
a difference with respect to so-called `jury notice.' Their difference 
relates to judicial notice of `facts.' Here Wigmore, following Thayer, 
insists that judicial notice is solely to save time where dispute is 
unlikely and that a matter judicially noticed is therefore only `prima 
facie,' or rebuttable, if the opponent elects to dispute it. It is 
expressed in

[[Page 226]]

Thayer and implicit in Wigmore that (perhaps because the matter is 
rebuttable) judicial notice may be applied not only to indisputable 
matters but also to matters of lesser certainty. Morgan on the other 
hand defines judicial notice more narrowly, and his consequences follow 
from his definition. He limits judicial notice of fact to matters 
patently indisputable. And his position is that matters judicially 
noticed are not rebuttable. He asserts that it is wasteful to permit 
patently indisputable matters to be litigated by way of formal proof and 
furthermore that it would be absurd to permit a party to woo a jury to 
an obviously erroneous finding contrary to the noticed fact. Also, he 
objects to the Wigmorean conception on the ground that it is really a 
`presumption' of sorts attempting to pass under a misleading name. It 
is, according to Morgan, a presumption with no recognized rules as to 
how the presumption works, what activates it, and who has the burden of 
doing how much to rebut it.'').
    Accordingly, notice that items (ii) and (iv) of the Uniform Law 
Commissioners' Model State Administrative Procedure Act quoted above are 
not included as separate items in Sec. 18.201. However codes and 
standards, (iv), to the extent not subject to reasonable question fall 
within Sec. 18.201(b)(2). To the extent such codes and standards do not 
so fall, proof should be required. Official notice of records of other 
proceedings before the agency would ``permit an agency to notice facts 
contained in its files, such as the revenue statistics contained in the 
reports submitted to it by a regulated company.'' Schwartz, supra at 
377. Once again, to the extent such information is not capable of 
accurate and ready determination by resort to sources whose accuracy 
cannot reasonably be questioned, Sec. 18.201(b)(2), proof should be 
required.

                     Reporter's Note to Sec. 18.301

    Section 18.301 does not prevent an administrative agency by either 
rule, regulation, or common law development from allocating burdens of 
production and burdens of persuasion in an otherwise permissible manner. 
See N.L.R.B. v. Transportation Management Corp., 462 U.S. 400, 403 n.7, 
103 S.Ct. 2469, 2475 n.7, 76 L.Ed.2d 667 (1983) (``Respondent contends 
that Federal Rule of Evidence 301 requires that the burden of persuasion 
rest on the General Counsel. Rule 301 provides:
    In all civil actions and proceedings not otherwise provided for by 
Act of Congress or by these rules, a presumption imposes on the party 
against whom it is directed the burden of going forward with evidence to 
rebut or meet the presumption, but does not shift to such party the 
burden of proof in the sense of the risk of nonpersuasion, which remains 
throughout the trial upon the party on whom it was originally cast.'
    The Rule merely defines the term `presumption.' It in no way 
restricts the authority of a court or an agency to change the customary 
burdens of persuasion in a manner that otherwise would be permissible. 
Indeed, were respondent correct, we could not have assigned to the 
defendant the burden of persuasion on one issue in Mt. Healthy City 
Board of Education v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 
(1977).'').

                     Reporter's Note to Sec. 18.302

    The Advisory Committee's Note to Federal Rule of Evidence 302, 56 
F.R.D. 118, 211 states:
    A series of Supreme Court decisions in diversity cases leaves no 
doubt of the relevance of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 
S.Ct. 817, 82 L.Ed. 1188 (1938), to questions of burden of proof. These 
decisions are Cities Service Oil Co. v. Dunlap, 308 U.S. 208, 60 S.Ct. 
201, 84 L.Ed. 196 (1939), Palmer v. Hoffman, 318 U.S. 477, 87 L.Ed. 645 
(1943), and Dick v. New York Life Ins. Co., 359 U.S. 437, 79 S.Ct. 921, 
3 L.Ed.2d 935 (1959). They involved burden of proof, respectively, as to 
status as bona fide purchaser, contributory negligence, and 
nonaccidental death (suicide) of an insured. In each instance the state 
rule was held to be applicable. It does not follow, however, that all 
presumptions in diversity cases are governed by state law. In each case 
cited, the burden of proof question had to do with a substantive element 
of the claim or defense. Application of the state law is called for only 
when the presumption operates upon such an element. Accordingly the rule 
does not apply state law when the presumption operates upon a lesser 
aspect of the case, i.e. ``tactical'' presumptions.
    The situations in which the state law is applied have been tagged 
for convenience in the preceding discussion as ``diversity cases.'' The 
designation is not a completely accurate one since Erie applies to any 
claim or issue having its source in state law, regardless of the basis 
of federal jurisdiction, and does not apply to a federal claim or issue, 
even though jurisdiction is based on diversity.
    Vestal, Erie R. R. v. Tompkins: A Projection, 48 Iowa L.Rev. 248, 
257 (1963); Hart and Wechsler, The Federal Courts and the Federal 
System, 697 (1953); 1A Moore Federal Practice p. 0.305[3] (2d ed. 1965); 
Wright, Federal Courts, 217-218 (1963). Hence the rule employs, as 
appropriately descriptive, the phrase ``as to which state law supplies 
the rule of decision.'' See A.L.I. Study of the Division of Jurisdiction 
Between State and Federal Courts, 2344(c), p. 40, P.F.D. No. 1 (1965).
    It is anticipated that Sec. 18.302 will very rarely come into play.

[[Page 227]]

                     Reporter's Note to Sec. 18.403

    Rule 403 of the Federal Rules of Evidence provides for the exclusion 
of relevant evidence on the grounds of unfair prejudice. Since all 
effective evidence is prejudicial in the sense of being damaging to the 
party against whom it is offered, prejudice which calls for exclusion is 
given a more specialized meaning: An undue tendency to suggest decision 
on an improper basis, commonly but not necessarily an emotional one, 
such as bias, sympathy, hatred, contempt, retribution or horror. Unfair 
prejudice is not, however, a proper ground for the exclusive of relevant 
evidence under these rules. Judges have shown over the years the ability 
to resist deciding matters on such an improper basis. Accord Gulf States 
Utilities Co. v. Ecodyne Corp., 635 F.2d 517, 519 (5th Cir. 1981). 
(``The exclusion of this evidence under Rule 403's weighing of probative 
value against prejudice was improper. This portion of Rule 403 has no 
logical application to bench trials. Excluding relevant evidence in a 
bench trial because it is cumulative or a waste of time is clearly a 
proper exercise of the judge's power, but excluding relevant evidence on 
the basis of `unfair prejudice' is a useless procedure. Rule 403 assumes 
a trial judge is able to discern and weigh the improper inferences that 
a jury might draw from certain evidence, and then balance those 
improprieties against probative value and necessity. Certainly, in a 
bench trial, the same judge can also exclude those improper inferences 
from his mind in reaching a decision.'')
    While Sec. 18.403, like Rule 403 of the Federal Rules of Evidence, 
does speak in terms of both confusion of the issues and misleading of 
the trier of fact, the distinction between such terms is unclear in the 
literature and in the cases. McCormick, Evidence section 185 at 546 (3d 
ed. 1984), refers to the probability that certain proof and the 
answering evidence that it provokes might unduly distract the trier of 
fact from the main issues. 2 Wigmore, Evidence section 443 at 528-29 
(Chadbourn rev. 1979), describes the concept as follows:
    In attempting to dispute or explain away the evidence thus offered, 
new issues will arise as to the occurrence of the instances and the 
similarity of conditions, new witnesses will be needed whose cross-
examination and impeachment may lead to further issues; and that thus 
the trial will be unduly prolonged, and the multiplicity of minor issues 
will be such that the jury will lose sight of the main issue, and the 
whole evidence will be only a mass of confused data from which it will 
be difficult to extract the kernel of controversy.
    Both commentators are clearly describing the notion of confusion of 
the issues. The notion of confusion of the issues of course applies as 
well to a reviewing body considering a record in such condition. While a 
trier of fact or reviewing body confused in the foregoing manner can 
also be said to have been misled, it is suggested that the concept of 
misleading refers primarily to the possibility of the trier of fact 
overvaluing the probative value of a particular item of evidence for any 
reason other than the emotional reaction associated with unfair 
prejudice. To illustrate, evidence of the results of a lie detector, 
even where an attempt is made to explain fully the significance of the 
results, is likely to be overvalued by the trier of fact. Similarly, the 
test of Frye v. United States, 293 F.1013, 1014 (D.C. Cir. 1923), 
imposing the requirement with respect to the admissibility of scientific 
evidence that the particular technique be shown to have gained ``general 
acceptance in the particular field in which it belongs,'' is an attempt 
to prevent decision makers from being unduly swayed by unreliable 
scientific evidence. Demonstrative evidence in the form of a photograph, 
map, model, drawing or chart which varies substantially from the fact of 
consequence sought to be illustrated similarly may mislead. Finally, any 
trier of fact may be misled by the sheer amount of time spent upon a 
question into believing the issue to be of major importance and 
accordingly into attaching too much significance to it in its 
determination of the factual issues involved. While clearly of less 
import where the judge is the trier of fact and with respect to the 
state of the record on review, the danger of confusion of the issues or 
misleading the judge as trier of fact, together with such risks on 
review, are each of sufficient moment especially when considered in 
connection with needless consumption of time to warrant inclusion in 
Sec. 18.403.
    Occasionally evidence is excluded not because distracting side 
issues will be created but rather because an unsuitable amount of time 
would be consumed in clarifying the situation. Concerns associated with 
the proper use of trial time also arise where the evidence being offered 
is relevant to a fact as to which substantial other evidence has already 
been introduced, including evidence bearing on the question of 
credibility, where the evidence itself possesses only minimal probative 
value, such as evidence admitted as background, or where evidence is 
thought by the court to be collateral. In recognition of the legitimate 
concern of the court with expenditures of time, Sec. 18.403 provides for 
exclusion of evidence where its incremental probative value is 
substantially outweighed by considerations of undue delay, waste of 
time, or needless presentation of cumulative evidence. Roughly speaking 
undue delay can be argued to refer to delay caused by the failure of the 
party to be able to produce the given evidence at the appropriate time 
at trial but only at some later time. Waste of time may

[[Page 228]]

be taken to refer to the fact that the evidence possesses inadequate 
incremental probative value in light of the time its total exploration 
will consume. Cumulative refers to multiple sources of different 
evidence establishing the same fact of consequence as well as multiple 
same sources, such as ten witnesses all testifying to the same speed of 
the car or the same character of a witness.

