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souri, Montana, Nebraska, North Dakota, South Dakota, Utah, and Wyoming).
6. Western Gulf Region, 411 North Akard Street, Room 601, Dallas, Tex. 75201 (Arkansas, Louisiana, New Mexico, Oklahoma, and Texas).
7. Pacific Region, 10353 Federal Building, 450 Golden Gate Avenue, Box 36017, San Francisco, Calif. 94102 (Alaska, Arizona, California, Hawaii, Nevada, Oregon, Washington, and Guam).
(g) The contractor and each subcontractor performing work subject to the Act shall make and maintain for 3 years from the completion of the work records containing the information specified below for each employee subject to the Act and shall make them available for inspection and transcription by authorized representatives of the Administrator of the Wage and Hour and Public Contracts Divisions of the U.S. Department of Labor.
(1) His name and address.
(2) His work classification or classifications, rate or rates of monetary wages and fringe benefits provided, rate or rates of fringe benefit payments in lieu thereof, and total daily and weekly compensation.
(3) His daily and weekly hours so worked.
(4) Any deductions, rebates, or refunds from his total daily or weekly compensation.
(5) A list of monetary wages and fringe benefits for those classes of service employees not included in the minimum wage attachment to this contract, but for which such wage rates or fringe benefits have been determined by the interested parties or by the Administrator or his authorized representative pursuant to the labor standards clause in paragraph (b) of this section. A copy of the report required by the clause in paragraph (k) of this section shall be deemed to be such a list.
(h) The contracting officer shall withhold or cause to be withheld from the Government Prime Contractor under this or any other Government contract with the prime contractor such sums as he, or an appropriate officer of the Labor Department, decides may be necessary to pay underpaid employees. Additionally, any failure to comply with the requirements of these clauses relating to the Service Contract Act of 1965 may be
grounds for termination of the right to proceed with the contract work. In such event, the Government may enter into other contracts or arrangements for completion of the work, charging the contractor in default with any additional cost.
(i) The contractor agrees to insert these clauses relating to the Service Contract Act of 1965 in all subcontracts. The term “contractor" as used in these clauses in any subcontract, shall be deemed to refer to the subcontractor, except in the term “Government Prime Contractor.”
(j) As used in these clauses relating to the Service Contract Act of 1965, the term “service employee" means guards, watchmen, and any person engaged in a recognized trade or craft, or other skilled mechanical craft, or in unskilled, semiskilled, or skilled manual labor occupations; and any other employee including a foreman or supervisor in a position having trade, craft, or laboring experience as the paramount requirement; and shall include all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons.
(k) If there is a wage determination attachment to this contract and one or more classes of service employees which are not listed thereon are to be employed under the contract, the contractor shall report to the contracting officer the monetary wages to be paid and the fringe benefits to be provided each such class of service employee. Such report shall be made promptly as soon as such compensation has been determined as provided in the clause in paragraph (b) of this section.
(1) All interpretations of the Service Contract Act of 1965 expressed in Subpart of this part, are hereby incorporated by reference in this contract.
(m) These clauses relating to the Service Contract Act of 1965 shall not apply to the following:
(1) Any contract of the United States or District of Columbia for construction, alteration and/or repair, including painting and decorating of public buildings or public works;
(2) Any work required to be done in accordance with the provisions of the Walsh-Healey Public Contracts Act (49 Stat. 2036);
(3) Any contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line, or oil or gas pipeline where published tariff rates are in effect, or where such carriage is subject to rates covered by section 22 of the Interstate Commerce Act;
(4) Any contract for the furnishing of services by radio, telephone, telegraph, or cable companies, subject to the Communications Act of 1934;
(5) Any contract for public utility services, including electric light and power, water, steam, and gas;
(6) Any employment contract providing for direct services to a Federal agency by an individual or individuals;
(7) Any contract with the Post Office Department, the principal purpose of which is the operation of postal contract stations.
(8) Any services to be furnished outside the United States. For geographic purposes, the “United States” is defined in section 8(d) of the Service Contract Act to include any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf Lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island. It does not include any other territory under the jurisdiction of the United States or any United States base or possession within a foreign country.
(9) Any of the following contracts exempted from all provisions of the Service Contract Act of 1965, pursuant to section 4(b) of the Act, which exemptions the Secretary of Labor hereby finds necessary and proper in the public interest or to avoid serious impairment of the conduct of Government business: Contracts entered into by the United States with common carriers for the carriage of mail by rail, air (except air star routes), bus, and ocean vessel, where such carriage is performed on regularly scheduled runs of the trains, airplanes, buses, and vessels over regularly established routes and accounts for an insubstantial portion of the revenue therefrom.
