Federal Service Contract Act for Government Contractors

As an HR pro working for a government contractor, I had my first run-in with the Federal Service Contract Act (SCA) last year. Let’s just say it was a memorable experience. But seriously, if you’re working in the private sector and don’t have interaction with the government, you might be wondering (as I was way back when): What is SCA? How does it affect our company? How do we comply with it?

Well, I’m not an expert by any stretch of the imagination, but I can get you started in the right direction.

Federal Service Contract Act wage determinations

A wage determination is a specific minimum wage set for employees of a certain category. For instance, a Senior Technician in Limestone county on an SCA contract would have to be paid a specific rate. On top of that minimum wage requirement comes a special stipend to cover benefits. For more information on wage determinations or to look one up, check out the WDOL website.

Federal Service Contract Act health and welfare stipend

In order to ensure that the workers are paid not only a minimum wage, but also a suitable amount for benefits, the employer is required to pay a set amount for “health and welfare” benefits. These benefits include, but are not limited to: health, dental, and vision insurance, life insurance, 401(k) savings match, education reimbursement, military leave, etc. The stipend amount varies by contract, but the important piece is to make sure you are providing at least the minimum amount per hour worked. If not, then you must pay the remaining stipend out in cash. Check out the resources below for more information on how this works.

Other Federal Service Contract Act requirements

There are so many twists and turns in the SCA regulations. Even numbered wage determinations are handled differently than odd numbered wage determinations. You can skip the stipend if you provide enough benefits, but you have to “true up” the numbers at year’s end to be sure you provided enough. Some employers separate their SCA employees into a separate “benefits pool,” allowing them to not pay them benefits and only pay the stipend, which is easier on the employer (though not necessarily on the SCA employees). It’s just one more administrative burden that HR pros working for federal contractors have to handle!

More SCA resources

Again, this is just a quick overview to get you started, but  I hope it was helpful. Any questions about the Federal Service Contract Act? Feel free to leave a comment below and I can try to help you find an answer!