                     Reporter's Note to Sec. 18.501

    The Conference Report to Federal Rule of Evidence 501, 1975 U.S. 
Code Cong. & Ad. News 7098, 7100 states:
    Rule 501 deals with the privilege of a witness not to testify. Both 
the House and Senate bills provide that federal privilege law applies in 
criminal cases. In civil actions and proceedings, the House bill 
provides that state privilege law applies ``to an element of a claim or 
defense as to which State law supplies the rule of decision.'' The 
Senate bill provides that ``in civil actions and proceedings arising 
under 28 U.S.C. 1332 or 28 U.S.C. 1335, or between citizens of different 
States and removed under 28 U.S.C. 1441(b) the privilege of a witness, 
person, government, State or political subdivision thereof is determined 
in accordance with State law unless with respect to the particular claim 
or defense, Federal law supplies the rule of decision.''
    The wording of the House and Senate bills differs in the treatment 
of civil actions and proceedings. The rule in the House bill applies to 
evidence that relates to ``an element of a claim or defense.'' If an 
item of proof tends to support or defeat a claim or defense, or an 
element of a claim or defense, and if state law supplies the rule of 
decision for that claim or defense, then state privilege law applies to 
that item of proof.
    Under the provision in the House bill, therefore, state privilege 
law will usually apply in diversity cases. There may be diversity cases, 
however, where a claim or defense is based upon federal law. In such 
instances, federal privilege law will apply to evidence relevant to the 
federal claim or defense. See Sola Electric Co. v. Jefferson Electric 
Co., 317 U.S. 173 (1942).
    In nondiversity jurisdiction civil cases, federal privilege law will 
generally apply. In those situations where a federal court adopts or 
incorporates state law to fill interstices or gaps in federal statutory 
phrases, the court generally will apply federal privilege law.

    As Justice Jackson has said:
    A federal court sitting in a nondiversity case such as this does not 
sit as a local tribunal. In some cases it may see fit for special 
reasons to give the law of a particular state highly persuasive or even 
controlling effect, but in the last analysis its decision turns upon the 
law of the United States, not that of any state.
    D'Oench, Duhme & Co. v. Federal Deposit Insurance Corp., 315 U.S. 
447, 471 (1942) (Jackson, J., concurring). When a federal court chooses 
to absorb state law, it is applying the state law as a matter of federal 
common law. Thus, state law does not supply the rule of decision (even 
though the federal court may apply a rule derived from state decisions), 
and state privilege law would not apply. See C.A. Wright, Federal Courts 
251-252 (2d ed. 1970); Holmberg v. Armbrecht, 327 U.S. 392 (1946); 
DeSylva v. Ballentine, 351 U.S. 570, 581 (1956); 9 Wright & Miller, 
Federal Rules and Procedures Sec. 2408.
    In civil actions and proceedings, where the rule of decision as to a 
claim or defense or as to an element of a claim or defense is supplied 
by state law, the House provision requires that state privilege law 
apply.
    The Conference adopts the House provision.
    It is anticipated that the proviso in Sec. 18.501 will very rarely 
come into play.

                     Reporter's Note to Sec. 18.601

    The Conference Report to Federal Rule of Evidence 601, 1975 U.S. 
Code Cong. & Ad. News 7051, 7059 states:
    Rule 601 deals with competency of witnesses. Both the House and 
Senate bills provide that federal competency law applies in criminal 
cases. In civil actions and proceedings, the House bill provides that 
state competency law applies ``to an element of a claim or defense as to 
which State law supplies the rule of decision.'' The Senate bill 
provides that ``in civil actions and proceedings arising under 28 U.S.C. 
1332 or 28 U.S.C. 1335, or between citizens of different States and 
removed under 28 U.S.C. 1441(b) the competency of a witness, person, 
government, State or political subdivision thereof is determined in 
accordance with State law, unless with respect to the particular claim 
or defense, Federal law supplies the rule of decision.''
    The wording of the House and Senate bills differs in the treatment 
of civil actions and proceedings. The rule in the House bill applies to 
evidence that relates to ``an element of a claim or defense.'' If an 
item of proof tends to support or defeat a claim or defense, or an 
element of a claim or defense, and if state law supplies the rule of 
decision for that claim or defense, then state competency law applies to 
that item of proof.
    For reasons similar to those underlying its action on Rule 501, the 
Conference adopts the House provision.
    It is anticipated that the proviso to Sec. 18.601 will very rarely 
come into play.

[[Page 229]]

                     Reporter's Note to Sec. 18.609

    Consistent with the position taken in Sec. 18.403, unfair prejudice 
is not felt to be a proper reason of the exclusion of relevant evidence 
in a hearing where the judge is the trier of fact. Sections 18.609 (a) 
and (b) provide for the use of every prior conviction punishable by 
death or imprisonment in excess of one year under the law under which 
the witness was convicted and every prior conviction involving 
dishonesty or false statement, regardless of punishment, provided not 
more than ten years has elapsed since the date of the conviction or the 
release of the witness from the confinement imposed for that conviction, 
whichever is the later date. Convictions more than ten years old are 
felt to be too stale to be admitted to impeach the credibility of a 
witness testifying in any hearing to which these rules apply.

                     Reporter's Note to Sec. 18.801

    Rule 801(d)(1)(A) of the Federal Rules of Evidence has been revised 
in Sec. 18.801(d)(1)(A) to permit the substantive admissibility of all 
prior inconsistent statements. The added protection of certainty of 
making and circumstances conducive to trustworthiness provided by the 
restriction that the prior inconsistent statement be ``given under oath 
subject to the penalty of perjury at a trial, hearing, in other 
proceeding, or in a deposition'' were added by Congress to Federal Rule 
of Evidence 801(d)(1)(A) for the benefit of the criminal defendant. See 
Graham, Employing Inconsistent Statements for Impeachment and as 
Substantive Evidence: A Critical Review and Proposed Amendments of 
Federal Rules of Evidence 801(d)(1)(A), 613 and 607, 75 Mich L. Rev. 565 
(1977).

                     Reporter's Note to Sec. 18.802

    An ``administrative file'' is admissible as such to the extent so 
provided by rule or regulation of the administrative agency prescribed 
pursuant to statutory authority, or pursuant to executive order, or by 
Act of Congress. If a program provides for the creation of an 
``administrative file'' and for the submission of an ``administrative 
file'' to the judge presiding at a formal adversarial adjudication 
governed by these rules, see section 18.1101, the ``administrative 
file'' would fall outside the bar of the hearsay rule. Similarly, such 
``administrative file'' is self-authenticating, section 18.902(10).

                     Reporter's Note to Sec. 18.803

    Section 18.803(24) provides that the ``equivalent circumstantial 
guarantees of trustworthiness'' required to satisfy the ``other 
[reliable] hearsay'' exception is that possessed solely by the 
``aforementioned hearsay exceptions,'' i.e., Secs. 18.803(1)-18.803(24). 
The hearsay exceptions which follow, i.e., Secs. 18.803(25)-18.803(30), 
rely too greatly upon necessity and convenience to serve as a basis to 
judge ``equivalent circumstantial guarantees of trustworthiness.''
    Section 18.803(25) provides a hearsay exception for the self-
authenticating aspect of documents and other items as provided in 
Sec. 18.902. Out of court statements admitted under Sec. 18.902 for the 
purpose of establishing that the document or other item offered into 
evidence is as purported to be are received in evidence to establish the 
truth of the matter stated, Secs. 18.801(a)-(c). Section 18.802 provides 
that ``hearsay is not admissible except as provided by these rules * * 
*'' Section 18.902 thus operates as a hearsay exception on the limited 
question of authenticity. Section 18.902 does not, however, purport to 
create a hearsay exception for matters asserted to be true in the self-
authenticated exhibit itself. As a matter of drafting consistency, it is 
preferable to have a specific hearsay exception in Sec. 18.803 for 
statements of self-authentication under Sec. 18.902 than to have a 
hearsay exception exist in these rules not bearing an 18.800 number.
    Sections 18.803(26) and 18.803(27) are derived from Rules 4(e) and 
(f) of the Arizona Uniform Rules of Procedure for Arbitration. Section 
18.803(26)(f) is derived from Illinois Supreme Court Rule 90(c)(4).
    Sections 18.803(27) and 18.803(28) maintain the common law 
distinction between a treating physician, i.e., medical treatment, and 
an examining or nontreating physician, i.e., medical diagnosis. A 
treating physician provides or acts with a view toward providing medical 
treatment. An examining physician is one hired with a view toward 
testifying on behalf of a party and not toward treating a patient. As 
such, written reports of the examining physician are not felt to be 
sufficiently trustworthy to be given the preferred treatment of 
Sec. 18.803(27). Thus a report of a physician made for the purpose of 
medical treatment, i.e., treating physician, is admissible if the 
requirements of Sec. 18.803(27) are satisfied. A report of physician 
prepared with a view toward litigation, i.e., examining physician, 
satisfying the requirements of Sec. 18.802(28) is also admissible. The 
reports of a given physician may, of course, fall within either or both 
categories. Reports of any medical surveillance test the purpose of 
which is to detect actual or potential impairment of health or 
functional capacity and autopsy reports fall within Sec. 18.803(28).
    Section 18.803(28) is derived from Rule 1613(b)(1) of the California 
Rules of Court. A summary of litigation experience of the expert is 
required to assist the evaluation of credibility.
    Section 18.803(29) is derived from Rule 1613(b)(2) of the California 
Rules of Court.
    Section 18.803(30) is derived from Rule 1613(b)(3) of the California 
Rules of Court.