(n) Notwithstanding any of the clauses in paragraphs (b) through (1) of this
section, relating to the Service Contract Act of 1965, the following employees may be employed in accordance with the following variations, tolerances, and exemptions, which the Secretary of Labor hereby finds pursuant to section 4(b) of the Act to be necessary and proper in the public interest or to avoid serious impairment of the conduct of Government business:
(1) (i) Apprentices, student-learners, and workers whose earning capacity is impaired by age, physical, or mental deficiency or injury may be employed at wages lower than the minimum wages otherwise required by section 2(a) (1) or 2(b) (1) of the Service Contract Act of 1965, without diminishing any fringe benefits or cash payments in lieu thereof required under section 2(a) (2) of that Act, in accordance with the procedures prescribed for the employment of apprentices, student-learners, handicapped persons, and handicapped clients of sheltered workshops under section 14 of the Fair Labor Standards Act of 1938, in the regulations issued by the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor (Parts 520, 521, 524, and 525 of this title).
(ii) The Administrator will issue certificates under the Service Contract Act of 1965 for the employment of apprentices, student-learners, handicapped persons, or handicapped clients of sheltered workshops not subject to the Fair Labor Standards Act of 1938, or subject to different minimum rates of pay under the two acts, authorizing appropriate rates of minimum wages (but without changing requirements concerning fringe benefits or supplementary cash payments in lieu thereof), applying procedures prescribed by the applicable regulations issued under the Fair Labor Standards Act of 1938 (Parts 520, 521, 524, and 525 of this title).
(iii) The Administrator will also withdraw, annul, or cancel such certificates in accordance with the regulations in Parts 525 and 528 of Title 29 of the Code of Federal Regulations.
(2) An employee engaged in an occupation in which he customarily and regularly receives more than $20 a month in tips may have the amount of his tips credited by his employer against the minimum wage required by section 2(a) (1)
or section 2(b) (1) of the Act, in accord- of the monetary wage required by secance with the regulations in Part 531 of tion 2(a) (1) and specified in the wage this title: Provided, however, That the determination and the contract, to be amount of such credit may not exceed offset by the fringe benefit payments or 80 cents per hour.
equivalents which are furnished or paid [33 F.R. 9880, July 10, 1968, as amended at pursuant to section 2(a) (2). 35 F.R. 883, Jan. 22, 1970)
$ 4.52 Equivalent fringe benefits. & 4.7 Labor standards clause for Federal
Under this Act, fringe benefit obligaservice contracts not exceeding
tions may be discharged by furnishing, $2,500.
in lieu of those fringe benefits determined Every contract with the Federal Gov- by the Secretary and specified in the ernment which is not in excess of $2,500 contract, other bona fide fringe benefits but has as its principal purpose the fur- which the contractor or subcontractor is nishing of services through the use of not required by statute to provide, or any service employees shall contain the fol- combination of such bona fide fringe lowing clause:
benefits: Provided That they are Service Contract Act of 1965. Except to the
"equivalent" in terms of monetary cost extent that an exemption, variation or toler- to the employer. Thus, if an applicable anco would apply pursuant to 29 CFR 4.6 i determination specifies that 10 cents per this were a contract in excess of $2,500, the hour is to be paid into a pension fund, contractor and any subcontractor hereunder
this fringe benefit obligation will be shall pay all of his employees engaged in
deemed to be met if instead, hospitalizaperforming work on the contract not less than the minimum wage specified under sec
tion benefits costing not less than 10 tion 6(a) (1) of the Fair Labor Standards Act
cents per hour are provided. The same of 1938, as amended ($1.60 per hour). How- obligation will be met if hospitalization ever, in cases where section 6(e) (2) of the benefits costing 5 cents an hour and holiFair Labor Standards Act of 1938 is appli- day pay equal to 5 cents an hour in cash cable, the rates specified therein will apply.
are provided. No benefit required to be All regulations and interpretations of the
furnished the employee by any other law, Service Contract Act of 1965 expressed in 29 CFR Part 4 are hereby incorporated by ref
such as workmen's compensation, may erence in this contract.
be credited toward satisfying the fringe
benefit requirements of the Act. 8 4.8 Notice of award.
