[Title 29 CFR ]
[Code of Federal Regulations (annual edition) - July 1, 2016 Edition]
[From the U.S. Government Publishing Office]
[[Page i]]
Title 29
Labor
________________________
Parts 0 to 99
Revised as of July 1, 2016
Containing a codification of documents of general
applicability and future effect
As of July 1, 2016
Published by the Office of the Federal Register
National Archives and Records Administration as a
Special Edition of the Federal Register
[[Page ii]]
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[[Page iii]]
Table of Contents
Page
Explanation................................................. v
Title 29:
SUBTITLE A--Office of the Secretary of Labor 0
Finding Aids:
Table of CFR Titles and Chapters........................ 709
Alphabetical List of Agencies Appearing in the CFR...... 729
List of CFR Sections Affected........................... 739
[[Page iv]]
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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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[[Page v]]
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
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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
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HOW TO USE THE CODE OF FEDERAL REGULATIONS
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collection request.
[[Page vi]]
Many agencies have begun publishing numerous OMB control numbers as
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(b) The matter incorporated is in fact available to the extent
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(c) The incorporating document is drafted and submitted for
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[[Page vii]]
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Oliver A. Potts,
Director,
Office of the Federal Register.
July 1, 2016.
[[Page ix]]
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, part 1900-Sec. 1910.999, part 1910.1000-
end of part 1910, 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, 2016.
The OMB control numbers for title 29 CFR part 1910 appear in Sec.
1910.8. For the convenience of the user, Sec. 1910.8 appears in the
Finding Aids section of the volume containing Sec. 1910.1000 to the
end.
For this volume, Robert J. Sheehan, III was Chief Editor. The Code
of Federal Regulations publication program is under the direction of
John Hyrum Martinez, assisted by Stephen J. Frattini.
[[Page 1]]
TITLE 29--LABOR
(This book contains parts 0 to 99)
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Part
SUBTITLE A--Office of the Secretary of Labor................ 0
[[Page 3]]
Subtitle A--Office of the Secretary of Labor
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Part Page
0 Ethics and conduct of Department of Labor
employees............................... 7
1 Procedures for predetermination of wage
rates................................... 9
2 General regulations......................... 17
3 Contractors and subcontractors on public
building or public work financed in
whole or in part by loans or grants from
the United States....................... 29
4 Labor standards for Federal service
contracts............................... 33
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).................................... 112
6 Rules of practice for administrative
proceedings enforcing labor standards in
Federal and federally assisted
construction contracts and Federal
service contracts....................... 140
7 Practice before the Administrative Review
Board with regard to Federal and
federally assisted construction
contracts............................... 151
8 Practice before the Administrative Review
Board with regard to Federal service
contracts............................... 155
9 Nondisplacement of qualified workers under
service contracts....................... 159
10 Establishing a minimum wage for contractors. 177
11 Department of Labor National Environmental
Policy Act (NEPA) compliance procedures. 196
12 Uniform relocation assistance and real
property acquisition for Federal and
federally assisted programs............. 203
14 Security regulations........................ 203
[[Page 4]]
15 Administrative claims under the Federal Tort
Claims Act and related statutes......... 207
16 Equal Access to Justice Act................. 220
17 Intergovernmental review of Department of
Labor programs and activities........... 226
18 Rules of practice and procedure for
administrative hearings before the
Office of Administrative Law Judges..... 230
19 Right to Financial Privacy Act.............. 287
20 Federal claims collection................... 289
22 Program Fraud Civil Remedies Act of 1986.... 317
24 Procedures for the handling of retaliation
complaints under the employee protection
provisions of six environmental statutes
and section 211 of the Energy
Reorganization Act Of 1974, as amended.. 332
25 Rules for the nomination of arbitrators
under section 11 of Executive Order
10988................................... 344
29 Labor standards for the registration of
apprenticeship programs................. 347
30 Equal employment opportunity in
apprenticeship and training............. 363
31 Nondiscrimination in federally assisted
programs of the Department of Labor--
effectuation of Title VI of the Civil
Rights Act of 1964...................... 376
32 Nondiscrimination on the basis of handicap
in programs or activities receiving
Federal financial assistance............ 386
33 Enforcement of nondiscrimination on the
basis of handicap in programs or
activities conducted by the Department
of Labor................................ 402
34 Implementation of the nondiscrimination and
equal opportunity requirements of the
Job Training Partnership Act of 1982, as
amended (JTPA).......................... 410
35 Nondiscrimination on the basis of age in
programs or activities receiving Federal
financial assistance from the Department
of Labor................................ 436
36 Nondiscrimination on the basis of sex in
education programs or activities
receiving Federal financial assistance.. 451
37 Implementation of the nondiscrimination and
equal opportunity provisions of the
Workforce Investment Act of 1998 (WIA).. 467
38 Implementation of the Nondiscrimination and
Equal Opportunity Provisions of the
Workforce Innovation and Opportunity Act 508
[[Page 5]]
42 Coordinated enforcement..................... 548
44 Process for electing State employment
statistics agency representatives for
consultations with Department of Labor.. 554
70 Production or disclosure of information or
materials............................... 555
71 Protection of individual privacy and access
to records under the Privacy Act of 1974 576
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............................. 597
90 Certification of eligibility to apply for
worker adjustment assistance............ 600
93 New restrictions on lobbying................ 609
94 Governmentwide requirements for drug-free
workplace (financial assistance)........ 621
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............. 626
96 Audit requirements for grants, contracts and
other agreements........................ 652
97 Uniform administrative requirements for
grants and cooperative agreements to
State and local governments............. 657
99 Audits of States, local governments, and
nonprofit organizations................. 684
[[Page 7]]
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 Director of the Office of
Government
[[Page 8]]
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
Authority: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization
Plan No. 14 of 1950, 5 U.S.C. appendix; 40 U.S.C. 3141 et seq.; 40
U.S.C. 3145; 40 U.S.C. 3148; 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\
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\1\ These definitions are not intended to restrict the meaning of
the terms as used in the applicable statutes.
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(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.
(e) The term Wage Determinations OnLine (WDOL) shall mean the
Government Internet Web site for both Davis-Bacon Act and Service
Contract Act wage determinations available at http://www.wdol.gov. In
addition, WDOL provides compliance assistance information. The term will
also apply to any other Internet Web site or electronic means that the
Department of Labor may approve for these purposes.
[48 FR 19533, Apr. 29, 1983, as amended at 48 FR 50313, Nov. 1, 1983; 70
FR 50894, Aug. 26, 2005]
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.
[[Page 11]]
(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 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) The Department of Labor publishes general wage determinations
under the Davis-Bacon Act on the WDOL Internet Web site. 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).
