Wage Determination Archives - GSA National

US DOL ANNOUNCES PLANS TO HIRE 100 INVESTIGATORS TO SUPPORT WAGE AND HOUR INVESTIGATIONS

Joe — Tue, 01 Mar 2022 18:04:22 +0000

The U.S. Department of Labor announced plans to add 100 investigators to its Wage and Hour (W&H) Division team to support its enforcement efforts to protect workers on federal contracts.

The W&H Division is responsible for enforcing some of the most comprehensive labor laws affecting more than 148 million workers. Investigator responsibilities include the following:

Conducting investigations to determine if employers are paying workers and affording them their rights as the law requires.
Promoting compliance through outreach and public education initiatives.
Supporting efforts to combat worker retaliation and worker misclassification as independent contractors.

“Adding 100 investigators to our team is an important step in the right direction,” said Acting Wage and Hour Administrator Jessica Looman. “We anticipate significantly more hiring activity later in fiscal year 2022. While appropriations will determine our course of action, we are optimistic we will be able to bring new talented professionals onboard to expand our diverse team.”

In fiscal year 2021, the Wage and Hour Division collected $230 million in wages owed to 190,000 workers.

GSA National’s Government Contract experts are here to answer any questions you may have regarding H&W investigations, or compliance challenges your organization may be up against. Please contact our team of government contract subject matter specialists with any questions.

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DOL Releases Proposed Rules to Implement $15 Minimum Wage for Federal Contractors

Joe — Tue, 03 Aug 2021 19:08:22 +0000

The U.S. Department of Labor (DOL) has released a proposed regulation that is intended to implement President Joe Biden’s executive order that would initiate a $15 minimum wage for federal government contract employees. The Biden administration issued the proposed increase on July 28, 2021 with enforcement to begin on January 30, 2022.

The Wage and Hour Division of the DOL will be responsible for enforcing the regulations and for investigating employee complaints. Contractors that the division believes have disregarded their obligations to workers in violation of the executive order would be subject to debarment proceedings by DOL, which would make them ineligible to bid on any government contract for up to three years.

The DOL projects that approximately 327,300 contract workers will be capable of seeing a raise of at least $15 an hour under this rule. The estimated cost of the proposed rule per year over 10 years including other factors would be $2.4 million per year. The quality of the government service is expected to improve when the minimum wage of the federal contract workers is raised, and according to industry analysis, implementing this rule will not have significant impact on the economy.

GSA National’s SCA experts are here to assist with any questions you may have regarding the minimum wage implementation and how it may impact your government contract. Please contact our team of government contract subject matter specialists with any questions.

GSA National 2021 Employee Benefits Strategy Intern, Dolly Amoh, contributed to this post.

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DOL Announces Reduced SCA H&W Fringe Benefit Rate for SCA Contracts Governed By New Federal Paid Sick Leave Requirements

wpengine — Wed, 09 Aug 2017 03:14:54 +0000

On July 25, 2017, the Department of Labor (DOL) released All Agency Memorandum #25 (AAM), which serves as the DOL’s annual announcement of the adjustment of the Health & Welfare (H&W) fringe benefit rate for employees working under contracts governed by the Service Contract Act (SCA).
The routine aspect of the AAM provides that effective as of August 1, 2017, the H&W fringe benefit rate is increased from $4.27 to $4.41 per hour.
However, totally unexpectedly, the AAM also provides for a separate, reduced $4.13 per hour fringe benefit rate for employees performing work on contracts covered by recently issued Executive Order (EO) 13706. This EO requires federal contractors to provide paid sick leave to eligible employees working under a contract for services covered under designated federal laws, including the SCA.
What is the Reason for the Reduced Rate?
The reduced H&W fringe benefit rate is prompted by the fact that payments made by a contractor to satisfy its sick leave obligations under EO 13706 cannot be credited toward the contractor’s SCA fringe benefit obligations. To mitigate the effect of this loss of credit, the DOL established an alternative H&W fringe benefit rate, which is designed to reduce the otherwise applicable rate by an amount that is roughly equivalent to the cost of the paid sick leave required to be provided to covered employees.
What is the Effective Date of Rate Reduction?
The new H&W fringe benefit rate, including the new reduced alternative rate, is effective as of August 1, 2017. However, the reduced H&W rate only applies to contracts governed by EO 13706.
EO 13706 generally became effective for new contracts issued or awarded on or after January 1, 2017. A contract entered into prior to January 1, 2017 (an “old contract”) will become subject to the paid sick leave law if, on or after January 1, 2017, through negotiation between the contractor and federal agency:

the contract is renewed;
the contract is extended, unless the extension is made pursuant to a provision in the contract as of December 31, 2016 providing for a short-term limited extension; or
the contract is amended pursuant to a modification that is outside the scope of the original contract.

