FAR 52.222-41: Service Contract Labor Standards (Service Contract Act / SCA)
Official federal procurement regulation analysis, contractor performance obligations, and risk mitigation strategies for small businesses.
What It Means in Plain English
Requires federal service contractors and subcontractors on contracts over $2,500 to pay non-exempt service workers no less than the prevailing wages and fringe benefits established by the Department of Labor for the locality.
Applies to every federal contract whose principal purpose is to furnish services in the U.S. through the use of service employees exceeding $2,500.
Mandatory Statutory Requirements
- Wage Determinations (WD): Must pay at or above the minimum hourly wage listed in the attached DOL Wage Determination for each labor category.
- Mandatory Fringe Benefits: Must provide health and welfare (H&W) fringe benefits (or cash equivalent in lieu of benefits) for all paid hours.
- Vacation & Seniority Carryover: Incumbent contractor service years carry over to new awardees for computing mandatory vacation days.
- Notice Posting: Contractors must post the DOL 'Notice to Employees Working on Government Contracts' (WH-1313) visibly at the job site.
Contractor Compliance Obligations
- Properly classify all non-exempt personnel against the DOL Service Contract Act Directory of Occupations.
- Provide itemized pay stubs showing base pay separated from fringe benefit payments or contributions.
Underbidding a service contract by quoting standard local market rates without including the mandatory DOL Health & Welfare fringe rate (~$4.98+/hour) leads to crippling back-wage liability from DOL Wage & Hour Division audits.
Frequently Asked Questions About FAR 52.222-41
Can I pay the Health and Welfare (H&W) fringe rate in cash?
Yes. If your company does not provide bona fide fringe benefit plans (like health insurance or retirement plans) totaling the required hourly fringe amount, you must pay the cash difference directly on the employee's regular paycheck.