[[Page 230]]

    Sections 18.803(26)-18.803(30) each provide that the adverse party 
may call the declarant of the hearsay statement, if available, as a 
witness and examine the witness as if under cross-examination. The 
proviso relating to the calling of witnesses is derived from Rule 
1305(b) of the Pennsylvania Rules of Court Procedure Governing 
Compulsory Arbitration. See also Secs. 18.902(12)-18.902(16) infra.
    These rules take no position with respect to which party must 
initially bear the cost of lay witness and expert witness fees nor as to 
the ultimate disposition of such fees. Ordinarily, however, it is 
anticipated that the adverse party calling the witness should initially 
pay statutory witness fees, mileage, etc., and reasonable compensation 
to an expert witness in whatever sum and at such time as the judge may 
allow. Such witness fees, mileage, etc., and reasonable expert witness 
compensation should thereafter be charged to the same extent and in like 
manner as other such costs.

                     Reporter's Note to Sec. 18.902

    Section 18.902(11) is modeled upon Uniform Rule of Evidence 902(11). 
The requirement of a final certification with respect to a foreign 
record has been deleted as unnecessary in accordance with the position 
adopted in 18 U.S.C. 3505 which governs the self-authentication of a 
foreign record offered in a federal criminal proceeding. The ``Comment'' 
to Uniform Rule of Evidence 902(11) states:
    Subsection 11 is new and embodies a revised version of the recently 
enacted federal statute dealing with foreign records of regularly 
conducted activity, 18 U.S.C. 3505. Under the federal statute, 
authentication by certification is limited to foreign business records 
and to use in criminal proceedings. This subsection broadens the federal 
provision so that it includes domestic as well as foreign records and is 
applicable in civil as well as criminal cases. Domestic records are 
presumably no less trustworthy and the certification of such records can 
more easily be challenged if the opponent of the evidence chooses to do 
so. As to the federal statute's limitation to criminal matters, 
ordinarily the rules are more strictly applied in such cases, and the 
rationale of trustworthiness is equally applicable in civil matters. 
Moreover, the absence of confrontation concerns in civil actions 
militates in favor of extending the rule to the civil side as well.
    The rule requires that the certified record be made available for 
inspection by the adverse party sufficiently in advance of the offer to 
permit the opponent a fair opportunity to challenge it. A fair 
opportunity to challenge the offer may require that the proponent 
furnish the opponent with a copy of the record in advance of its 
introduction and that the opponent have an opportunity to examine, not 
only the record offered, but any other records or documents from which 
the offered record was procured or to which the offered record relates. 
That is a matter not addressed by the rule but left to the discretion of 
the trial judge.
    Sections 18.902 (12) and (13) are derived from Rule 4 (e) and (f) of 
the Arizona Uniform Rules of Procedure for Arbitration. Section 
18.902(12)(f) is derived from Illinois Supreme Court Rule 90(c)(4).
    Section 18.902(14) is derived from Rule 1613(b)(1) of the California 
Rules of Court. A summary of litigation experience of the expert is 
required to assist the evaluation of credibility.
    With respect to Secs. 18.902(13) and 18.902(14) as applied to a 
treating or examining physician, see Reporter's Note to Secs. 18.803(27) 
and 18.803(28) supra.
    Section 18.902(15) is derived from Rule 1613(b)(2) of the California 
Rules of Court.
    Section 18.902(16) is derived from Rule 1613(b)(3) of the California 
Rules of Court.
    Sections 18.902 (12)-(16) each provide that the adverse party may 
call the declarant of the hearsay statement, if available, as a witness 
and examine the witness as if under cross-examination. The proviso 
relating to the calling of witnesses is derived from Rule 1305(b) of the 
Pennsylvania Rules of Civil Procedure Governing Compulsory Arbitration.
    These rules take no position with respect to which party must 
initially bear the cost of lay witness and expert witness fees nor as to 
the ultimate disposition of such fees. Ordinarily, however, it is 
anticipated that the adverse party calling the witness should initially 
pay statutory witness fees, mileage, etc., and reasonable compensation 
to an expert witness in whatever sum and at such time as the judge may 
allow. Such witness fees, mileage, etc., and reasonable expert witness 
compensation should thereafter be charged to the same extent and in like 
manner as other such costs. See also Secs. 18.803 (25)-(30) supra.

                     Reporter's Note to Sec. 18.1001

    Section 18.1001(3) excludes prints made from X-ray film from the 
definition of an original. A print made from X-ray film is not felt to 
be equivalent to the X-ray film itself when employed for purposes of 
medical treatment or diagnosis.

                     Reporter's Note to Sec. 18.1101

    Section 23(a) of the Longshore and Harbor Workers' Compensation Act, 
33 U.S.C. 922, provides as follows:
    In making an investigation or inquiry or conducting a hearing the 
deputy commissioner or Board shall not be bound by common law or 
statutory rules of evidence or by technical or formal rules of 
procedure, except as provided by this chapter; but may

[[Page 231]]

make such investigation or inquiry or conduct such hearing in such 
manner as to best ascertain the rights of the parties. Declarations of a 
deceased employee concerning the injury in respect of which the 
investigation or inquiry is being made or the hearing conducted shall be 
received in evidence and shall, if corroborated by other evidence, be 
sufficient to establish the injury.

Other acts such as the Defense Base Act, 42 U.S.C. 1651, adopt section 
23(a) of the Longshore and Harbor Workers' Compensation Act by 
reference. In addition 20 CFR 725.455(b) provides as follows with 
respect to the Black Lung Benefits Act, 30 U.S.C. 901:
    Evidence. The administrative law judge shall at the hearing inquire 
fully into all matters at issue, and shall not be bound by common law or 
statutory rules of evidence, or by technical or formal rules of 
procedure, except as provided by 5 U.S.C. 554 and this subpart. The 
administrative law judge shall receive into evidence the testimony of 
the witnesses and parties, the evidence submitted to the Office of 
Administrative Law Judges by the deputy commissioner under Sec. 725.421, 
and such additional evidence as may be submitted in accordance with the 
provisions of this subpart. The administrative law judge may entertain 
the objections of any party to the evidence submitted under this 
section.
    Section 18.1101(c) provides that these rules do not apply to the 
extent inconsistent with, in conflict with, or to the extent a matter is 
otherwise specifically provided for by an Act of Congress or by a rule 
or regulation of specific application prescribed by the United States 
Department of Labor pursuant to statutory authority. Whether section 
23(a) and Sec. 725.455(b) are in fact incompatible with these rules, 
while unlikely for various reasons including their lack of specificity, 
is nevertheless arguable.
    Without regard to section 23(a) and Sec. 725.455(b), various other 
considerations support the conclusion to exclude hearings under 
Longshore, Black Lung, and related acts from coverage of these rules at 
this time. Longshore, Black Lung, and related acts involve entitlements. 
Claimants in such hearings benefit from proceeding pursuant to the most 
liberal evidence rules that are consistent with the orderly 
administration of justice and the ascertainment of truth. Claimants in 
such hearings on occasion appear pro se. While the modifications made by 
these rules are clearly designed to further liberalize the already 
liberal Federal Rules of Evidence, it is nevertheless unclear at this 
time whether even conformity with minimal requirements with respect to 
the introduction of evidence would present a significant barrier to the 
successful prosecution of meritorious claims. Rather than speculate as 
to the impact adoption of these rules would have upon such entitlement 
programs, it was decided to exclude hearings involving such entitlement 
programs from coverage of these rules. It is anticipated that 
application of these rules to hearings involving such entitlement 
programs will be reconsidered in the future following careful study. 
Notice that the inapplicability of these rules in such hearings at this 
time is specifically stated in Sec. 18.1101(b)(2) to be without 
prejudice to the continuation of current practice with respect to 
application of rules of evidence in such hearings.

[55 FR 13229, Apr. 9, 1990; 55 FR 24227, June 15, 1990]



PART 19--RIGHT TO FINANCIAL PRIVACY ACT--Table of Contents




Sec.
19.1  Definitions.
19.2  Purpose.
19.3  Authorization.
19.4  Contents of request.
19.5  Certification.

    Authority: Sec. 1108, Right to Financial Privacy Act of 1978, 92 
Stat. 3697 et seq., 12 U.S.C. 3401 et seq., (5 U.S.C. 301); and 
Reorganization Plan No. 6 of 1950.

    Source: 52 FR 48420, Dec. 22, 1987, unless otherwise noted.



Sec. 19.1  Definitions.

    For purposes of this regulation, the term:
    (a) Financial institution means any office of a bank, savings bank, 
card issuer as defined in section 103 of the Consumer Credit Protection 
Act (15 U.S.C. 1602(n)), industrial loan company, trust company, savings 
and loan, building and loan, or homestead association (including 
cooperative banks), credit union, consumer financial institution, 
located in any State or territory of the United States, the District of 
Columbia, Puerto Rico, Guam, American Samoa, or the Virgin Islands.
    (b) Financial record means an original of, a copy of, or information 
known to have been derived from, any record held by a financial 
institution pertaining to a customer's relationship with the financial 
institution.
    (c) Person means an individual or a partnership of five or fewer 
individuals.
    (d) Customer means any persons or authorized representative of that 
person who utilized or is utilizing any service of a financial 
institution, or for

[[Page 232]]

whom a financial institution is acting or has acted as a fiduciary, in 
relation to an account maintained in the person's name.
    (e) Law enforcement inquiry means a lawful investigation or official 
proceeding inquiring into a violation of or failure to comply with any 
criminal or civil statute or any regulation, rule, or order issued 
pursuant thereto.
    (f) Departmental unit means those offices, divisions bureaus, or 
other components of the Department of Labor authorized to conduct law 
enforcement inquiries.
    (g) Act means the Right to Financial Privacy Act of 1978.