(b)(1) If a general wage determination is not available, the Federal
agency shall request a wage determination under the Davis-Bacon Act or
any of its related prevailing wage statutes by submitting Form SF-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. In
preparing Form SF-308, the agency shall check only those classifications
that 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 that 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.
[[Page 12]]
(3) Such request for a wage determination shall be accompanied by
any pertinent wage payment information that 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.
(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 50313, Nov. 1, 1983; 50
FR 49823, Dec. 4, 1985; 70 FR 50894, Aug. 26, 2005]
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(a),
notice of which is published on WDOL, 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.
(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
[[Page 13]]
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 on WDOL 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 notice of a modification
or a supersedeas wage determination is published on WDOL or on the date
the agency receives actual written notice of the modification from the
Department of Labor, whichever occurs first. Archived versions of Davis-
Bacon and Related Acts wage determinations that are no longer current
may be accessed in the ``Archived DB WD'' database of WDOL for
information purposes only. Contracting officers should not use an
[[Page 14]]
archived wage determination in a contract action without prior approval
of the Department of Labor.
(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; 70
FR 50894, Aug. 26, 2005]
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.
Sec. 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, 82
Stat. 45; 40 U.S.C. 808).
Note: Section applying labor standards provisions of the Davis-Bacon
Act repealed August 21, 2002, by 116 Stat. 1318, Pub. L. 107-217.
20. Appalachian Regional Development Act of 1965 (sec. 402, 79 Stat.
21; 40 U.S.C. 14701).
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, as amended at 70
FR 50894, Aug. 26, 2005]
[[Page 17]]
Sec. Appendix B to Part 1
Northeast Region
For the States of Connecticut, Delaware, District of Columbia,
Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York,
Pennsylvania, Puerto Rico, Rhode Island, Vermont, Virgin Islands,
Virginia and West Virginia:
Regional Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, Curtis Center, 170 South
Independence Mall West, Room 850 West, Philadelphia, PA 19106
(Telephone: 215-861-5800, FAX: 215-861-5840).
Southeast Region
For the States of Alabama, Florida, Georgia, Kentucky, Mississippi,
North Carolina, South Carolina and Tennessee:
Regional Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, 61 Forsyth Street, SW., Room
7M40, Atlanta, GA 30303 (Telephone 404-893-4531, FAX: 404-893-4524).
Midwest Region
For the States of Illinois, Indiana, Iowa, Kansas, Michigan,
Minnesota, Missouri, Nebraska, Ohio and Wisconsin:
Regional Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, 230 South Dearborn Street,
Room 530, Chicago, IL 60604-1591 (Telephone: 312-596-7180, FAX: 312-596-
7205).
Southwest Region
For the States of Arkansas, Colorado, Louisiana, Montana, New
Mexico, North Dakota, Oklahoma, South Dakota, Texas, Utah and Wyoming:
Regional Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, 525 South Griffin Street,
Suite 800, Dallas, TX 75202-5007 (Telephone: 972-850-2600, FAX: 972-850-
2601).
Western Region
For the States of Alaska, American Samoa, Arizona, California, Guam,
Hawaii, Idaho, Nevada, Oregon and Washington:
Regional Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor, 71 Stevenson Street, Suite
930, San Francisco, CA 94105, (Telephone: 415-848-6600, FAX: 415-848-
6655).
[70 FR 50895, Aug. 26, 2005]
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.
Subpart D_Equal Treatment in Department of Labor Programs for Religious
Organizations; Protection of Religious Liberty of Department of Labor
Social Service Providers and Beneficiaries
2.30 Purpose.
2.31 Definitions.
2.32 Equal participation of religious organizations.
2.33 Responsibilities of DOL, DOL social service providers and State and
local governments administering DOL support.
2.34 Beneficiary protections: written notice.
2.35 Beneficiary protections: referral requirements.
2.36 Application to State and local funds.
2.37 Effect of DOL support on Title VII employment nondiscrimination
requirements and on other existing statutes.
2.38 Status of nonprofit organizations.
2.39 Political or religious affiliation.
Appendix A to Part 2--Notice of Beneficiary Religious Liberty
Protections
[[Page 18]]
Appendix B to Part 2--Beneficiary Referral Request
Authority: 5 U.S.C. 301; Executive Order 13198, 66 FR 8497, 3 CFR
2001 Comp., p. 750; Executive Order 13279, 67 FR 77141, 3 CFR 2002
Comp., p. 258; Executive Order 13559, 75 FR 71319, 3 CFR 2011 Comp., p.
273.
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.
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
Government Accountability Office, and to the Department of Justice for
litigation.
(b) Designation. The Assistant Secretary for Administration and
Management, 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
[[Page 19]]
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, as amended at 72 FR 37098, July 9, 2007]
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.
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
[[Page 20]]
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 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 Sec. Sec. 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.
[[Page 21]]
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 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.
[[Page 22]]
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 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 Sec. Sec. 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 Sec. Sec. 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.
Subpart D_Equal Treatment in Department of Labor Programs for Religious
Organizations; Protection of Religious Liberty of Department of Labor
Social Service Providers and Beneficiaries
Source: 69 FR 41891, July 12, 2004, unless otherwise noted.
Sec. 2.30 Purpose.
The purpose of the regulations in this subpart is to ensure that
DOL-supported social service programs are open to all qualified
organizations, regardless of the organizations' religious character, and
to establish clearly the permissible uses to which DOL support for
social service programs may be put, and the conditions for receipt of
such support. In addition, this proposed rule is designed to ensure that
the Department's social service programs are implemented in a manner
consistent with the requirements of the Constitution, including the
Religion Clauses of the First Amendment.
[[Page 23]]
Sec. 2.31 Definitions.
As used in the regulations in this subpart:
(a) The term Federal financial assistance means assistance that non-
Federal entities (including State and local governments) receive or
administer in the form of grants, contracts, loans, loan guarantees,
property, cooperative agreements, direct appropriations, or other direct
or indirect assistance, but does not include a tax credit, deduction or
exemption. Federal financial assistance may be direct or indirect.
(1) The term direct Federal financial assistance or Federal
financial assistance provided directly means that the Government or a
DOL social service intermediary provider under this part selects the
provider and either purchases services from that provider (e.g., via a
contract) or awards funds to that provider to carry out a service (e.g.,
via grant or cooperative agreement). In general, Federal financial
assistance shall be treated as direct, unless it meets the definition of
indirect Federal financial assistance or Federal financial assistance
provided indirectly.