§ 4.53 Cash equivalents. Whenever an agency of the United States or the District of Columbia shall
(a) Fringe benefit obligations may be award a contract in excess of $2,500 sub
discharged by paying, in addition to the ject to the Act, it shall furnish the Ad
monetary wage required, a cash amount ministrator of the Wage and Hour and
per hour in lieu of the specified fringe Public Contracts Divisions, on the form
benefits provided such amount is equivaused pursuant to 41 CFR 50–201.1201, the
lent to the cost of the fringe benefits information required by such form.
required. If, for example, an employee's
monetary rate under an applicable deSubpart B-Equivalents of Deter
termination is $1.90 an hour, and the mined Fringe Benefits
fringe benefits to be furnished are hos
pitalization benefits costing 10 cents an § 4.51 Discharging fringe benefit obli
hour and retirement benefits costing 10 gations by equivalent methods.
cents an hour, the fringe benefit obligaSection 2(a) (2) of the Act, which pro- tion is discharged if instead of furnishing vides for fringe benefits that are separate the required fringe benefits the emfrom and additional to the monetary ployer pays the employee, in cash, 20 compensation required under section cents per hour as the cash equivalent of 2(a) (1), permits an employer to dis- the fringe benefits in addition to the charge his obligation to provide the $1.90 per hour required under the apspecified fringe benefits by furnishing plicable wage determination. any equivalent combinations of “bona
(b) The hourly cash equivalent of fide" fringe benefits or by making those fringe benefits which are not listed equivalent or differential payments in in the applicable determination in terms cash. However, credit for such pay- of hourly cash amount may be obtained ments is limited to the employer's fringe by mathematical computation through benefit obligations under section 2(a) (2), the use of pertinent factors such as the since the Act does not authorize any part monetary wages paid the employee and
the hours of work attributable to the period, if any, by which fringe benefits are measured in the determination. If the employee's regular rate of pay is greater than the minimum monetary wage specified in the wage determination and the contract, the former should be used for this computation, and if the fringe benefit determination does not specify any daily or weekly hours of work by which benefits should be measured, a standard 8-hour day and 40-hour week will be considered applicable. The application of these rules in typical situations is illustrated in paragraphs (c), (d), and (e) of this section.
(C) Where fringe benefits are stated as a percentage of the monetary rate, the hourly cash equivalent is determined by multiplying the stated percentage by the employee's regular or basic rate of pay. For example, if the determination calls for a 5 percent pension fund payment, and the employee is paid a monetary rate of $1.60 an hour, or if he earns $1.60 an hour on a piece-work basis in a particular workweek, the cash equivalent of that payment would be 8 cents an hour.
(d) If the determination lists a particular fringe benefit in such terms as $25 a year, or as $2 week, the hourly cash equivalent is determined by dividing the amount stated in the determination by the number of working hours to which the amount is attributable. For example, if a determination lists a fringe benefit as “pension-$2 a week,” and does not specify weekly hours, the hourly cash equivalent is 5 cents per hour, i.e., $2 divided by 40, the number of standard working hours in a week.
(e) In determining the hourly cash equivalent of those fringe benefits which are not listed in a determination in terms of hourly cash amount, but are stated, for example, as "six paid holidays per year” or “1-week paid vacation,” the employee's hourly monetary rate of pay is multipled by the number of hours making up the paid holidays or vacation. Unless the hours contemplated in the fringe benefit are specified in the determination, a standard 8-hour day and 40-hour week will be considered applicable. The total annual cost so determined will be divided by 2,080, the typical number of nonovertime hours in a year of work, to arrive at the hourly cash equivalent. To illustrate, if a particular determination lists as a fringe benefit
“six paid holidays per year," and the employee's hourly rate of pay is $1.60, the $1.60 is multiplied by 48 (6 days of 8 hours each) and the result, $76.80, is then divided by 2,080 to arrive at the hourly cash equivalent, $.0369 an hour. Similarly, where a determination requires 1-week's paid vacation during the year, a computation of this kind for a short term employee who does not receive the vacation with pay would be necessary to determine the cash equivalent payment to which he is entitled for the proportionate part of the vacation earned during his period of employment. § 4.54 Combination of equivalent fringe
benefits and cash payments. Fringe benefit obligations may be discharged by furnishing any combination of cash or fringe benefits as illustrated in $$ 4.52 and 4.53, in amounts the total of which is equivalent, under the rules there stated, to the determined fringe benefits specified in the contract. § 4.55 Effect of equivalents in comput
