Photo of Trina Fairley BarlowPhoto of Amy Laderberg O'SullivanPhoto of Skye MathiesonPhoto of Eric Herendeen

The Department of Labor (“DOL”) recently announced in a July 29, 2022 Change Order notice that the Wage and Hour Division (“WHD”) had revised the Field Operations Handbook (“FOH”) by deleting the exemption under the Service Contract Act (“SCA”) for federal contracts to operate Job Corps Centers.  Prime contractors and subcontractors operating these centers will now be subject to the SCA and FAR 52.222-41, Service Contract Labor Standards, according to DOL. 

The practical effect of this change is that covered contractors must pay the minimum wages and “bona fide” fringe benefits mandated by the SCA to all covered workers, which includes workers who are “non-exempt” under the Fair Labor Standards Act.  The required wages and fringe benefits for these workers are set forth in wage determinations that are incorporated into the applicable contract by the contracting agency.  Higher tier contractors must also flow down the SCA Clause (FAR 52.222-41) and all applicable wage determinations to lower tier contractors.  All covered contractors must meet the SCA’s posting and recordkeeping requirements.  See 29 CFR 4.183, Employees must be notified of compensation required; 29 CFR 4.184, Posting of notice; 29 CFR 4.185, Recordkeeping requirements.    

DOL stated that it will issue further instructions for submitting Requests for Equitable Adjustment (“REAs”) as a result of the application of the SCA to Job Corps Center contracts.  REAs are submitted for the purpose of negotiating a settlement with the cognizant Contracting Officer and should be timely submitted in order to negotiate a contractor’s increased costs of performance related to the SCA and FAR 52.222-41 requirements.  Given that DOL has recognized this change and indicated its willingness to make contractors whole, contractors should be prepared to submit their increased costs to Contracting Officers based on this change.

Compliance with the SCA can present operational and legal challenges due to the statute’s detailed regulatory requirements.  Further, the DOL frequently investigates contractors’ compliance with the SCA. Failure to comply with the SCA’s detailed requirements can have deleterious consequences for contractors, as the statute mandates suspension and debarment for non-compliance.  Covered contractors should not delay in implementing the SCA’s requirements and training its contracts, finance, and human resources professionals to ensure compliance.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Trina Fairley Barlow Trina Fairley Barlow

Trina Fairley Barlow is co-chair of the firm’s Labor and Employment Group and a member of the firm’s Government Contracts Group. She devotes a substantial portion of her practice to helping government contractors navigate and comply with the myriad laws, regulations, and Executive…

Trina Fairley Barlow is co-chair of the firm’s Labor and Employment Group and a member of the firm’s Government Contracts Group. She devotes a substantial portion of her practice to helping government contractors navigate and comply with the myriad laws, regulations, and Executive Orders which impact employers who are also government contractors. Trina’s experience includes advising federal contractors on the requirements of the Service Contract Act, as well as the Davis Bacon Act, and assisting clients with developing compliance strategies that reduce legal risks. In addition, Trina has defended and advised clients in False Claim Act (FCA) whistleblower retaliation cases and has led large internal investigations that frequently encompass a complex combination of labor and employment, government contracts, and ethics and compliance issues. In connection with such investigations and in other contexts, clients also frequently call upon Trina to assist them with developing compliant policies and internal practices that achieve business objectives while simultaneously reducing potential legal risks and exposure.

Photo of Amy Laderberg O'Sullivan Amy Laderberg O'Sullivan

Amy Laderberg O’Sullivan is a partner in the firm’s Washington, D.C. office, a member of the Steering Committee for the firm’s Government Contracts Group, and former chair of the firm’s Diversity Council. Her practice involves a mix of litigation, transactional work, investigations, and

Amy Laderberg O’Sullivan is a partner in the firm’s Washington, D.C. office, a member of the Steering Committee for the firm’s Government Contracts Group, and former chair of the firm’s Diversity Council. Her practice involves a mix of litigation, transactional work, investigations, and counseling for corporate clients of all sizes and levels of experience as government contractors. On the litigation side, she has represented corporate clients in bid protests (agency level, GAO, ODRA, Court of Federal Claims, Court of Appeals for the Federal Circuit, as well as state and local bid protests in numerous jurisdictions), size and status protests before the U.S. Small Business Administration, claims litigation before the various Boards of Contract Appeals, Defense Base Act claims litigation at the Administrative Law Judge and Benefits Review Board levels, civil and criminal investigations, and she has been involved in complex commercial litigation.

Photo of Skye Mathieson Skye Mathieson

Skye Mathieson is a counsel in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. He works with and advises clients from diverse industries on a wide array of matters, including contract performance disputes (CDA claims and equitable adjustments), cost allowability…

Skye Mathieson is a counsel in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. He works with and advises clients from diverse industries on a wide array of matters, including contract performance disputes (CDA claims and equitable adjustments), cost allowability issues, defective pricing, fiscal law questions, prime-sub disputes, bid protests, internal investigations, and responding to DCAA audits. Prior to joining Crowell & Moring, Skye spent several years as a trial attorney at the procurement litigation division of the Air Force Headquarters for Legal Operations, where he pioneered the seminal “Laguna Defense” that is now widely raised and litigated at the Boards of Contract Appeals.

Photo of Eric Herendeen Eric Herendeen

Eric Herendeen is an associate in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. He advises clients on a wide array of performance dispute issues, including requests for equitable adjustments, CDA claims, cost allowability issues, and prime-sub disputes. He has…

Eric Herendeen is an associate in the Government Contracts Group in Crowell & Moring’s Washington, D.C. office. He advises clients on a wide array of performance dispute issues, including requests for equitable adjustments, CDA claims, cost allowability issues, and prime-sub disputes. He has represented clients before the Civilian Board of Contract Appeals, Armed Services Board of Contract Appeals, and the U.S. Court of Appeals for the Federal Circuit. In addition to his disputes and litigation practice, Eric has also counseled clients through internal investigations to support disclosures to the government and to advocate before the Department of Justice on False Claims Act matters.