(2) The term indirect Federal financial assistance or Federal
financial assistance provided indirectly means that the choice of the
service provider is placed in the hands of the beneficiary, and the cost
of that service is paid through a voucher, certificate, or other similar
means of government-funded payment. Federal financial assistance
provided to an organization is considered indirect when:
(i) The Government program through which the beneficiary receives
the voucher, certificate, or other similar means of Government-funded
payment is neutral toward religion;
(ii) The organization receives the assistance as a result of a
decision of the beneficiary, not a decision of the government; and
(iii) The beneficiary has at least one adequate secular option for
the use of the voucher, certificate, or other similar means of
Government-funded payment.
(3) The recipient of sub-awards received through programs
administered by States or other intermediaries that are themselves
recipients of Federal financial assistance (e.g., local areas that
receive within-state allocations to provide workforce services under
title I of the Workforce Innovation and Opportunity Act) are not
considered recipients of indirect Federal financial assistance or
recipients of Federal financial assistance provided indirectly as those
terms are used in Executive Order 13559. These recipients of sub-awards
are considered recipients of direct Federal financial assistance.
(b) The term social service program means a program that is
administered or supported by the Federal Government, or by a State or
local government using Federal financial assistance, and that provides
services directed at reducing poverty, improving opportunities for low-
income children, revitalizing low-income communities, empowering low-
income families and low-income individuals to become self-sufficient, or
otherwise helping people in need. Such programs include, but are not
limited to, the following:
(1) Child care services and services to meet the special needs of
children, older individuals, and individuals with disabilities
(including physical, mental, or emotional disabilities);
(2) Job training and related services, and employment services;
(3) Information, referral, and counseling services;
(4) Literacy and mentoring programs; and
(5) Services for the prevention and treatment of juvenile
delinquency and substance abuse, services for the prevention of crime
and the provision of assistance to the victims and the families of
criminal offenders, and services related to intervention in, and
prevention of domestic violence.
(c) The term DOL means the U.S. Department of Labor.
(d) The term DOL-supported social service program, DOL social
service program, or DOL program means a social service program, as
defined in paragraph (b) of this section, that is administered by or for
DOL with DOL support. Such programs include, but are not limited to, the
One Stop Career Center System, the Job Corps, and other programs
supported through the Workforce Investment Act.
[[Page 24]]
(e) The term DOL social service provider means any non-Federal
organization, other than a State or local government, that seeks or
receives DOL support as defined in paragraph (g) of this section, or
participates in DOL programs other than as the ultimate beneficiary of
such programs.
(f) The term DOL social service intermediary provider means any DOL
social service provider, including a non-governmental organization,
that, as part of its duties, selects subgrantees to receive DOL support
or subcontractors to provide DOL-supported services, or has the same
duties under this part as a governmental entity.
(g) The term DOL support means Federal financial assistance, as well
as procurement funding provided to a non-Federal organization, including
a State or local government, to support the organization's
administration of or participation in a DOL social service program as
defined in paragraph (d) of this section.
[69 FR 41891, July 12, 2004, as amended at 81 FR 19422, Apr. 4, 2016]
Sec. 2.32 Equal participation of religious organizations.
(a) Religious organizations must be eligible, on the same basis as
any other organization, to seek DOL support or participate in DOL
programs for which they are otherwise eligible. DOL, DOL social service
intermediary providers, as well as State and local governments
administering DOL support, must not discriminate for or against an
organization on the basis of the organization's religious character or
affiliation, although this requirement does not preclude DOL, DOL social
service providers, or State and local governments administering DOL
support from accommodating religion in a manner consistent with the
Establishment Clause. In addition, because this rule does not affect
existing constitutional requirements, DOL, DOL social service providers
(insofar as they may otherwise be subject to any constitutional
requirements), and State and local governments administering DOL support
must continue to comply with otherwise applicable constitutional
principles, including, among others, those articulated in the
Establishment, Free Speech, and Free Exercise Clauses of the First
Amendment to the Constitution.
(b) A religious organization that is a DOL social service provider
retains its independence from Federal, State, and local governments and
must be permitted to continue to carry out its mission, including the
definition, development, practice, and expression of its religious
beliefs, subject to the provisions of Sec. 2.33. Among other things,
such a religious organization must be permitted to:
(1) Use its facilities to provide DOL-supported social services
without removing or altering religious art, icons, scriptures, or other
religious symbols from those facilities; and
(2) Retain its authority over its internal governance, including
retaining religious terms in its name, selecting its board members on a
religious basis, and including religious references in its mission
statements and other governing documents.
(c) A grant document, contract or other agreement, covenant,
memorandum of understanding, policy, or regulation that is used by DOL,
a State or local government administering DOL support, or a DOL social
service intermediary provider must not require only religious
organizations to provide assurances that they will not use direct DOL
support for explicitly religious activities (including activities that
involve overt religious content, such as worship, religious instruction,
or proselytization). Any such requirements must apply equally to both
religious and other organizations. All organizations, including
religious ones, that are DOL social service providers must carry out
DOL-supported activities in accordance with all applicable legal and
programmatic requirements, including those prohibiting the use of direct
DOL support for explicitly religious activities (including activities
that involve overt religious content, such as worship, religious
instruction, or proselytization). A grant document, contract or other
agreement, covenant, memorandum of understanding, policy, or regulation
that is used by DOL, a State or local government, or a DOL social
service intermediary provider in administering a DOL social service
[[Page 25]]
program must not disqualify organizations from receiving DOL support or
participating in DOL programs on the grounds that such organizations are
motivated or influenced by religious faith to provide social services,
have a religious character or affiliation, or lack a religious
component.
[69 FR 41891, July 12, 2004, as amended at 81 FR 19422, Apr. 4, 2016]
Sec. 2.33 Responsibilities of DOL, DOL social service providers and
State and local governments administering DOL support.
(a) Any organization that participates in a program funded by
federal financial assistance shall not, in providing services or in
outreach activities related to such services, discriminate against a
current or prospective program beneficiary on the basis of religion,
religious belief, a refusal to hold a religious belief, or a refusal to
attend or participate in a religious practice. However, an organization
that participates in a program funded by indirect financial assistance
need not modify its program activities to accommodate a beneficiary who
chooses to expend the indirect aid on the organization's program. This
requirement does not preclude DOL, DOL social service intermediary
providers, or State or local governments administering DOL support from
accommodating religion in a manner consistent with the Establishment
Clause of the First Amendment to the Constitution.
(b)(1) DOL, DOL social service intermediary providers, DOL social
service providers, and State and local governments administering DOL
support must ensure that they do not use direct DOL support for
explicitly religious activities (including activities that involve overt
religious content such as worship, religious instruction, or
proselytization). DOL social service providers must be permitted to
offer explicitly religious activities so long as they offer those
activities separately in time or location from social services receiving
direct DOL support, and participation in the explicitly religious
activities is voluntary for the beneficiaries of social service programs
receiving direct DOL support. For example, participation in an
explicitly religious activity must not be a condition for participating
in a directly-supported social service program.