ing overtime pay. The Act (section 6) excludes from the regular or basic hourly rate of an employee, for purposes of determining the overtime pay to which he is entitled under any other Federal law, those fringe benefit payments computed under the Act which are excluded from the regular rate under the Fair Labor Standards Act by provisions of section 7(e) of that Act (29 U.S.C. 207(e)). Fringe benefit payments which qualify for such exclusion are described in Subpart C of Part 778 of this title. When such fringe benefits have been determined by the Secretary to be prevailing for service employees in the locality and are specified in the contract to be furnished to service employees engaged in its performance, the right to compute overtime pay in accordance with the above rule is not lost to a contractor or subcontractor because he discharges his obligation under this Act to furnish such fringe benefits through alternative equivalents as provided in this Subpart B. If he furnishes equivalent benefits or makes cash payments, or both, to such an employee as authorized herein, the amounts thereof, to the extent that they operate to discharge the employer's obligation to furnish such specified fringe benefits, may be excluded pursuant to this Act from the employee's regular or basic rate of pay in computing
any overtime pay due the employee under U.S. Department of Labor, Washington, any other Federal law. It is not neces- D.C. 20210, or to any Regional Office of sary to consider in such a case whether the Bureau. A full description of the such amounts would themselves be ex- facts and any relevant documents should cludable under section 7(e) of the Fair be submitted if an official ruling is deLabor Standards Act. No such exclu- sired. sion can operate, however, to reduce an
§ 4.102 The Act. employee's regular or basic rate of pay below the monetary wage rate specified
The McNamara-O'Hara Service Conas his minimum wage rate under section tract Act of 1965 (Public Law 89–286, 79 2(a) (1) or 2(b) of this Act or under Stat. 1034, 41 U.S.C. 351 et seq.), hereinother law or by employment contract.
after referred to as the Act, was approved The application of the rules set out in by the President on October 22, 1965 (1 the regulations in this part will be con
Weekly Compilation of Presidential sidered and illustrated in the rulings and
Documents 428). It establishes standards interpretations on application of this
for minimum compensation and safety Act.
and health protection of employees per
forming work for contractors and subSubpart C—Application of the Mc- contractors on service contracts entered
Namara-O'Hara Service Contract into with the Federal Government and Act
the District of Columbia. It applies to INTRODUCTORY
contracts entered into pursuant to nego
tiations concluded or invitations for bids § 4.101 Official rulings and interpreta
issued on or after January 20, 1966. tions in this subpart.
§ 4.103 What the Act provides, generThe purpose of this subpart is to pro
ally. vide, pursuant to the authority cited in § 4.104 official rulings and interpreta
The provisions of the Act apply to contions with respect to the application of
tracts, whether negotiated or advertised, the McNamara-O'Hara Service Contract
the principal purpose of which is to furAct for the guidance of the agencies of
nish services in the United States through the United States and the District of the use of service employees. Under its Columbia which may enter into and ad
provisions, every contract subject to the minister contracts subject to its provi
Act (and any bid specification therefor) sions, the persons desiring to enter into
entered into by the United States or the such contracts with these agencies, and
District of Columbia in excess of $2,500 the contractors, subcontractors, and em
must contain stipulations requiring (a) ployees who perform work under such
that specified minimum monetary wages contracts. This subpart supersedes all
and fringe benefits determined by the prior rulings and interpretations issued
Secretary of Labor (based on wage rates under the Act to the extent, if any, that
and fringe benefits prevailing in the they may be inconsistent with rules here- locality) be paid to service employees in stated. Principles governing the ap
employed by the contractor or any subplication of the Act as set forth in this
contractor in performing the services subpart are clarified or amplified in par
contracted for; (b) that working conditicular instances by illustrations and ex
tions of such employees which are under amples based on specific fact situations.
the control of the contractor or subconSince such illustrations and examples
tractor meet safety and health standcannot and are not intended to be ex
ards; and (c) that notice be given to such haustive, no inference should be drawn
employees of the compensation due them
under the minimum wage and fringe from the fact that a subject or illustra
benefits provisions of the contract. The tion is omitted. If doubt arises, inquiries
Act does not permit the monetary wage with respect to matters other than safety
rates specified in such a contract to be and health standards should be directed less than the minimum wage specified to the Administrator of the Wage and under section 6(a) (1) of the Fair Labor Hour and Public Contracts Divisions, Standards Act, as amended (29 U.S.C. U.S. Department of Labor, Washington, 206(a) (1)). In addition, it is a violation D.C. 20210, or to any Regional or Dis- of the Act for any contractor or subcontrict Office of the Divisions. Safety and tractor under a Federal contract subject health inquiries should be addressed to to the Act, regardless of the amount of the Director, Bureau of Labor Standards, the contract, to pay any of his employees