The Service Contract Act, or SCA, was issued in 1965 and requires federal contractors (businesses under contract with federal agencies) pay their employees a minimum wage based on occupation and location. Employees protected by SCA are also legally entitled to a set Health & Welfare (H&W) amount, paid time off and benefits. The SCA is one of several acts passed by Congress to protect low wage workers. Failure to abide by these protections can result in the serious allegation of wage theft.
In early April 2015, a group of federal labor groups calling itself Good Jobs Nation, launched a complaint with the Department of Labor, accusing multiple federal contractors of intentionally bypassing the Service Contract Act and denying non-exempt hourly workers their rightful wages. The developments of the complaint and the gravity of the allegations should be closely watched by all federal contractors. No matter the findings, the events of the investigation should raise consciousness of the plight of non-exempt hourly workers in the federal marketplace.
Position of the Disaffected
Good Jobs Nation is representing three distinct groups alleging that their federal contractor employers are dodging the SCA: janitors at the Department of Education, groundskeepers at the National Zoo, and tour bus drivers working for the National Park Service. The janitors, for example, are required by the SCA to be paid a base rate of $11.83 per hour plus $4.02 in H&W benefits, 10 days paid holidays, and paid vacation of varying amounts based on length of employment and other factors. However, according to the complaint they are paid as low as $9.10 per hour with no sick leave and four or fewer days of paid holidays (ironically, they work in the Lyndon Baines Johnson Federal Building- named after the man who championed the “War on Poverty”). The groundskeepers and bus drivers are encountering similar difficulties with different numbers. These are major discrepancies that are fueling an emotional backlash by both the disaffected workers and those in industry championing the rights of non-exempt hourly workers.
Obstacles in the Way of Wage Recovery
Since 2005, 150,548 workers lodging complaints have received $262.5 million in back wages. While it may sound like determining whether the SCA applies to a given contract is a black and white issue, it is not. The SCA has been notoriously difficult to police throughout its history due to the fluid nature of the job designations that determine its applicability. Indeed, the law is driven by the work contracted rather than the companies. This highly imperfect system has historically hamstrung the Department of Labor, which is then forced to police the program in a passive manner, responding to complaints rather than proactively seeking violators itself. Unfortunately, the litigation rate for these complaints is dismally low, and violator accountability has been frustratingly mild. These factors do not bode well for those lodging a given complaint.
To complicate matters, some employers have been known to routinely resort to the use of loopholes to circumvent the SCA requirements. In the case of the Department of Education janitors, the contractor had subcontracted with a shell company and claimed that they were not aware that said subcontractor was not adhering to SCA. In the case of the National Zoo groundskeepers, the Smithsonian has stated that a group called Friends of the National Zoo employs most concession and maintenance workers. Known as FONZ, this is a member-supported nonprofit that doesn’t necessarily provide services perfectly aligned with the SCA. By this logic, the Smithsonian reasons that the SCA does not apply to this disaffected group.
The contention of Good Jobs Nation is that behind each attempt to abandon the spirit, if not the letter, of the Service Contract Act, a human being has a little less to afford a home, feed his or her children, or establish savings. Sadly, as recently as 2009, undercover GAO investigations revealed that the Department of Labor’s own Wage and Hours Division exhibited a level of dishonesty and unresponsiveness to customer complaints that bordered on scandalous.
As a federal contractor, we recommend that you complete the research to determine whether your contracts are covered by SCA and initiate steps you can take to avoid being non-compliant. If you require assistance in understanding the SCA and how it applies, please contact your attorney or Coley Government Contracting Services.
Published author with 30 years’ experience working with Federal agencies and contractors, including proposal development and project delivery.