Georgia Tech Procurement Assistance Center

Increase in 2017 Service Contract Act health & welfare rate; Lower rate for contracts covered by federal paid sick leave EO

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The U.S. Department of Labor (DOL) has released its annual memorandum with the rate increase for Service Contract Act (SCA) Health and Welfare (H&W) Fringe Benefits. The new rate of $4.41 per hour (up from the 2015-2016 rate of $4.27 per hour) is required in all government contract bids or other service contracts awarded on or after August 1, 2017.

A special rate of $1.91 per hour is set for Hawaii, which takes into account that state’s mandatory health insurance coverage. However, an employer may use this lower rate only if it actually makes contributions for employees under the Hawaii Prepaid Health Care Act.

DOL officials indicated earlier this year that the rates set for 2017 would account for contracts subject to Executive Order 13706, which applies to new contracts that result from solicitations issued on or after January 1, 2017, or that are awarded outside the solicitation process on or after that date. The EO requires covered contractors to provide employees up to 56 hours of paid leave sick leave annually.

Keep reading this article at: http://www.jdsupra.com/legalnews/increase-in-2017-service-contract-act-87128/

Labor Dept. resumes providing guidance on wage and hour laws

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The U.S. Department of Labor is reinstating the issuance of opinion letters.  The letters, issued by the department’s Wage and Hour Division, is one of its methods the department uses to provide guidance to covered employers and employees.

An opinion letter is an official, written opinion by the Wage and Hour Division of how a particular law applies in specific circumstances presented by an employer, employee or other entity requesting the opinion. The letters were a division practice for more than 70 years until being stopped and replaced by general guidance in 2010.

“Reinstating opinion letters will benefit employees and employers as they provide a means by which both can develop a clearer understanding of the Fair Labor Standards Act and other statutes,” says Labor Secretary Alexander Acosta. “The U.S. Department of Labor is committed to helping employers and employees clearly understand their labor responsibilities so employers can concentrate on doing what they do best: growing their businesses and creating jobs.”

The division has established a webpage where the public can see if existing agency guidance already addresses their questions or submit a request for an opinion letter. The webpage explains what to include in the request, where to submit the request, and where to review existing guidance. The division will exercise discretion in determining which requests for opinion letters will be responded to, and the appropriate form of guidance to be issued.

Federal contractor paid sick leave regulations finalized

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paid-sick-leave-regulations-oct-2016The Labor Department’s Wage & Hour Division (WHD) has released final regulations implementing mandatory paid sick leave for employees working on federal service, construction, and concessions contracts.

The costs are likely to come both from the paid sick leave itself (a maximum of seven days per year) and from the layers of complexity on top of contractors’ existing compliance obligations with respect to these types of contracts.

The regulations overlap with WHD’s responsibility for oversight of the Service Contract Labor Standards (commonly known as the Service Contract Act, or SCA), which is already a complicated compliance undertaking for employers.

Keep reading this article to see a summary of the highlights of the final regulations and flag issues for contractors to consider before the regulations take effect in January 2017: https://www.insidegovernmentcontracts.com/2016/10/paid-sick-leave-final-regulations-released/

DOL finds Senate food services contractors broke law

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Wage & Hour DivisionContractors hired by the Architect of the Capitol must award a total of $1 million in back pay to hundreds of cafeteria workers due to violations of the federal prevailing wage law, the Labor Department announced last Tuesday.

Restaurant Associates and its subcontractor Personnel Plus will pay 674 food servers and cooks a collective $1,008,302 because of improper job classifications that violated the McNamara-O’Hara Service Contract Act, Labor’s Wage and Hour Division said. The companies paid the workers for lower-skilled jobs than they actually performed, forced them to report for work early and failed to pay overtime at proper rates, according to the decision.

In addition, the contractors failed to pay required health and welfare benefits and violated the McNamara-O’Hara Act’s recordkeeping requirements.

Keep reading this article at: http://www.govexec.com/contracting/2016/07/labor-department-finds-senate-food-services-contractors-broke-law/130262

 

Requirement for paid sick leave could penalize contractors who already offer that benefit

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DOLFollowing up on President Obama’s Labor Day release of an executive order requiring government contractors to offer paid sick leave to employees, the Labor Department issued proposed implementing regulations and invited comments by April 12.  Contractors with service contracts should consider submitting comments, especially if they already offer paid sick leave and rely on that leave to meet their fringe benefit obligations under the Service Contract Act (SCA).

Under the SCA, contractors cannot take credit for offering benefits that they are legally required to provide.  By setting a minimum required level of paid sick leave, the proposed regulations convert seven days of those benefits into legal requirements, rendering them ineligible for bona fide fringe benefit status under the SCA.  Contractors would remain free to continue to account for the value of excess paid sick leave in discharging their SCA obligations, but not the base requirements.  As a result, contractors may have to recalculate their fringe benefit packages by extracting the value of current paid sick leave benefits, and then offer some other offsetting bona fide fringe benefit or an equivalent cash payment.  In sum, the paid sick leave executive order could have the effect of penalizing contractors who were already offering the very same benefit that the government now requires.

