LABOR & PREVAILING WAGEFAR Part 22 (Application of Labor Laws to Government Acquisitions)

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.

REGULATORY CONTEXT

What It Means in Plain English

Official Acquisition.gov Text ↗

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.

Where This Clause Appears in Federal RFPs:

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.
⚠️ Audit Trap & High-Risk Pitfall

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.

Related Procurement Clauses

FAR 52.219-14

Limitations on Subcontracting (The 50% Rule)

When a small business wins a set-aside contract, it cannot simply broker the deal to a large business or non-qualified subcontractor. The prime contractor (and its similarly situated small business teammates) must perform at least a specified minimum percentage of the contract value or labor cost.

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DFARS 252.204-7012

Safeguarding Covered Defense Information & Cyber Incident Reporting (CMMC / NIST 800-171)

Requires all Department of Defense contractors and subcontractors handling Covered Defense Information (CDI) or Controlled Unclassified Information (CUI) to provide 'adequate security' by implementing the 110 security controls of NIST SP 800-171, record a score in SPRS, and report cyber incidents within 72 hours.

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FAR 52.204-27

Prohibition on a ByteDance Covered Application (TikTok Federal Ban)

Strictly bans the presence or use of TikTok or any application developed or provided by ByteDance Limited on any information technology used by contractors in the performance of federal contracts, including personal devices used under BYOD policies.

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