Sec. 19.2  Purpose.

    The purpose of these regulations is to authorize Departmental units 
to request financial records from a financial institution pursuant to 
the formal written request procedure authorized by section 1108 of the 
Act, and to set forth the conditions under which such requests may be 
made.



Sec. 19.3  Authorization.

    Departmental units are hereby authorized to request financial 
records of any customer from a financial institution pursuant to a 
formal written request under the Act only if:
    (a) No administrative summons or subpoena authority reasonably 
appears to be available to the Departmental unit to obtain financial 
records for the purpose for which the records are sought;
    (b) There is reason to believe that the records sought are relevant 
to a legitimate law enforcement inquiry and will further that inquiry;
    (c) The request is issued by the Assistant Secretary or Deputy Under 
Secretary heading the Departmental unit requesting the records, or by a 
senior agency official designated by the head of the Departmental unit. 
Officials so designated shall not delegate this authority to others;
    (d) The request adheres to the requirements set forth in Sec. 19.4; 
and
    (e) The notice requirements set forth in section 1108(4) of the Act, 
or the requirements pertaining to delay of notice in section 1109 of the 
Act are satisfied, except in situations where no notice is required 
(e.g., section 1113(g)).



Sec. 19.4  Contents of request.

    The formal written request shall be in the form of a letter or 
memorandum to an appropriate official of the financial institution from 
which financial records are requested. The request shall be signed by an 
issuing official of the requesting Departmental unit, as specified in 
Sec. 19.3(c). It shall set forth that official's name, title, business 
address and business phone number. The request shall also contain the 
following:
    (a) The identity of the customer or customers to whom the records 
pertain;
    (b) A reasonable description of the records sought;
    (c) Any other information that the issuing official deems 
appropriate, e.g., the date on which the requesting Departmental unit 
expects to present a certificate of compliance with the applicable 
provisions of the Act, the name and title of the individual to whom 
disclosure is to be made, etc.
    (d) In cases where customer notice is delayed by a court order, a 
copy of the court order shall be attached to the formal written request.



Sec. 19.5  Certification.

    Prior to obtaining the requested records pursuant to a formal 
written request, a senior official designated by the head of the 
requesting Departmental unit shall certify in writing to the financial 
institution that the Departmental unit has complied with the applicable 
provisions of the Act.



PART 20--FEDERAL CLAIMS COLLECTION--Table of Contents




    Subpart A--Disclosure of Information to Credit Reporting Agencies

Sec.
20.1  Purpose and scope.
20.2  Definitions.
20.3  Agency responsibilities.
20.4  Determination of delinquency; notice.
20.5  Examination of records relating to the claim; opportunity for full 
          explanation of the claim.
20.6  Opportunity for repayment.
20.7  Review of the obligation.

[[Page 233]]

20.8  Disclosure to credit reporting agencies.
20.9  Waiver of credit reporting.
20.10  Responsibilities of the Chief Financial Officer.

                    Subpart B--Administrative Offset

20.19  Purpose and scope.
20.20  Definitions.
20.21  Agency responsibilities.
20.22  Notifications.
20.23  Examination of records relating to the claim; opportunity for 
          full explanation of the claim.
20.24  Opportunity for repayment.
20.25  Review of the obligation.
20.26  Request for waiver or administrative review.
20.27  Cooperation with other DOL agencies and Federal agencies.
20.28  DOL agency as organization holding funds of the debtor.
20.29  Notice of offset.
20.30  Multiple debts.
20.31  Administrative offset against amounts payable from civil service 
          retirement and disability fund.
20.32  Liquidation of collateral.
20.33  Collection in installments.
20.34  Exclusions.
20.35  Additional administrative collection action.
20.36  Prior provision of rights with request to debt.
20.37  Responsibilities of the Chief Financial Officer.

         Subpart C--Interest, Penalties and Administrative Costs

20.50  Purpose and scope.
20.51  Exemptions.
20.52  Definitions.
20.53  Agency responsibilities.
20.54  Notification of charges.
20.55  Second and subsequent notifications.
20.56  Delivery of notices.
20.57  Accrual of interest.
20.58  Rate of interest.
20.59  Assessment of administrative costs.
20.60  Application of partial payments to amounts owed.
20.61  Waiver.
20.62  Responsibilities of the Chief Financial Officer.

                        Subpart D--Salary Offset

20.74  Purpose.
20.75  Scope.
20.76  Definitions.
20.77  Agency responsibilities.
20.78  Notifications.
20.79  Examination of records relating to the claim; opportunity for 
          full explanation of the claim.
20.80  Opportunity for repayment.
20.81  Review of the obligation.
20.82  Cooperation with other DOL agencies and Federal agencies.
20.83  DOL agency as paying agency of the debtor.
20.84  Collections.
20.85  Notice of offset.
20.86  Non-waiver of rights by payments.
20.87  Refunds.
20.88  Additional administrative collection action.
20.89  Prior provision of rights with respect to debt.
20.90  Responsibilities of the Chief Financial Officer.

               Subpart E--Federal Income Tax Refund Offset

Sec.
20.101  Purpose and scope.
20.102  Redelegation of authority.
20.103  Definitions.
20.104  Agency responsibilities.
20.105  Minimum referral amount.
20.106  Relation to other collection efforts.
20.107  Debtor notification.
20.108  Agency review of the obligation.
20.109  Prior provision of rights with respect to debt.
20.110  Referral to IRS for tax refund offset.
20.111  Administrative cost charges.

    Authority: 31 U.S.C. 3711 et seq.; Subpart D is also issued under 5 
U.S.C. 5514; Subpart E is also issued under 31 U.S.C. 3720A.

    Source: 50 FR 5202, Feb. 6, 1985, unless otherwise noted.

    Editorial Note: Nomenclature changes affecting this part appear at 
57 FR 31451, July 16, 1992.



    Subpart A--Disclosure of Information to Credit Reporting Agencies



Sec. 20.1  Purpose and scope.

    The regulations in this subpart establish procedures to implement 
section 3 of the Debt Collection Act of 1982 (Pub. L. 97-365), 31 U.S.C. 
3711(f). This statute, and other applicable authority, authorizes 
Department heads to disclose to credit reporting agencies information 
concerning claims owed the United States under programs administered by 
the Department head. This disclosure is limited to certain information 
and must be in accordance with procedures set forth in the Debt 
Collection Act and other applicable laws. This subpart specifies the 
agency procedures and debtor rights that will be

[[Page 234]]

followed in making a disclosure to a credit reporting agency.



Sec. 20.2  Definitions.

    For purposes of this subpart--
    (a) The term commercial debt means any non-tax business debt in 
excess of $100, arising from loans, loan guarantees, overpayments, 
fines, penalties or other causes.
    (b) The term consumer debt means any non-tax debt of an individual 
in excess of $100, arising from loans--loan guarantees, overpayments, 
fines, penalties, or other causes.
    (c) A debt is considered delinquent if it has not been paid by the 
date specified in the agency's initial demand letter (Sec. 20.4), unless 
satisfactory payment arrangements have been made by that date, or if, at 
any time thereafter, the debtor fails to satisfy his obligations under a 
payment agreement with the Department of Labor, or any agency thereof.
    (d) The term claim and debt are deemed synonymous and 
interchangeable. They refer to an amount of money or property which has 
been determined by an appropriate agency official to be owed to the 
United States from any person, organization, or entity, except another 
federal agency.



Sec. 20.3  Agency responsibilities.

    (a) As authorized by law, each Department of Labor agency may report 
all delinquent consumer debts to consumer credit reporting agencies and 
may also report all commercial debts to appropriate commercial credit 
reporting agencies.
    (b) Information provided to a consumer credit reporting agency on 
delinquent consumer debts from a system of records subject to the 
Privacy Act of 1974, 5 U.S.C. 552a, must be maintained by the Department 
of Labor in accordance with that Act, except as otherwise modified by 
law. Furthermore, no disclosure may be made until the appropriate notice 
of system of records has been amended in accordance with 5 U.S.C. 
552a(e)(11).
    (c) The Chief Financial Officer, or his or her designee, shall have 
the responsibility for obtaining satisfactory assurances from each 
credit reporting agency to which information will be provided, 
concerning compliance by the credit reporting agency with the Fair 
Credit Reporting Act (15 U.S.C. 1681 et seq.) and any other Federal law 
governing the provision of credit information.
    (d) The information disclosed to the credit reporting agency is 
limited to: (1) The name, address, taxpayer identification number, and 
other information necessary to establish the identity of the individual, 
(2) the amount, status, and history of the claim, and (3) the Department 
of Labor agency or program under which the claim arose.
    (e) The agency official providing information to a credit reporting 
agency: (1) Shall promptly disclose to each credit reporting agency to 
which the original disclosure was made, any substantial change in the 
status or amount of the claim; and (2) shall within 30 days whenever 
feasible, or otherwise promptly verify or correct, as appropriate, 
information concerning the claim upon the request of any such credit 
reporting agency for verification of any or all information so 
disclosed.
    (f) Each Department of Labor agency is responsible for ensuring the 
continued accuracy of calculations and records relating to its claims, 
and for the prompt notification to the credit reporting agency of any 
substantial change in the status or amount of the claim. The agencies 
shall promptly follow-up on any allegation made by a debtor that the 
records of the agency concerning a claim are in error. Agencies should 
respond promptly to communications from the debtor, within 30 days 
whenever feasible.
    (g) The agency official responsible for providing information to a 
consumer credit reporting agency shall take reasonable action to locate 
the individual owing the debt prior to disclosing any information to a 
consumer credit reporting agency.



Sec. 20.4  Determination of delinquency; notice.