(2) This regulation is not intended to and does not restrict the
exercise of rights or duties guaranteed by the Constitution. For
example, program officials must not impermissibly restrict the ability
of program beneficiaries or DOL social service providers to freely
express their views and to exercise their right to religious freedom.
Additionally, subject to reasonable and permissible time, place and
manner restrictions, residential facilities that receive DOL support
must permit residents to engage in voluntary religious activities,
including holding religious services, at these facilities.
(3) Notwithstanding the requirements of paragraph (b)(1) of this
section, and to the extent otherwise permitted by Federal law (including
constitutional requirements), direct DOL support may be used to support
explicitly religious activities (including activities that involve overt
religious content such as worship, religious instruction, or
proselytization), and such activities need not be provided separately in
time or location from other DOL-supported activities, under the
following circumstances:
(i) Where DOL support is provided to chaplains to work with inmates
in prisons, detention facilities, or community correction centers
through social service programs;
(ii) Where DOL support is provided to social service programs in
prisons, detention facilities, or community correction centers, in which
social service organizations assist chaplains in carrying out their
duties; or
(iii) Where DOL-supported social service programs involve such a
degree of government control over the program environment that religious
exercise would be significantly burdened absent affirmative steps by DOL
or its social service providers.
(c) If a DOL social service intermediary provider, acting under a
contract, grant, or other agreement with the Federal Government or with
a State or local government that is administering a program supported by
Federal financial assistance, is given the authority under the contract,
[[Page 26]]
grant, or agreement to select non-governmental organizations to provide
services funded by the Federal Government, the DOL social service
intermediary provider must ensure compliance with the provisions of
Executive Order 13279, as amended by Executive Order 13559, and any
implementing rules or guidance, by the recipient of a contract, grant or
agreement. If the DOL social service intermediary provider is a non-
governmental organization, it retains all other rights of a non-
governmental organization under the program's statutory and regulatory
provisions.
[69 FR 41891, July 12, 2004, as amended at 81 FR 19422, Apr. 4, 2016]
Sec. 2.34 Beneficiary protections: written notice.
(a) Contents. Religious organizations providing social services to
beneficiaries under a DOL program supported by direct Federal financial
assistance must give written notice to beneficiaries and prospective
beneficiaries of certain protections. Such notice must be given in a
manner prescribed by DOL, and state that:
(1) The organization may not discriminate against a beneficiary or
prospective beneficiary on the basis of religion or religious belief, a
refusal to hold a religious belief, or a refusal to attend or
participate in a religious practice;
(2) The organization may not require beneficiaries to attend or
participate in any explicitly religious activities (including activities
that involve overt religious content such as worship, religious
instruction, or proselytization) that are offered by our organization,
and any participation by beneficiaries in such activities must be purely
voluntary;
(3) The organization must separate out in time or location any
privately-funded explicitly religious activities (including activities
that involve overt religious content such as worship, religious
instruction, or proselytization) from activities supported with direct
Federal financial assistance;
(4) If a beneficiary objects to the religious character of the
organization, the organization must make reasonable efforts to identify
and refer the beneficiary to an alternative provider to which the
beneficiary has no objection. The organization cannot guarantee,
however, that in every instance, an alternative provider will be
available; and
(5) Beneficiaries or prospective beneficiaries may report violations
of these protections to, or file a written complaint of any denials of
services or benefits by an organization with, the U.S. Department of
Labor's Civil Rights Center. The required language of the notice is set
forth in appendix A to these regulations and may be downloaded from the
Civil Rights Center's Web site at http://www.dol.gov/oasam/programs/crc
or at the Center for Faith-Based and Neighborhood Partnerships' Web site
at http://www.dol.gov/cfbnp. DOL social service providers may post and
distribute exact duplicate copies of the notice, including through
electronic means.
(b) Timing of notice. This written notice must be given to
beneficiaries prior to the time they enroll in the program or receive
services from such programs. When the nature of the service provided or
exigent circumstances make it impracticable to provide such written
notice in advance of the actual service, DOL social service providers
must advise beneficiaries of their protections at the earliest available
opportunity.
(c) Applicability. The obligations in this subsection apply only to
religious organizations providing services under social service programs
administered in the United States.
[81 FR 19423, Apr. 4, 2016]
Sec. 2.35 Beneficiary protections: referral requirements.
(a) If a beneficiary or prospective beneficiary of a social service
program supported by direct DOL financial assistance objects to the
religious character of an organization that provides services under the
program, that organization must promptly undertake reasonable efforts to
identify and refer the beneficiary or prospective beneficiary to an
alternative provider to which the beneficiary or the prospective
beneficiary has no objection.
[[Page 27]]
(b) A referral may be made to another religious organization, if the
beneficiary has no objection to that provider. But if the beneficiary
requests a secular provider, and a secular provider is available, then a
referral must be made to that provider.
(c) Except for services provided by telephone, internet, or similar
means, the referral must be to an alternative provider that is in
reasonable geographic proximity to the organization making the referral
and that offers services that are similar in substance and quality to
those offered by that organization. The alternative provider also must
have the capacity to accept additional clients.
(d) When the organization makes a referral to an alternative
provider, the organization shall maintain a record of that referral for
review by the awarding entity. When the organization determines that it
is unable to identify an alternative provider, the organization shall
promptly notify and maintain a record for review by the awarding entity.
If the organization is unable to identify an alternative provider, the
awarding entity shall determine whether there is any other suitable
alternative provider to which the beneficiary may be referred.
(e) A DOL social service intermediary provider that receives a
request for assistance in identifying an alternative provider may
request assistance from DOL.
(f) The obligations in this section apply only to religious
organizations providing services under social service programs
administered in the United States.
[81 FR 19423, Apr. 4, 2016]
Sec. 2.36 Application to State and local funds.
If a State or local government voluntarily contributes its own funds
to supplement activities carried out under the applicable programs, the
State or local government has the option to separate out the Federal
funds or commingle them. If the funds are commingled, then the
provisions of this subpart apply to all of the commingled funds in the
same manner, and to the same extent, as the provisions apply to the
Federal assistance. State funds that are contributed pursuant to the
requirements of a matching or grant agreement are considered to be
commingled funds.
[69 FR 41891, July 12, 2004. Redesignated at 81 FR 19423, Apr. 4, 2016]
Sec. 2.37 Effect of DOL support on Title VII employment nondiscrimination
requirements and on other existing statutes.