Keep reading this article at: https://www.insidegovernmentcontracts.com/2016/03/labor-department-invites-comments-on-regulations-governing-paid-sick-leave/

Labor Dept. to require paid sick leave for workers of federal contractors

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Dept. of LaborThe Department of Labor (DOL) is requiring federal contractors, subcontractors and certain parties who contract with the Federal Government to provide their employees with up to 7 days of paid sick leave annually, implementing Executive Order 13706, which was signed by President Obama on September 7, 2015.

The proposed rule applies to new contracts or contract-like instruments, if:

(i)(A)  it is a procurement contract for services or construction; (B) a contract covered by the Service Contract Act; (C)  a contract for concessions; and (D) a contract entered into with the Federal government in connection with Federal property or lands related to offering services for Federal employees, their dependents, or the general public; and

(ii) the wages of employees under such contract are governed by the Davis-Bacon Act, the Service Contract Act, or the  Fair Labor Standards Act (FLSA), including employees who qualify for an exemption from the FLSA.

DOL estimates that the proposed rule will cost each small business $150-$650 for the first year in implementation costs and payroll costs.

Comments are due to the DOL by March 28, 2016.     

 

Minimum wage for federal contractor workers to increase Jan. 1, 2016

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On February 14, 2014, President Obama issued an executive order requiring certain federal contractors and subcontractors to pay an increased hourly minimum wage as mandated by the secretary of labor, who was also to determine increases to the wage rate on an annual basis.

Dept. of LaborOn September 16, 2015, the Secretary of Labor Announced that, effective Jan. 1, 2016, new minimum wages for employees of federal contractors will be increased from $10.10 to $10.15 per hour and that the rate for tipped employees will rise from $4.90 to $5.85 per hour.

What Contracts Are Covered?

Keep reading this article at: http://www.oanow.com/news/business/article_b09cf56e-5f2b-11e5-b780-d3ebd138a752.html

DOL releases final rule raising minimum wage for employees working on covered federal contracts

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On October 1, the Department of Labor (“DOL”) announced its final rule raising the minimum wage for employees working on covered federal government contracts from $7.25 an hour to $10.10 an hour.  The final rule implements Executive Order 13658, which was issued by President Obama last February.

The final rule applies to a wide range of contracts issued for solicitations on or after January 1, 2015, including (1) procurement contracts for services or construction; (2) service contracts exceeding $2,500 covered by the Service Contract Act; (3) contracts for concessions; and (4) contracts that are both (a) entered into the with the Federal Government in connection with Federal property or lands and (b) covered by the Fair Labor Standards Act, Service Contract Act, or Davis-Bacon Act.  The rule also applies to (1) individuals with disabilities who were previously paid below the minimum wage because their disability affects their productivity; and (2) tipped employees, whose minimum hourly pay will be raised from $2.13 to $4.90.

Keep reading this article at http://www.mondaq.com/article.asp?articleid=344992 for details on employees covered, impact on employers, and next steps.

The intricacies of government contract rules

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Lexy Kessler, a partner at public accounting and consulting firm Aronson LLC, speaks to Risk & Compliance Journal about the impact of new regulations on government contractors and the uncertainties that arise when lawmakers can’t agree on a federal budget.

What is the Service Contract Act and how is it changing the landscape for companies trying to win government contracts?

Ms. Kessler: The Service Contract Act is a set of labor laws in place relative to certain categories of employees. We are seeing a lot of companies that don’t understand what the regulations are, what is required in having to classify employees. Under these regulations they have to pay them a certain dollar amount that is required for health and welfare benefits. We have had situations where companies come to us and say they didn’t know that and now they have to go back and quantify and capture the appropriate pay and, as importantly, communicate to their employees that they are paying these benefits and how. A lot of times what people, as far as more professional services firms, IT firms, don’t realize is that some of their help desk functions may be subject to the SCA and that they can be fined from the Department of Labor.

Keep reading this interview at: http://blogs.wsj.com/riskandcompliance/2014/08/19/the-intricacies-of-meeting-government-contract-compliance-rules/

Contractors affected by recent hikes in Service Contract Act’s health & welfare rates must file timely claims

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On federal contracts subject to the Service Contract Act, the prevailing health and welfare (H&W) fringe benefit rate was increased, effective July 22, 2014, to $4.02 per hour.  (One exception: The new benefit rate in Hawaii is $1.66.)

The new H&W rate applies to all invitation for bids opened, or other service contracts awarded on or after July 22, 2014.

Contracting offices are to include a new wage determination reflecting the new H&W rate to trigger the contractor’s obligation to pay the higher H&W rate. Contracting offices may make “pen and ink” changes to the current wage determinations received for contracts beginning on or after July 22, 2014 and for which the updated rates were not included.

Once the contracting authority provides a new wage determination, contractors must submit — within 30 days of the change — any claim for an equitable adjustment as a result of increased costs attributable to wage determination rate changes.

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