    (a) The agency head (or designee) responsible for carrying out the 
provisions of this subpart with respect to the debt shall send to the 
debtor appropriate written demands for payment in terms which inform the 
debtor of the consequences of failure to cooperate. In

[[Page 235]]

accordance with guidelines established by the Chief Financial Officer, a 
total of three progressively stronger written demands at not more than 
30-day intervals will normally be made unless a response to the first or 
second demand indicates that a further demand would be futile and the 
debtor's response does not require rebuttal. In determining the timing 
of the demand letters, agencies should give due regard to the need to 
act promptly so that, as a general rule, if necessary to refer the debt 
to the Department of Justice for litigation, such referral can be made 
within one year of the final determination of the fact and the amount of 
the debt. When the agency head (or designee) deems it appropriate to 
protect the government's interests (for example, to prevent the statute 
of limitations, 28 U.S.C. 2415, from expiring), written demand may be 
preceded by other appropriate actions, including immediate referral for 
litigation.
    (b) Prior to disclosing information to a consumer credit reporting 
agency in accordance with this subpart, the agency head (or designee) 
responsible for administering the program under which the debt arose 
shall review the claim and determine that the claim is valid and 
overdue. In cases where the debt arises under programs of two or more 
Department of Labor agencies, or in such other instances as the Chief 
Financial Officer or his or her designee may deem appropriate, the Chief 
Financial Officer, or his or her designee, may determine which agency, 
or official, shall have responsibility for carrying out the provisions 
of this subpart.
    (c) In accordance with guidelines established by the Chief Financial 
Officer, the agency official responsible for disclosure of the debt to a 
consumer credit reporting agency shall send written notice to the 
individual debtor informing such debtor:
    (1) Of the basis for the indebtedness;
    (2) That the payment of the claim is overdue;
    (3) That the agency intends to disclose to a consumer credit 
reporting agency, within not less than sixty days after sending such 
notice, that the individual is responsible for such claim;
    (4) Of the specific information intended to be disclosed to the 
credit reporting agency;
    (5) Of the rights of such debtor to a full explanation of the claim, 
to dispute any information in the records of the agency concerning the 
claim, and of the name of an agency employee who can provide a full 
explanation of the claim;
    (6) Of the debtor's right to administrative appeal or review with 
respect to the claim and how such review shall be obtained; and,
    (7) Of the date on which or after which the information will be 
reported to the consumer credit reporting agency.
    (d) Where the disclosure concerns a commercial debt, the responsible 
agency head (or designee) shall send written notice to the commercial 
debtor informing such debtor of the information discussed in paragraphs 
(c)(1), (4), (5), and (6) of this section.
    (e) Agencies shall also include in their demand letters the notice 
provisions to debtors required by other regulations of the Labor 
Department, pertaining to waiver, assessment of interest, penalties and 
administrative costs, administrative offset, and salary offset to the 
extent that such inclusion is appropriate and practicable.
    (f) The responsible agency head (or designee) shall exercise due 
care to insure that demand letters are mailed or hand-delivered on the 
same day that they are actually dated. If evidence suggests that the 
debtor is no longer located at the address of record, reasonable action 
shall be taken to obtain a current address.
    (g) To the extent that the requirements under this section have been 
provided to the debtor in relation to the same debt under some other 
statutory or regulatory authority, the agency is not required to 
duplicate such efforts.

[50 FR 5202, Feb. 5, 1985; 50 FR 8608, Mar. 4, 1985]



Sec. 20.5  Examination of records relating to the claim; opportunity for full explanation of the claim.

    Following receipt of the notice specified in Sec. 20.4, the debtor 
may request to examine and copy the information to

[[Page 236]]

be disclosed to the consumer credit reporting agency, in accordance with 
5 U.S.C. 552a.



Sec. 20.6  Opportunity for repayment.

    The Department of Labor agency responsible for collecting the claim 
shall afford the debtor the opportunity to repay the debt or enter into 
a repayment plan which is agreeable to the head of the agency and is in 
a written form signed by such debtor. The head of the agency (or 
designee) may deem a repayment plan to be abrogated if the debtor 
should, after the repayment plan is signed, fail to comply with the 
terms of the plan.



Sec. 20.7  Review of the obligation.

    (a) The debtor shall have the opportunity to obtain review by the 
responsible agency of the initial decision concerning the existence or 
amount of the debt.
    (b) The debtor seeking review shall make the request in writing to 
the reviewing official or employee, not more than 15 days from the date 
the initial demand letter was received by the debtor. The request for 
review shall state the basis for challenging the initial determination. 
If the debtor alleges that specific information to be disclosed to a 
credit reporting agency is not accurate, timely, relevant or complete, 
such debtor shall provide information or documentation to support this 
allegation.
    (c) The review shall ordinarily be based on written submissions and 
documentation by the debtor. However a reasonable opportunity for an 
oral hearing shall be provided an individual debtor when the responsible 
agency determines that:
    (1) An applicable statute authorizes or requires the agency to 
consider waiver of the indebtedness involved, the debtor requests waiver 
of the indebtedness, and the waiver determination turns on an issue of 
credibility or veracity; or
    (2) An individual debtor requests reconsideration of the debt and 
the agency determines that the question of the indebtedness cannot be 
resolved by review of the documentary evidence, for example, when the 
validity of the debt turns on an issue of credibility or veracity; or
    (3) In other situations in which the agency deems an oral hearing 
appropriate. Unless otherwise required by law an oral hearing under this 
section is not required to be a formal evidentiary-type hearing, 
although the reviewing official should carefully document all 
significant matters discussed at the hearing.
    (d) Upon receipt of a timely request for review, the agency shall 
suspend its schedule for disclosure of a delinquent consumer debt to a 
consumer credit reporting agency until such time as a final decision is 
made on the request.
    (e) Upon completion of the review, the reviewing official shall 
transmit to the debtor a written notification of the decision. If 
appropriate, this notification shall inform the debtor of the scheduled 
date on or after which information concerning the debt will be provided 
to credit reporting agencies. The notification shall, also if 
appropriate, indicate any changes in the information to be disclosed to 
the extent such information differs from that provided in the initial 
notification.
    (f) Nothing in this subpart shall preclude an agency, upon request 
of the debtor alleged by the agency to be responsible for a debt, or on 
its own initiative, from reviewing the obligation of such debtor, 
including an opportunity for reconsideration of the initial decision 
concerning the debt, and including the accuracy, timeliness, relevance, 
and completeness of the information to be disclosed to a credit 
reporting agency.
    (g) To the extent that the requirements under this section have been 
provided to the debtor in relation to the same debt under some other 
statutory or regulatory authority, the agency is not required to 
duplicate such efforts.

(Approved by the Office of Management and Budget under control number 
1225-0030)



Sec. 20.8  Disclosure to credit reporting agencies.

    (a) In accordance with guidelines established by the Chief Financial 
Officer, the responsible Department of Labor agency shall make the 
disclosure of information on the debtor to the

[[Page 237]]

credit reporting agency. Such disclosure to consumer credit reporting 
agencies shall be made on or after the date specified in the Sec. 20.4 
notification to the individual owing the claim, and shall be comprised 
of the information set forth in the initial determination, or any 
modification thereof.
    (b) This section shall not apply to individual debtors when--
    (1) Such debtor has repaid or agreed to repay his or her obligation, 
and such agreement is still valid, as provided in Sec. 20.6; or
    (2) Such debtor has filed for review of the claim under 
Sec. 20.7(b), and the reviewing official or employee has not issued a 
decision on the review.
    (c) In addition, the agency may determine not to make a disclosure 
of information to a credit reporting agency when the agency, on its own 
initiative, is reviewing and has not concluded such review of its 
initial determination of the claim under Sec. 20.7(f).



Sec. 20.9  Waiver of credit reporting.

    The agency head (or designee) may waive reporting a commercial debt 
or delinquent consumer debt to a credit reporting agency, if otherwise 
appropriate and if reporting the debt would not be in the best interests 
of the United States.



Sec. 20.10  Responsibilities of the Chief Financial Officer.

    The Chief Financial Officer, or his or her designee, shall provide 
appropriate and binding, written or other guidance to Department of 
Labor agencies and officials in carrying out this subpart, including the 
issuance of guidelines and instructions, which he or she may deem 
appropriate. The Chief Financial Officer shall also take such 
administrative steps as may be appropriate to carry out the purposes and 
ensure the effective implementation of this regulation, including the 
designation of credit reporting agencies authorized to receive and 
disseminate information under this subpart.



                    Subpart B--Administrative Offset



Sec. 20.19  Purpose and scope.

    The regulations in this subpart establish procedures to implement 
section 10 of the Debt Collection Act of 1982 (Pub. L. 97-365), 31 
U.S.C. 3716(d). Among other things, this statute authorizes the head of 
each agency to collect a claim arising under an agency program by means 
of administrative offset, except that no claim may be collected by such 
means if outstanding for more than 10 years after the agency's right to 
collect the debt first accrued, unless facts material to the 
Government's right to collect the debt were not known and could not 
reasonably have been known by the official or officials of the 
government who were charged with the responsibility to discover and 
collect such debts. This subpart specifies the agency procedures that 
will be followed by the Department of Labor for an administrative 
offset.



Sec. 20.20  Definitions.

    For purposes of this subpart--
    (a) The term administrative offset means the withholding of money 
payable by the United States to or held by the United States on behalf 
of a person to satisfy a debt owned the United States by that person; 
and
    (b) The term person does not include any agency of the United 
States, or any state or local government.
    (c) The terms claim and debt are deemed synonymous and 
interchangeable. They refer to an amount of money or property which has 
been determined by an appropriate agency official to be owed to the 
United States from any person, organization, or entity, except another 
federal agency.
    (d) A debt is considered delinquent if it has not been paid by the 
date specified in the agency's initial demand letter (Sec. 20.22), 
unless satisfactory payment arrangements have been made by that date, or 
if, at any time thereafter, the debtor fails to satisfy his obligations 
under a payment agreement with the Department of Labor, or any agency 
thereof.



Sec. 20.21  Agency responsibilities.