A religious organization's exemption from the Federal prohibition on
employment discrimination on the basis of religion, set forth in Sec.
702(a) of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e-1, is not
forfeited when the organization receives direct or indirect DOL support.
Some DOL programs, however, were established through Federal statutes
containing independent statutory provisions requiring that recipients
refrain from discriminating on the basis of religion. Accordingly, to
determine the scope of any applicable requirements, recipients and
potential recipients should consult with the appropriate DOL program
official or with the Civil Rights Center, U.S. Department of Labor, 200
Constitution Avenue, NW., Room N4123, Washington, DC 20210, (202) 693-
6500. Individuals with hearing or speech impairments may access this
telephone number via TTY by calling the toll-free Federal Information
Relay Service at 1-800-877-8339.
[69 FR 41891, July 12, 2004. Redesignated at 81 FR 19423, Apr. 4, 2016]
Sec. 2.38 Status of nonprofit organizations.
(a) In general, DOL does not require that an organization, including
a religious organization, obtain tax-exempt status under section
501(c)(3) of the Internal Revenue Code in order to be eligible for
Federal financial assistance under DOL social service programs. Many
such programs, however, do require an organization to be a ``nonprofit
organization'' in order to be eligible for such support. Individual
solicitations that require organizations to have nonprofit status must
specifically so indicate in the eligibility section of the solicitation.
In addition, any solicitation for a program that requires an
organization to maintain tax-exempt status must expressly state the
[[Page 28]]
statutory authority for requiring such status. For assistance with
questions about a particular solicitation, applicants should contact the
DOL program office that issued the solicitation.
(b) Unless otherwise provided by statute, in DOL programs in which
an applicant must show that it is a nonprofit organization, the
applicant must be permitted to do so by any of the following means:
(1) Proof that the Internal Revenue Service currently recognizes the
applicant as tax exempt under section 501(c)(3) of the Internal Revenue
Code;
(2) A statement from a State taxing body or the State Secretary of
State certifying that:
(i) The organization is a nonprofit organization operating within
the State; and
(ii) No part of its net earnings may lawfully benefit any private
shareholder or individual;
(3) A certified copy of the applicant's certificate of incorporation
or similar document that clearly establishes the nonprofit status of the
applicant; or
(4) Any item described in paragraphs (b)(1) through (b)(3) of this
section, if that item applies to a State or national parent
organization, together with a statement by the State or national parent
organization that the applicant is a local nonprofit affiliate of the
organization.
[69 FR 41891, July 12, 2004. Redesignated at 81 FR 19423, Apr. 4, 2016]
Sec. 2.39 Political or religious affiliation.
Decisions about awards of Federal financial assistance must be free
from political interference or even the appearance of such interference
and must be made on the basis of merit, not on the basis of religion or
religious belief or lack thereof.
[81 FR 19423, Apr. 4, 2016]
Sec. Appendix A to Part 2--Notice of Beneficiary Religious Liberty
Protections
[Insert Name of Organization]:
[Insert Name of Program]:
[Insert Contact information for Program Staff (name, phone number,
and email address, if appropriate)]:
________________________________________________________________________
Because this program is supported in whole or in part by financial
assistance from the Federal Government, we are required to let you know
that:
(1) We may not discriminate against you on the basis of religion or
religious belief, a refusal to hold a religious belief, or a refusal to
attend or participate in a religious practice;
(2) We may not require you to attend or participate in any
explicitly religious activities (including activities that involve overt
religious content such as worship, religious instruction, or
proselytization) that are offered by our organization, and any
participation by beneficiaries in such activities must be purely
voluntary;
(3) We must separate out in time or location any privately-funded
explicitly religious activities (including activities that involve overt
religious content such as worship, religious instruction, or
proselytization) from activities supported with direct Federal financial
assistance;
(4) If you object to the religious character of an organization, we
must make reasonable efforts to identify and refer you to an alternative
provider to which you have no objection. We cannot guarantee, however,
that in every instance, an alternative provider will be available; and
(5) You may report violations of these protections to, or file a
written complaint of any denials of services or benefits by an
organization, with the U.S. Department of Labor's Civil Rights Center,
200 Constitution Ave. NW., Room N-4123, Washington, DC 20210, or by
email to [email protected].
This written notice must be given to you prior to the time you
enroll in the program or receive services from such programs, unless the
nature of the service provided or urgent circumstances makes it
impracticable to provide such notice in advance of the actual service.
In such an instance, this notice must be given to you at the earliest
available opportunity.
--End of Form --
[81 FR 19423, Apr. 4, 2016]
Sec. Appendix B to Part 2--Beneficiary Referral Request
If you object to receiving services from us based on the religious
character of our organization, please complete this form and return it
to the program contact identified above. If you object, we will make
reasonable efforts to refer you to another service provider. With your
consent, we will follow up with you or the organization to which you
were referred to determine whether you contacted that organization.
Please check if applicable:
[[Page 29]]
( ) I want to be referred to another service provider.
If you checked above that you wish to be referred to another service
provider, please check one of the following:
( ) Please follow up with me.
Name:
Best way to reach me (phone/address/email):
( ) Please follow up with the other service provider.
( ) Please do not follow up.
--End of Form--
[81 FR 19423, Apr. 4, 2016]
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. 3145; Secretary's Order 01-
2008; and Employment Standards Order No. 2001-01.
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, 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.
[[Page 30]]
(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 title during the preceding weekly
payroll period. This statement shall be executed by the contractor or
subcontractor or by an authorized officer or employee of the contractor
or subcontractor who supervises the payment of wages, and shall be on
the back of Form WH 347, ``Payroll (For Contractors Optional Use)'' or
on any form with identical wording. Copies of Form WH 347 may be
obtained from the Government contracting or sponsoring agency or from
the Wage and Hour Division Web site at http://www.dol.gov/esa/whd/forms/
wh347instr.htm or its successor site.
(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; 73 FR 77511, Dec. 19, 2008]
[[Page 31]]
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 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.
[[Page 32]]
(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 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
[[Page 33]]
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 Obtaining a wage determination.
4.5 Contract specification of determined minimum wages and fringe
benefits.
4.6 Labor standards clauses for Federal service contracts exceeding
$2,500.
4.7-4.9 [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.
[[Page 34]]
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]
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.
[[Page 35]]
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;
Pub. L. 104-188, Sec. 2105(b); Pub. L. 110-28, 121 Stat. 112;
Secretary's Order 9-2009, 74 FR 58836 (Nov. 13, 2009).
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 Assistant
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 Sec. Sec. 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 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
[[Page 36]]
which is subject to the provisions of the Service Contract Act of 1965.
