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McNamara-O’Hara Service Contract Act (SCA) Prevailing Wage and Fringe Benefits and Special Minimum Wages (SMWs) Under FLSA Section 14(c)

An employer with a contract entered into by the United States, or the District of Columbia, the principal purpose of which is to furnish services through the use of service employees, is covered under the McNamara-O’Hara Service Contract Act (SCA). This includes employers who operate work centers. All contracts in excess of $2,500, or for an indefinite amount, require a wage determination specifying the prevailing wages and fringe benefits that must be paid to various classes of service employees, including those with disabilities, who perform the contracted work. Service employees performing on SCA contracts that are $2500 or less must receive at least the federal minimum wage.

The SCA, like the FLSA, allows an employer to pay service employees who have disabilities for the work to be performed an SMW less than the prevailing wage required by the wage determination. Regulations 29 CFR Part 4.6(o) instructs the contractor to follow the same “conditions and procedures” required for the employment of workers with disabilities under FLSA Section 14(c). However, this exception is from the prevailing wage only. Contractors are still required to pay the full fringe benefits, or the equivalent dollar cash payment in lieu of providing the benefits, to service employees who have disabilities for the work performed.

It is important to note that Section 6(e) of the FLSA requires an employer who is either a prime contractor or a subcontractor on an SCA contract to pay all employees working at the establishment where the SCA work is performed, including staff and employees not working on the service contract, at least the FLSA minimum wage. Employers who have obtained the proper certification under FLSA Section 14(c) may pay an SMW to SCA service employees and other employees not working on the contract who have disabilities for the work being performed.

For general information about determining SMWs under the SCA, read Fact Sheet No. 39F, The Payment of SMWs to Workers with Disabilities Who Are Employed on Federal Service Contracts Subject to the SCA.

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FLSA Section 14(c) Advisor | Wage and Hour Division