    (a) Each Department of Labor agency which has delinquent debts owed 
under its program is responsible for collecting its claims by means of 
administrative offset, in accordance with

[[Page 238]]

guidelines established by the Chief Financial Officer.
    (b) Before collecting a claim by means of administrative offset, the 
responsible agency must ensure that administrative offset is feasible, 
allowable and appropriate, and must notify the debtor of the 
Department's policies for collecting a claim by means of administrative 
offset.
    (c) Whether collection by administrative offset is feasible is a 
determination to be made by the creditor agency on a case-by-case basis, 
in the exercise of sound discretion. Agencies shall consider not only 
whether administrative offset can be accomplished, both practically and 
legally, but also whether offset is best suited to further and protect 
all of the Government's interests. In appropriate circumstances, 
agencies may give due consideration to the debtor's financial condition, 
and are not required to use offset in every instance in which there is 
an available source of funds. Agencies may also consider whether offset 
would substantially interfere with or defeat the purposes of the program 
authorizing the payments against which offset is contemplated.
    (d) Before advising the debtor that the delinquent debt will be 
subject to administrative offset, the agency head (or designee) 
responsible for administering the program under which the debt arose 
shall review the claim and determine that the debt is valid and overdue. 
In the case where a debt arises under the programs of two or more 
Department of Labor agencies, or in such other instances as the Chief 
Financial Officer, or his or her designee, may deem appropriate, the 
Chief Financial Officer, or his or her designee, may determine which 
agency (or agencies), or official (or officials), shall have 
responsibility for carrying out the provisions of this subpart.
    (e) Administrative offset shall be considered by agencies only after 
attempting to collect a claim under Section 3(a) of the Federal Claims 
Collection Act, except that no claim under this Act that has been 
outstanding for more than 10 years after the Government's right to 
collect the debt first accrued may be collected by means of 
administrative offset, unless facts material to the right to collect the 
debt were not known and could not reasonably have been known by the 
official of the Agency who was charged with the responsibility to 
discover and collect such debts. When the debt first accrued should be 
determined according to existing laws regarding the accrual of debts, 
such as under 28 U.S.C. 2415.



Sec. 20.22  Notifications.

    (a) The agency head (or designee) responsible for carrying out the 
provisions of this subpart with respect to the debt shall send 
appropriate written demands to the debtor in terms which inform the 
debtor of the consequences of failure to cooperate. In accordance with 
guidelines established by the Chief Financial Officer, a total of three 
progressively stronger written demands at not more than 30-day intervals 
will normally be made unless a response to the first or second demand 
indicates that a further demand would be futile and the debtor's 
response does not require rebuttal. In determining the timing of the 
demand letters, agencies should give due regard to the need to act 
promptly so that, as a general rule, if necessary to refer the debt to 
the Department of Justice for litigation, such referral can be made 
within one year of the final determination of the fact and the amount of 
the debt. When the agency head (or designee) deems it appropriate to 
protect the government's interests (for example, to prevent the statute 
of limitations, 28 U.S.C. 2415, from expiring), written demand may be 
preceded by other appropriate actions, including immediate referral for 
litigation.
    (b) In accordance with guidelines established by the Chief Financial 
Officer, the agency official responsible for collection of the debt 
shall send written notice to the debtor, informing such debtor as 
appropriate:
    (1) Of the nature and amount of the indebtedness;
    (2) That the agency intends to collect, as appropriate, interest, 
penalties and administrative costs; and, in accordance with guidelines 
of the Chief Financial Officer, of the applicable standards for 
collecting such payments;

[[Page 239]]

    (3) Of the date by which payment is to be made (which normally 
should be not more than 30 days from the date that the initial 
notification was mailed or hand-delivered);
    (4) Of the agency's intention to collect by administrative offset 
and of the debtor's rights in conjunction with such an offset;
    (5) Of the debtor's entitlement to waiver, where applicable, and of 
the debtor's rights in conjunction with waiver;
    (6) Of the debtor's opportunity to enter into a written agreement 
with the agency to repay the debt;
    (7) Of the rights of such debtor to a full explanation of the claim, 
of the opportunity to inspect and copy the agency records with respect 
to the claim and to dispute any information in the records of the agency 
concerning the claim;
    (8) Of the debtor's right to administrative appeal or review with 
respect to the claim and how such review shall be obtained; and
    (9) Of the date on which or after which an administrative offset 
will begin.
    (c) Agencies shall also include in their demand letters the notice 
provisions to debtors required by other regulations of the Labor 
Department, pertaining to disclosures to credit reporting agencies, 
salary offset, and assessment of interest, penalties and administrative 
costs, to the extent inclusion of such is appropriate and practicable.
    (d) The responsible agency head (or designee) shall exercise due 
care to insure that demand letters are mailed or hand-delivered on the 
same day that they are actually dated. If evidence suggests that the 
debtor is no longer located at the address of record, reasonable action 
shall be taken to obtain a current address.
    (e) The agency responsible for collecting the claim shall, in the 
initial demand letter to the debtor, provide the name of an agency 
employee who can provide a full explanation of the claim.



Sec. 20.23  Examination of records relating to the claim; opportunity for full explanation of the claim.

    Following receipt of the initial demand letter specified in 
Sec. 20.22, the debtor may request to examine and copy agency records 
pertaining to the debt.



Sec. 20.24  Opportunity for repayment.

    (a) The Department of Labor agency responsible for collecting the 
claim shall afford the debtor the opportunity to repay the debt or enter 
into a repayment plan which is agreeable to the agency head (or 
designee) and is in a written form signed by such debtor. The head of 
the agency (or designee) may deem a repayment plan to be abrogated if 
the debtor should, after the repayment plan is signed, fail to comply 
with the terms of the plan.
    (b) Agencies have discretion and should exercise sound judgment in 
determining whether to accept a repayment agreement in lieu of offset. 
The determination should balance the Government's interest in collecting 
the debt against fairness to the debtor. If the debt is delinquent and 
the debtor has not disputed its existence or amount, an agency should 
effect an offset unless the debtor is able to establish that offset 
would result in undue financial hardship or would be against equity and 
good conscience.



Sec. 20.25  Review of the obligation.

    (a) The debtor shall have the opportunity to obtain review by the 
responsible agency of the determination concerning the existence or 
amount of the debt.
    (b) The debtor seeking review shall make the request in writing to 
the reviewing official or employee, not more than 15 days from the date 
the initial demand letter was received by the debtor. The request for 
review shall state the basis for challenging the determination. If the 
debtor alleges that the agency's information relating to the debt is not 
accurate, timely, relevant or complete, such debtor shall provide 
information or documentation to support this allegation.

[[Page 240]]

    (c) The review shall ordinarily be based on written submissions and 
documentation by the debtor. However a reasonable opportunity for an 
oral hearing shall be provided an individual debtor when the responsible 
agency determines that:
    (1) An applicable statute authorizes or requires the agency to 
consider waiver of the indebtedness involved, the debtor requests waiver 
of the indebtedness, and the waiver determination turns on an issue of 
credibility or veracity; or
    (2) An individual debtor requests reconsideration of the debt and 
the agency determines that the question of the indebtedness cannot be 
resolved by review of the documentary evidence, for example, when the 
validity of the debt turns on an issue of credibility or veracity; or
    (3) In other situations in which the agency deems an oral hearing 
appropriate. Unless otherwise required by law, an oral hearing under 
this section is not required to be a formal evidentiary-type hearing, 
although the reviewing official should carefully document all 
significant matters discussed at the hearing.
    (d) Agencies may effect an administrative offset against a payment 
to be made to a debtor prior to the completion of the due process 
procedures required by this subpart, if failure to take the offset would 
substantially prejudice the agency's ability to collect the debt; for 
example, if the time before the payment is to be made would not 
reasonably permit the completion of due process procedures. Offset prior 
to completion of due process procedures must be promptly followed by the 
completion of those procedures. Amounts recovered by offset but later 
found not owed to the agency should be promptly refunded.
    (e) Upon completion of the review, the reviewing official shall 
transmit to the debtor a written notification of the decision. If 
appropriate, this notification shall inform the debtor of the scheduled 
date on or after which administrative offset will begin. The 
notification shall also, if appropriate, indicate any changes in the 
information to the extent such information differs from that provided in 
the initial notification under Sec. 20.22.
    (f) Nothing in this subpart shall preclude an agency, upon request 
of the debtor alleged by the agency to be responsible for a debt, or on 
its own initiative, from reviewing the obligation of such debtor, 
including an opportunity for reconsideration of the determination 
concerning the debt, and including the accuracy, timeliness, relevance, 
and completeness of the information on which the debt is based.

(Approved by the Office of Management and Budget under control number 
1225-0030)



Sec. 20.26  Request for waiver or administrative review.

    (a) If the statute under which waiver or administrative review is 
sought is mandatory, that is, if it prohibits the agency from collecting 
the debt prior to the agency's consideration of the request for waiver 
or review (see Califano v. Yamasaki, 442 U.S. 682 (1979)), then 
collection action must be suspended until either
    (1) The agency has considered the request for waiver/review, or
    (2) The applicable time limit for making the waiver/review request, 
as prescribed in the agency's regulations, has expired and the debtor, 
upon proper notice, has not made such a request.
    (b) If the applicable waiver/review statute is permissive, that is, 
if it does not require all requests for waiver/review to be considered, 
and if it does not prohibit collection action pending consideration of a 
waiver/review request (for example, 5 U.S.C. 5584), collection action 
may be suspended pending agency action on a waiver/review request based 
upon appropriate consideration, on a case-by-case basis, as to whether:
    (1) There is a reasonable possibility that waiver will be granted, 
or that the debt (in whole or in part) will be found not owing from the 
debtor;
    (2) The Government's interests would be protected, if suspension 
were granted, by reasonable assurance that the debt could be recovered 
if the debtor does not prevail; and
    (3) Collection of the debt will cause undue hardship.
    (c) If the applicable statutes and regulations would not authorize 
refund by the agency to the debtor of amounts

[[Page 241]]

collected prior to agency consideration of the debtor's waiver/review 
request in the event the agency acts favorably on it, collection action 
should ordinarily be suspended, without regard to the factors specified 
in paragraph (b) of this section, unless it appears clear, based on the 
request and the surrounding circumstances, that the request is frivolous 
and was made primarily to delay collection.