A wage determination is effective upon its publication on the WDOL Web
site or when a Federal agency receives a response from the Department of
Labor to an e98.
(i) Wage Determinations OnLine (WDOL) means the Government Internet
Web site for both Davis-Bacon Act and Service Contract Act wage
determinations available at http://www.wdol.gov. In addition, WDOL
provides compliance assistance information and a link to submit an e98
or any electronic means the Department of Labor may approve for this
purpose. The term will also apply to any other Internet Web site or
electronic means that the Department of Labor may approve for these
purposes.
(j) The e98 means a Department of Labor approved electronic
application (http://www.wdol.gov), whereby a contracting officer submits
pertinent information to the Department of Labor and requests a wage
determination directly from the Wage and Hour Division. The term will
also apply to any other process or system the Department of Labor may
establish for this purpose.
[48 FR 49762, Oct. 27, 1983, as amended at 70 FR 50895, Aug. 26, 2005]
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,
[[Page 37]]
provided that the contracting agency finds that there is not reasonable
time still available to notify bidders; or
(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) As described in subpart B of this part--Wage Determination
Procedures, two types of wage determinations are issued under the Act:
Prevailing in the locality or Collective Bargaining Agreement
(Successorship) wage determinations. The facts related to a specific
solicitation and contract will determine the type of wage determination
applicable to that procurement. In addition, different types of
prevailing wage determinations may be issued depending upon the nature
of the contract. While prevailing wage determinations based upon cross-
industry survey data are applicable to most contracts covered by the
Act, in some cases the Department of Labor may issue industry specific
wage determinations for application to specific types of service
contracts. In addition, the geographic scope of contracts is often
different and the geographic scope of the underlying survey data for the
wage determinations applicable to those contracts may be different.
(c) 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
[[Page 38]]
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,
revision, or supersedure.
(d) Generally, wage determinations issued for solicitations or
negotiations 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)(3)(i).)
(e) 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. In addition, most prevailing wage determinations are
available online from WDOL. Archived versions of SCA wage determinations
that are no longer current may be accessed in the ``Archived SCA WD''
database of WDOL for information purposes only. Contracting officers
should not use an archived wage determination in a contract action
without prior approval of the Department of Labor.
[48 FR 49762, Oct. 27, 1983, as amended at 70 FR 50895, Aug. 26, 2005]
Sec. 4.4 Obtaining a wage determination.
(a)(1) Sections 2(a)(1) and (2) of the Act require that every
contract and any bid specification therefore in excess of $2,500 contain
a wage determination specifying the minimum monetary wages and fringe
benefits to be paid to service employees performing work on the
contract. The contracting agency, therefore, must obtain a wage
determination 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.
(2) As described in Sec. 4.4(b), wage determinations may be
obtained from the Department of Labor by electronically submitting an
e98 describing the proposed contract and the occupations expected to be
employed on the contract. Based upon the information provided on the
e98, the Department of Labor will respond with the wage determination or
wage determinations that the contracting agency may rely upon as the
correct wage determination(s) for the contract described in the e98.
Alternatively, contracting agencies may select and obtain a wage
determination using WDOL. (See Sec. 4.4(c).) Although the WDOL Web site
provides assistance to the agency to select the correct wage
determination for the contract, the agency remains responsible for the
wage determination selected.
(3)(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, upon identification of firms participating in the
procurement in response to an initial solicitation, shall obtain a wage
determination for each location where the work may be performed as
indicated by participating firms. 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
[[Page 39]]
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)(3)(i) of this section is not practicable
in a particular situation. In these situations, the Department may
authorize a modified procedure that may result in the subsequent
issuance of wage determinations for one or more composite localities.
(4) In no event may a contract subject to the Act on which more than
five (5) service employees are contemplated to be employed be awarded
without an appropriate wage determination. (See section 10 of the Act.)
(b) e98 process--
(1) The e98 is an electronic application used by contracting
agencies to request wage determinations directly from the Wage and Hour
Division. The Division uses computers to analyze information provided on
the e98 and to provide a response while the requester is online, if the
analysis determines that an existing wage determination is currently
applicable to the procurement. The response will assign a unique serial
number to the e98 and the response will provide a link to an electronic
copy of the applicable wage determination(s). If the initial computer
analysis cannot identify the applicable wage determination for the
request, an online response will be provided indicating that the request
has been referred to an analyst. Again, the online response will assign
a unique serial number to the e98. After an analyst has reviewed the
request, a further response will be sent to the email address identified
on the e98. In most cases, the further response will provide an
attachment with a copy of the applicable wage determination(s). In some
cases, however, additional information may be required and the
additional information will be requested via email. After an applicable
wage determination is sent in response to an e98, the e98 system
continues to monitor the request and if the applicable wage
determination is revised in time to affect the procurement, an amended
response will be sent to the email address identified on the e98.
(2) When completing an e98, it is important that all information
requested be completed accurately and fully. However, several sections
are particularly important. Since most responses are provided via email,
a correct email address is critically important. Accurate procurement
dates are essential for the follow-up response system to operate
effectively. An accurate estimate of the number of service employees to
be employed under the contract is also important because section 10 of
the Act requires that a wage determination be issued for all contracts
that involve more than five service employees.
(3) Since the e98 system automatically provides an amended response
if the applicable wage determination is revised, the email address
listed on the e98 must be monitored during the full solicitation stage
of the procurement. Communications sent to the email address provided
are deemed to be received by the contracting agency. A contracting
agency must update the email address through the ``help'' process
identified on the e98, if the agency no longer intends to monitor the
email address.
(4) For invitations to bid, if the bid opening date is delayed by
more than sixty (60) days, or if contract commencement is delayed by
more than sixty (60) days for all other contract actions, the
contracting agency shall submit a revised e98.
(5) 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 reference the union and the
collective bargaining agreement on the e98. The requester will receive
an e-mail response giving instructions for
[[Page 40]]
submitting 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. After receipt
of the collective bargaining agreement, the Wage and Hour Division will
provide a further e-mail response attaching a copy of the wage
determination based upon the collective bargaining 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 locality as the predecessor contractor. 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 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 e98.
(6) If the proposed contract is for a multi-year period subject to
other than annual appropriations, the contracting agency shall provide a
statement in the comments section of the e98 concerning the type of
funding and the contemplated term of the proposed contract. Unless
otherwise advised by the Wage and Hour Division that a wage
determination must be obtained on the annual anniversary date, a new
wage determination shall be obtained 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.