In contrast, a contract entered into prior to January 1, 2017 will not become subject to the EO 13706 paid sick leave law (and thus will not be eligible for the reduced H&W fringe benefit rate) simply by reason of a federal agency’s unilateral exercise of a pre-negotiated option to renew the contract.
For example, many SCA contracts provide for a first-year base period, with an option by the federal agency to maintain the contract for a period of three or four additional years. The unilateral exercise of the option by the federal agency does not cause a contract entered into prior to January 1, 2017 to then become subject to the EO 13706 paid sick leave law.
In summary, the reduced H&W fringe benefit rate will not be available to a contractor with respect to a particular contract until the contract becomes governed by EO 13706.
Are There Any Other Concerns?
The reduction in the fringe benefit rate does raise a number of issues and concerns.

The reduced H&W fringe benefit rate may result in the contribution not fully covering the cost of employee-only coverage. Consequently, employees who have become accustomed to 100% employer-paid may now be obligated to pay for a portion of that coverage from their wages. Under applicable SCA regulations, a deduction from an employee’s wage to pay for the coverage requires the consent of the employee.
The reduced H&W fringe benefit rate may also make it more difficult for an employer to satisfy the premium affordability test imposed under the Affordable Care Act regulations.
Contractors will need to carefully review new contracts and Wage Determinations to verify that the indicated fringe benefit rate is correct.
Covered employees will need to be provided notice of the modified H&W fringe benefit rate as required under the SCA regulations.

* * *

This article was written by Walter W. Miller. Walter helps employers to comply with the myriad of laws governing retirement plans and other employee benefit programs. A primary focus of Mr. Miller’s current practice is the Affordable Care Act, including the employer “play-or-pay” mandates. He works with clients to evaluate the effect of the new law on their group health plans, and offers advice as to the manner of addressing the new rules. He is listed both in The Best Lawyers in America and SuperLawyers as being among the top attorneys in the field of employee benefits. He has also been elected as a Fellow of the American College of Employee Benefits Counsel, which is regarded as the preeminent professional association for employee benefits attorneys.

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2012 Service Contract Act Health & Welfare Fringe Benefit Changes

wpengine — Wed, 11 Jul 2012 17:41:00 +0000

Effective June 17, 2012, the Health & Welfare Fringe Benefit Rate issued under the McNamara-O’Hara Service Contract Act (SCA) increased to $3.71 per hour, as posted on the Wage Determinations Online (www.wdol.gov) and Wage and Hour Division (WHD) (www.dol.gov/whd) websites.
All Agency DOL Memorandum Number 211 announced the change in rate and affects new contracts being awarded on or after June 17, 2012 and existing contracts on their first anniversary date following June 17, 2012.
Based on the regulations adopted in 1996, SCA wage determinations (WDs) have contained two different health and welfare fringe benefit levels consisting of a “low level” or “employee-by-employee” level benefit and a “high Level” or “average cost” level benefit. The low level benefit was updated every year on June 1st, based upon the latest Bureau of Labor Statistics (BLS) data, and the high level benefit was grandfathered at $2.56 per hour. Both levels had different methods of determining compliance.
In 2004, when the BLS publication of Employer Costs for Employee Compensation indicated that the low level benefit was about to exceed the grandfathered high benefit of $2.56 per hour, the Wage and Hour Division announced* an increase of the fringe benefit rate for all wage determinations, although the two different methods for determining compliance would be retained.
*All Agency Memorandum Number 197
This policy continues again this year with the employee-by-employee benefit increased to $3.71 per hour, or $148.40 per week, or $643.07 per month. The average cost fringe benefit rate will also be $3.71 per hour. In accordance with the policy established in 1996 and continued since 2004, the average cost fringe benefit wage determination will be issued only for those contracts where the formerly grandfathered “high” benefit rate would have applied.

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