Sec. 20.27  Cooperation with other DOL agencies and Federal agencies.

    (a) Appropriate use should be made of the cooperative efforts of 
other DOL agencies and Federal agencies in effecting collection by 
administrative offset. Generally, agencies should comply with requests 
from other agencies to initiate administrative offset to collect debts 
owed to the United States, unless the requesting agency has not complied 
with the applicable regulations or the request would otherwise be 
contrary to law or the best interests of the United States.
    (b) Unless otherwise prohibited by law, a DOL agency may request 
that monies due and payable to a debtor by another DOL agency or a 
Federal agency outside the Department be administratively offset in 
order to collect debts owed the creditor DOL agency by the debtor. In 
requesting an administrative offset, the creditor DOL agency must 
provide the DOL agency or other Federal agency holding funds of the 
debtor with written certification stating
    (1) That the debtor owes the creditor agency a debt (including the 
amount of debt); and
    (2) That the creditor agency has complied with the applicable 
Federal Claims Collection Standards, including any hearing or review.



Sec. 20.28  DOL agency as organization holding funds of the debtor.

    (a) Whenever a DOL agency is holding funds of a debtor from which 
administrative offset is sought by another DOL agency or other Federal 
agency, the DOL agency holding funds should not initiate the requested 
offset until it has been provided by the creditor organization with an 
appropriate written certification that the debtor owes a debt (including 
the amount) and that applicable provisions of the Federal Claims 
Collection Standards have been fully complied with.
    (b) Moreover, the DOL agency holding funds of the debtor should 
determine whether collection by offset would be in the best interests of 
the United States; for example, if the debtor is a contractor for the 
DOL agency holding funds, whether administrative offset would impair the 
contractor's ability to perform under the terms of the contract. The 
creditor organization should be notified promptly of the determination.



Sec. 20.29  Notice of offset.

    Prior to effecting an administrative offset, the agency holding 
funds of a debtor should advise the debtor of the impending offset. This 
notice should state that the debtor has been provided his/her rights 
under the Federal Claims Collection Standards, that a determination has 
been made that collection by administrative offset would be in the best 
interests of the United States, the amount of the offset, and the source 
of funds from which the offset will be made.



Sec. 20.30  Multiple debts.

    When collecting multiple debts by administrative offset, agencies 
should apply the recovered amounts to those debts, in accordace with the 
best interests of the United States, as determined by the facts and 
circumstances of the particular case, paying special attention to 
applicable statutes of limitations.



Sec. 20.31  Administrative offset against amounts payable from Civil Service Retirement and Disability fund.

    (a) Unless otherwise prohibited by law, agencies may request that 
moneys which are due and payable to a debtor from the Civil Service 
Retirement and Disability Fund be administratively offset in reasonable 
amounts in order to collect debts owed to the United States by the 
debtor. Such requests shall be made to the appropriate officials of the 
Office of Personnel Management in accordance with such regulations as 
may be prescribed by the Director of that Office.

[[Page 242]]

    (b) When making a request for administrative offset under paragraph 
(a) of this section, an agency shall include a written certification 
that:
    (1) The debtor owes the United States a debt, including the amount 
of the debt;
    (2) The requesting agency has complied with all applicable statutes, 
regulations, and procedures of the Office of Personnel Management; and
    (3) The requesting agency has complied with the requirements of the 
applicable provisions of the Federal Claims Collection Standards, 
including any required hearing or review.
    (c) Once an agency decides to request administrative offset under 
paragraph (a) of this section, it should make the request as soon as 
practical after completion of the applicable due process procedures in 
order that the Office of Personnel Management may identify and ``flag'' 
the debtor's account in anticipation of the time when the debtor becomes 
eligible and requests to receive payments from the Fund. This will 
satisfy any requirement that offset be initiated prior to expiration of 
the applicable statute of limitations. At such time as the debtor makes 
a claim for payments from the Fund, if at least a year has elapsed since 
the offset request was originally made, the debtor should be permitted 
to offer a satisfactory repayment plan in lieu of offset upon 
establishing that changed financial circumstances would render the 
offset unjust.
    (d) In accordance with procedures established by the Office of 
Personnel Management, agencies may request an offset from the Civil 
Service Retirement and Disability Fund prior to completion of due 
process procedures.
    (e) If the requesting agency collects part or all of the debt by 
other means before deductions are made or completed pursuant to 
paragraph (a) of this section, the agency shall act promptly to modify 
or terminate its request for offset under paragraph (a).



Sec. 20.32  Liquidation of collateral.

    An agency holding security or collateral which may be liquidated and 
the proceeds applied on debts due it through the exercise of a power of 
sale in the security instrument or a nonjudicial foreclosure should do 
so by such procedures if the debtor fails to pay the debt within a 
reasonable time after demand, unless the cost of disposing of the 
collateral will be disproportionate to its value or special 
circumstances require judicial foreclosure. The agency should provide 
the debtor with reasonable notice of the sale, an accounting of any 
surplus proceeds, and any other procedures required by contract or law. 
Collection from other sources, including liquidation of security or 
collateral, is not a prerequisite to requiring payment by a surety or 
insurance concern unless such action is expressly required by statute or 
contract.



Sec. 20.33  Collection in installments.

    (a) Whenever feasible, and except as otherwise provided by law, 
debts owed to the United States, together with interest, penalties, and 
administrative costs should be collected in full in one lump sum. This 
is true whether the debt is being collected by administrative offset or 
by another method, including voluntary payment. However, if the debtor 
is financially unable to pay the indebtedness in one lump sum, payment 
may be accepted in regular installments. Agencies should obtain and may 
require financial statements from debtors who represent that they are 
unable to pay the debt in one lump sum. Agencies which agree to accept 
payment in regular installments should obtain a legally enforceable 
written agreement from the debtor which specifies all of the terms of 
the arrangement and which contains a provision accelerating the debt in 
the event the debtor defaults. The size and frequency of installment 
payments should bear a reasonable relation to the size of the debt and 
the debtor's ability to pay. If possible, the installment payments 
should be sufficient in size and frequency to liquidate the Government's 
claim in not more than 3 years. Installment payment of less than $50 per 
month should be accepted only if justifiable on the grounds of financial 
hardship or for some other reasonable cause. An agency holding an

[[Page 243]]

unsecured claim for administrative collection should attempt to obtain 
an executed confess-judgment note, comparable to the Department of 
Justice Form USA-70a, from a debtor when the total amount of the 
deferred installments will exceed $750. Such notes may be sought when an 
unsecured obligation of a lesser amount is involved. When attempting to 
obtain confess-judgment notes, agencies should provide their debtors 
with written explanation of the consequences of signing the note, and 
should maintain documentation sufficient to demonstrate that the debtor 
has signed the note knowingly and voluntarily. Security for deferred 
payments other than a confess-judgment note may be accepted in 
appropriate cases. An agency may accept installment payments 
notwithstanding the refusal of a debtor to execute a confess-judgment 
note or to give other security, at the agency's option.
    (b) If the debtor owes more than one debt and designates how a 
voluntary installment payment is to be applied as among those debts, 
that designation must be followed. If the debtor does not designate the 
application of the payment, agencies should apply payments to the 
various debts in accordance with the best interests of the United 
States, as determined by the facts and circumstances of the particular 
case, paying special attention to applicable statutes of limitations.



Sec. 20.34  Exclusions.

    (a) Agencies are not authorized by section 10 of the Debt Collection 
Act of 1982 (31 U.S.C. 3716) to use administrative offset with respect 
to: (1) Debts owed by any State or local Government; (2) debts arising 
under or payments made under the Social Security Act, the Internal 
Revenue Code of 1954, or the tariff laws of the United States; or (3) 
any case in which collection of the type of debt involved by 
administrative offset is explicitly provided for or prohibited by 
another statute. However, unless otherwise provided by contract or law, 
debts or payments which are not subject to administrative offset under 
31 U.S.C. 3716 may be collected by administrative offset under the 
common law or other applicable statutory authority, pursuant to this 
paragraph or agency regulations established pursuant to such other 
statutory authority.
    (b) This section should not be construed as prohibiting use of these 
authorities or requirements when collecting debts owed by persons 
employed by agencies administering the laws cited in the preceding 
paragraph unless the debt ``arose under'' those laws.
    (c) Collection by offset against a judgment obtained by a debtor 
against the United States shall be accomplished in accordance with 31 
U.S.C. 3728.



Sec. 20.35  Additional administrative collection action.

    Nothing contained in this subpart is intended to preclude the 
utilization of any other administrative remedy which may be available.



Sec. 20.36  Prior provision of rights with respect to debt.

    To the extent that the rights of the debtor in relation to the same 
debt have been previously provided under some other statutory or 
regulatory authority, the agency is not required to duplicate those 
efforts before taking administrative offset.



Sec. 20.37  Responsibilities of the Chief Financial Officer.

    The Chief Financial Officer, or his or her designee, shall provide 
appropriate and binding written or other guidance to Department of Labor 
agencies and officials in carrying out this subpart, including the 
issuance of guidelines and instructions, which he or she may deem 
appropriate. The Chief Financial Officer shall also take such 
administrative steps as may be appropriate to carry out the purposes and 
ensure the effective implementation of this regulation.



         Subpart C--Interest, Penalties and Administrative Costs



Sec. 20.50  Purpose and scope.

    The regulations in this subpart establish the policies and 
procedures to implement section 11 of the Debt Collection Act of 1982 
(Pub. L. 97-365), 31 U.S.C. 3717. Among other things, this

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statute authorizes the head of each agency to assess interest, penalties 
and administrative costs against debtors with respect to delinquent 
debts arising under the agency's program. This subpart establishes the 
standards and procedures that will be followed by the Department of 
Labor in assessing such charges.



Sec. 20.51  Exemptions.