(c) WDOL process--
(1) Contracting agencies may use the WDOL Web site to select the
applicable prevailing wage determination for the procurement. The WDOL
site provides assistance to the agency in the selection of the correct
wage determination. The contracting agency, however, is fully
responsible for selecting the correct wage determination. If the
Department of Labor subsequently determines that an incorrect wage
determination was applied to a specific contract, the contracting
agency, in accordance with Sec. 4.5, shall amend the contract to
incorporate the correct wage determination as determined by the
Department of Labor.
(2) If an applicable prevailing wage determination is not available
on the WDOL site, the contracting agency must submit an e98 in
accordance with Sec. 4.4(b).
(3) The contracting agency shall monitor the WDOL site to determine
whether the applicable wage determination has been revised. Revisions
published on the WDOL site or otherwise communicated to the contracting
officer within the timeframes prescribed in Sec. 4.5(a)(2) are
applicable and must be included in the resulting contract.
(4) 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 may prepare a wage determination that
references the collective bargaining agreement by incorporating that
wage determination, with a complete copy of the collective bargaining
agreement attached thereto, into the
[[Page 41]]
successor contract action. It need not submit a copy of the collective
bargaining agreement to the Department of Labor unless requested to do
so. If the place of contract performance is unknown, the contracting
agency will prepare a wage determination on WDOL and attach the
collective bargaining agreement of the incumbent contractor and make
both the wage determination and collective bargaining agreement
applicable to a potential bidder located in the same locality as the
predecessor contractor. (See section 4.4(a)(3).) 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 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 to the Wage and Hour Division
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. A wage determination based upon
the collective bargaining agreement must be included in the contract
until a hearing or a final ruling of the Administrator determines that
the collective bargaining agreement was not reached as the result of
arm's-length negotiations or was substantially at variance with locally
prevailing rates. Any questions regarding timeliness or applicability of
collective bargaining agreements must be referred to the Department of
Labor for resolution.
(5) If the proposed contract is for a multi-year period subject to
other than annual appropriations, the contracting agency shall, unless
otherwise advised by the Wage and Hour Division, obtain a new wage
determination 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.
[70 FR 50896, Aug. 26, 2005]
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 information referred to in
paragraphs (a)(1) or (2) of this section;
(1) Any wage determination from the Wage and Hour Division,
Employment Standards Administration, Department of Labor, responsive to
the contracting agency's submission of an e98 or obtained through WDOL
under 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.
(i) 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.
(ii) 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
[[Page 42]]
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). Any notice of a revision
received by the agency not less than 10 days before commencement of the
contract shall be effective, if:
(A) The contract does not specify a start of performance date which
is within 30 days from the award; and/or
(B) Performance of such procurement does not commence within this
30-day period.
(iii) In situations arising under section 4(c) of the Act, the
provisions in Sec. 4.1b(b) apply.
(3) For purposes of using WDOL databases containing prevailing wage
determinations, the date of receipt by the contracting agency will be
the date of publication on the WDOL Web site or on the date the agency
receives actual notice of an initial or revised wage determination from
the Department of Labor through the e98 process, whichever occurs first.
(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 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) 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 ]
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 an e98 and has
not received a response from the Department of Labor, the contracting
agency shall, with respect to any contract for which section 10 to the
Act and Sec. 4.3 for this part mandate the inclusion of an applicable
wage determination, contact the
[[Page 43]]
Wage and Hour Division by e-mail or telephone for guidance.
[48 FR 49762, Oct. 27, 1983, as amended at 70 FR 50897, Aug. 26, 2005]
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 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
[[Page 44]]
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 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
[[Page 45]]
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 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.
[[Page 46]]
(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).
(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
[[Page 47]]
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 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,
[[Page 48]]
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 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. Sec. 4.7-4.9 [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
[[Page 49]]
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
Sec. Sec. 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:
(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
[[Page 50]]
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;
(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
[[Page 51]]
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, 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
[[Page 52]]
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.
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. (1) 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).
(2) The prevailing wage determinations applicable to most contracts
covered by the Act are based upon cross-industry survey data. However,
in some cases the Department of Labor may issue industry specific wage
determinations for application to specific types of service contracts.
In addition, the geographic scope of contracts is often different and
the geographic scope of the underlying survey data for the wage
determinations applicable to those contracts may be different.
[[Page 53]]
Therefore, a variety of different prevailing wage determinations may be
applicable in a particular locality. The application of these different
prevailing wage determinations will depend upon the nature of the
contracts to which they are applied.
(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. (See sections 2(a)(1) and (2) as well as
4(c) of the Act.)
[70 FR 50898, Aug. 26, 2005]
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 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
[[Page 54]]
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 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
[[Page 55]]
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]
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
[[Page 56]]
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)(3)(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,
and amended at 70 FR 50898, Aug. 26, 2005]
Sec. 4.55 Issuance and revision of wage determinations.
(a) 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 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) of subpart A.
(b) 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 the same for all
bidders so none will be placed at a competitive disadvantage.
(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
[[Page 57]]
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;
70 FR 50898, Aug. 26, 2005]
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.
(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,
[[Page 58]]
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 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
[[Page 59]]
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 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
[[Page 60]]
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 Sec. Sec. 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
Sec. Sec. 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 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
[[Page 61]]
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 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
[[Page 62]]
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 Sec. Sec. 4.107-4.108. Except as otherwise specifically provided
(see Sec. Sec. 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. 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
[[Page 63]]
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 Sec. Sec. 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 Sec. Sec. 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 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
[[Page 64]]
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 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
[[Page 65]]
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 (Sec. Sec. 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;
(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
[[Page 66]]
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, 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)
[[Page 67]]
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 Sec. Sec. 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.
(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
[[Page 68]]
(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 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
[[Page 69]]
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 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
[[Page 70]]
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, the views 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, Sec. Sec.
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 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
[[Page 71]]
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 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) of this
section 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)
shall be followed.
[[Page 72]]
(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 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.
[[Page 73]]
(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) of this
section 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)
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; 70 FR
50899, Aug. 26, 2005]
Sec. Sec. 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 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.
[[Page 74]]
(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 Sec. Sec. 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 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
[[Page 75]]
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
Sec. Sec. 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 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
[[Page 76]]
``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
Sec. Sec. 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 Sec. Sec. 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 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
[[Page 77]]
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.
Sec. Sec. 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 Sec. Sec.
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 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,
[[Page 78]]
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 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.
[[Page 79]]
Sec. 4.144 Contract modifications affecting amount.
Where a contract that 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 shall immediately obtain a wage determination from
the Department of Labor using the e98 application or directly from WDOL,
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.
[70 FR 50899, Aug. 26, 2005]
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, 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
[[Page 80]]
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.
Sec. Sec. 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 Sec. Sec. 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 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
[[Page 81]]
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 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
[[Page 82]]
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.