    (a) The provisions of 31 U.S.C. 3717 do not apply:
    (1) To debts owed by any State or local government;
    (2) To debts arising under contracts which were executed prior to, 
and were in effect on (i.e., were not completed as of), October 25, 
1982;
    (3) To debts where an applicable statute, regulation required by 
statute, loan agreement, or contract either prohibits such charges or 
explicitly fixes the charges that apply to the debts involved; or
    (4) To debts arising under the Social Security Act, the Internal 
Revenue Code of 1954, or the tariff laws of the United States.
    (b) Agencies are authorized to assess interest and related charges 
on debts which are not subject to 31 U.S.C. 3717 to the extent 
authorized under the common law or other applicable statutory authority.



Sec. 20.52  Definitions.

    For purposes of this subpart--
    (a) The terms claim and debt are deemed synonymous and 
interchangeable. They refer to an amount of money or property which has 
been determined by an appropriate agency official to be owed to the 
United States from any person, organization or entity, except another 
federal agency.
    (b) A debt is considered delinquent if it has not been paid by the 
date specified in the agency's initial demand letter (Sec. 20.54), 
unless satisfactory payment arrangements have been made by that date, or 
if, at any time thereafter, the debtor fails to satisfy his obligations 
under payment agreement with the Department of Labor, or any agency 
thereof.



Sec. 20.53  Agency responsibilities.

    (a) The Department of Labor agency responsible for administering the 
program under which a delinquent debt arose shall assess interest and 
related charges on the debt, in accordance with guidelines established 
by the Chief Financial Officer. In the case where a debt arises under 
the program of two or more Department of Labor agencies, or in such 
other instances as the Chief Financial Officer, or his or her designee, 
may deem appropriate, the Chief Financial Officer, or his or her 
designee, may determine which agency, or official, shall have 
responsibility for carrying out the provisions of this subpart.
    (b) Before assessing any charges on a delinquent debt, the 
responsible agency must notify the debtor of the Department's policies 
for assessing interest, penalties and administrative costs and must 
ensure that the debt is overdue for the respective periods specified in 
these regulations.
    (c) Each Department of Labor agency is responsible for ensuring the 
continued accuracy of calculations and records relating to its 
assessment of charges, and for the prompt notification of the debtor of 
any substantial change in the status or amount of the claim. As 
appropriate, the Agencies should promptly follow up on any allegation 
made by a debtor that principal or charges is in error. Agencies should 
respond promptly to communication from the debtor, within 30 days 
whenever feasible.



Sec. 20.54  Notification of charges.

    The agency head (or designee) responsible for carrying out the 
provisions of this subpart shall mail or hand-deliver an initial demand 
for payment to the debtor. In the initial demand, the debtor shall be 
notified that interest on the debt will start to accrue from the date on 
which the notice is mailed or hand-delivered, but that payment of 
interest will be waived if the debt is paid by the due date, or within 
30 days of the date of notice, if no due date is specified. The initial 
demand shall also state that administrative costs of recovering the 
delinquent debt will be assessed if payment is not received by the due 
date.

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Sec. 20.55  Second and subsequent notifications.

    (a) In accordance with guidelines established by the Chief Financial 
Officer, the responsible agency head (or designee) shall send 
progressively stronger second and subsequent demands for payment, if 
payment or other appropriate response is not received within the time 
specified by the initial demand. Unless a response to the first or 
second demand indicates that a further demand would be futile or the 
debtor's response does not require rebuttal, the second and subsequent 
demands shall generally be made at 30 day intervals from the first, and 
shall state that a 6 percent per annum penalty will be assessed after 
the debt has been delinquent 90 days, accruing from the date it became 
delinquent. The second and subsequent demands shall also identify the 
amount of interest then accrued on the debt, as well as administrative 
costs thus far assessed. In determining the timing of the demand 
letters, agencies should give due regard to the need to act promptly so 
that, as a general rule, if necessary to refer the debt to the 
Department of Justice for litigation, such referral can be made within 
one year of the final determination of the fact and the amount of the 
debt. When the agency head (or designee) deems it appropriate to protect 
the government's interests (for example, to prevent the statute of 
limitations 28 U.S.C. 2415, from expiring), written demand may be 
preceded by other appropriate actions, including immediate referral for 
litigation.
    (b) Agencies shall also include in their demand letters the notice 
provisions to debtors required by other regulations of the Labor 
Department, pertaining to waiver of the indebtedness, administrative 
offset, salary offset and disclosure of information to credit reporting 
agencies, to the extent that such inclusion is appropriate and 
practicable.



Sec. 20.56  Delivery of notices.

    The responsible agency head (or designee) shall exercise due care to 
ensure that demand letters are dated and mailed or hand-delivered on the 
same day that they are actually dated. If evidence suggests that the 
debtor is no longer located at the address of record, reasonable action 
shall be taken to obtain a current address.



Sec. 20.57  Accrual of interest.

    Interest shall accrue from the date on which notice of the debt and 
the interest requirements is first mailed or hand-delivered to the 
debtor, using the most current address that is available to the agency.



Sec. 20.58  Rate of interest.

    (a) The rate of interest assessed shall be the rate of the current 
value of funds to the United States Treasury as published in the Federal 
Register (as of the date the notice is sent), unless another rate is 
specified by statute, regulations or preexisting contract condition. The 
Office of the Chief Financial Officer will notify agencies promptly of 
the current Treasury rate. The responsible agency may assess a higher 
rate of interest if it reasonably determines that a higher rate is 
necessary to protect the interests of the United States, and such rate 
is agreed to by the Chief Financial Officer (or his designee). The rate 
of interest prescribed in section 6621 of the Internal Revenue Code 
shall be sought for backwages recovered in litigation by the Department.
    (b) The rate of interest as initially assessed shall remain fixed 
for the duration of the indebtedness, except that where a debtor has 
defaulted on a repayment agreement and seeks to enter into a new 
agreement, the agency may set a new interest rate which reflects the 
current value of funds to the Treasury at the time the new agreement is 
executed.
    (c) Interest shall not be assessed on interest, penalties or 
administrative costs required by this subpart. However, if the debtor 
defaults on a previous repayment agreement, charges which accrued but 
were not collected under the defaulted agreement shall be added to the 
principal to be paid under a new repayment agreement.



Sec. 20.59  Assessment of administrative costs.

    (a) The Department of Labor agency responsible for collecting the 
claim shall assess against debtors charges to

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cover administrative costs incurred as a result of the delinquent debt; 
that is, the additional costs incurred in processing and handling the 
debt because it became delinquent. Calculation of administrative costs 
shall be based on cost analyses establishing an average of actual 
additional costs incurred by the agency in processing and handling 
claims against other debtors in similar stages of delinquency.
    (b) In addition to assessing the costs listed in the administrative 
cost fee schedule, the responsible agency may include the costs incurred 
in obtaining a credit report or in using a private debt collector, to 
the extent they are attributable to delinquency.
    (c) The Chief Financial Officer shall issue each year a schedule 
providing the costs associated with various common activities required 
to collect delinquent debts.



Sec. 20.60  Application of partial payments to amounts owed.

    When a debt is paid in partial or installment payments, amounts 
received by the responsible agency should be applied first to 
outstanding penalty and administrative cost charges, second to accrued 
interest, and third to outstanding principal.



Sec. 20.61  Waiver.

    (a) The Department of Labor agency responsible for collecting the 
claim shall waive the collection of interest on the debt or any portion 
of the debt which is paid within 30 days after the date on which 
interest began to accrue. This 30-day period may be extended for another 
30 days on a case-by-case basis, if the agency reasonably determines 
that such action is appropriate, and is in accordance with these 
regulations. Also, the responsible agency may waive charges assessed 
under this subpart, based on criteria specified in the Federal Claims 
Collection Standards relating to the compromise of claims (without 
regard to the amount of the debt), or if the agency determines that 
collection of these charges would be against equity and good conscience 
or not be in the best interests of the United States. Waiver under the 
first sentence of this paragraph is mandatory. Under the second and 
third sentences waiver is permissive and may be exercised only in 
accordance with the standards set by these regulations.
    (b) Agencies may waive interest and other charges under appropriate 
circumstances, including, for example:
    (1) Pending consideration of a request for reconsideration, 
administrative review, or waiver under a permissive statute,
    (2) If the agency has accepted an installment plan, there is no 
fault or lack of good faith on the part of the debtor, and the amount of 
interest is large enough in relation to the size of the debt and the 
amount of the installments that the debtor can reasonably afford to pay 
so that the debt can never be repaid, or
    (3) If repayment of the full amount of the debt is made after the 
date upon which interest and other charges became payable and the 
estimated costs of recovering the residual interest balance exceed the 
amount owed the Agency.
    (c) Where a mandatory waiver or review statute applies, interest and 
related charges may not be assessed for those periods during which 
collection action must be suspended.



Sec. 20.62  Responsibilities of the Chief Financial Officer.

    The Chief Financial Officer, or his or her designee, shall provide 
appropriate and binding written or other guidance to Department of Labor 
agencies and officials in carrying out this subpart, including the 
issuance of guidelines and instructions, which he or she may deem 
appropriate. The Chief Financial Officer shall also take such 
administrative steps as may be appropriate to carry out the purposes and 
ensure the effective implementation of this regulation.



                        Subpart D--Salary Offset

    Source: 52 FR 3772, Feb. 5, 1987, unless otherwise noted.



Sec. 20.74  Purpose.

    (a) The regulations in this subpart establish procedures to 
implement section 5 of the Debt Collection Act of 1982 (Pub. L. 97-365), 
5 U.S.C. 5514. This statute authorizes the head of each agency

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to deduct from the current pay account of an employee (salary offset) 
when the employee owes money to the United States. This subpart 
specifies the agency procedures that will be available in a salary 
offset by the Department of Labor of an employee's current pay account.
    (b) Administrative offset is defined in 31 U.S.C. 3701(a)(1) as 
``withholding money payable by the United States Government, to or held 
by the Government for a pe