Sec. Sec. 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,
Sec. Sec. 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.
[48 FR 49762, Oct. 27, 1983, as amended at 76 FR 18854, Apr. 5, 2011]
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 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
[[Page 83]]
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 Sec. Sec. 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 Sec. Sec. 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 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 Sec. Sec. 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.)
[[Page 84]]
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 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.
[[Page 85]]
(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 Sec. Sec.
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 Sec. Sec. 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 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
[[Page 86]]
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 Sec. Sec. 4.170 through 4.177 regarding
specific interpretations of the fringe benefit provisions of prevailing
wage determinations may not be applicable to wage determinations 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
[[Page 87]]
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 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
[[Page 88]]
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 provides, when determining the wage an
employer is required to pay a tipped employee, the maximum allowable
hourly tip credit is limited to the difference between $2.13 and the
applicable minimum wage specified in section 6(a)(1) of that Act. (See
Sec. 4.163(k) for exceptions in section 4(c) situations.) In no event
shall the sum credited as tips exceed the value of tips actually
received by the employee. The tip credit is not available to an employer
unless the employer has informed the employee of the tip credit
provisions and all tips received by the employee have been retained by
the employee (other than as part of a valid tip pooling arrangement
among employees who customarily and regularly receive tips; see section
3(m) of the Fair Labor Standards Act).
[48 FR 49762, Oct. 27, 1983; 48 FR 50529, Nov. 2, 1983, as amended at 76
FR 18854, Apr. 5, 2011]
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 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
[[Page 89]]
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 Sec. Sec. 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 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
[[Page 90]]
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 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.
[[Page 91]]
(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 (Sec. Sec.
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.
(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
[[Page 92]]
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 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
[[Page 93]]
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 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
[[Page 94]]
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.
(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
[[Page 95]]
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 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
[[Page 96]]
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 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:
[[Page 97]]
(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 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:
[[Page 98]]
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
$15,000/20,000 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 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:
[[Page 99]]
(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, 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
[[Page 100]]
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.
(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.
[[Page 101]]
(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 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
[[Page 102]]
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.
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
[[Page 103]]
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 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-
[[Page 104]]
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 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
[[Page 105]]
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 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
[[Page 106]]
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 ] 33,607 (N.D. N.Y. 1977); G & H Machinery Co. v. Donovan,
96 CCH Labor Cases ] 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 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
[[Page 107]]
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 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.,
[[Page 108]]
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 ] 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).
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
[[Page 109]]
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 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
[[Page 110]]
(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
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
[[Page 111]]
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 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
[[Page 112]]
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.
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.
[[Page 113]]
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: 5 U.S.C. 301; R.S. 161, 64 Stat. 1267; Reorganization
Plan No. 14 of 1950, 5 U.S.C. appendix; 40 U.S.C. 3141 et seq.; 40
U.S.C. 3145; 40 U.S.C. 3148; 40 U.S.C. 3701 et seq.; and the laws listed
in 5.1(a) of this part; Secretary's Order 01-2008; and Employment
Standards Order No. 2001-01.
Source: 48 FR 19541, 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 of part 5 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 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)).
[[Page 114]]
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)).
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).
[[Page 115]]
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 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:
[[Page 116]]
(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 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.
[[Page 117]]
(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 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
[[Page 118]]
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]
Sec. Sec. 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 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
[[Page 119]]
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 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
[[Page 120]]
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 29 CFR 5.5(a)(3)(i), except that full
social security numbers and home addresses shall not be included on
weekly transmittals. Instead the payrolls shall only need to include an
individually identifying number for each employee (e.g., the last four
digits of the employee's social security number). The required weekly
payroll information may be submitted in any form desired. Optional Form
WH-347 is available for this purpose from the Wage and Hour Division Web
site at http://www.dol.gov/esa/whd/forms/wh347instr.htm or its successor
site. The prime contractor is responsible for the submission of copies
of payrolls by all subcontractors. Contractors and subcontractors shall
maintain the full social security number and current address of each
covered worker, and shall provide them upon request 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 them to the applicant, sponsor, or owner, as the case may be, for
transmission to the (write in name of agency), the contractor, or the
Wage and Hour Division of the Department of Labor for purposes of an
investigation or audit of compliance with prevailing wage requirements.
It is not a violation of this section for a prime contractor to require
a subcontractor to provide addresses and social security numbers to the
prime contractor for its own records, without weekly submission to the
sponsoring government agency (or the applicant, sponsor, or owner).
(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 provided under Sec. 5.5
[[Page 121]]
(a)(3)(ii) of Regulations, 29 CFR part 5, the appropriate information is
being 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;
(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
[[Page 122]]
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 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
[[Page 123]]
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 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 Sec. 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.
[[Page 124]]
(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 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; 73 FR
77511, Dec. 19, 2008]
Effective Date Note 1.: At 58 FR 58955, Nov. 5, 1993, Sec. 5.5 was
amended by suspending paragraph (a)(1)(ii) indefinitely.
Effective Date Note 2.: At 81 FR 43450, July 1, 2016, Sec. 5.5 was
amended by revising the last sentence of paragraph (b)(2), effective
Aug. 1, 2016. For the convenience of the user, the revised text is set
forth as follows:
Sec. 5.5 Contract provisions and related matters.
* * * * *
(b) * * *
(2) * * * 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 $25 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.
* * * * *
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
[[Page 125]]
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 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
[[Page 126]]
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 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
[[Page 127]]
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, 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]
Effective Date Note: At 81 FR 43450, July 1, 2016, Sec. 5.8 was
amended by revising the second sentence in paragraph (a), effective Aug.
1, 2016. For the convenience of the user, the revised text is set forth
as follows:
Sec. 5.8 Liquidated damages under the Contract Work Hours and Safety
Standards Act.
(a) * * * 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
$25 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.
* * * * *
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.
[[Page 128]]
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 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
[[Page 129]]
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. 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
[[Page 130]]
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 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.
[[Page 131]]
(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, 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]
[[Page 132]]
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:
(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
[[Page 133]]
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 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;
[[Page 134]]
(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 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
[[Page 135]]
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
(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.
[[Page 136]]
(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.)
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;
[[Page 137]]
(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 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
[[Page 138]]
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 ..........
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
[[Page 139]]
(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 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
[[Page 140]]
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.
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.
[[Page 141]]
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 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
[[Page 142]]
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 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
[[Page 143]]
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 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
[[Page 144]]
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 Sec. Sec. 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 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.
[[Page 145]]
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-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
[[Page 146]]
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 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.
[[Page 147]]
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.
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 proceedings.
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
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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 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.