The Service Contract Act seems to be getting attention lately. The proposed regulations implementing the President’s Executive Order 13658 raising the minimum wage for federal contractor employees would extend the minimum wage to (among others) “service employees” working on federal government contracts covered by the Service Contract Act (SCA). The SCA applies to federal contracts for services worth more than $2,500 and requires contractors to pay “service employees” working on the contract a prevailing local wage and fringe benefits. DOL issues wage determinations setting the required wages and benefits based on rates prevailing for each class of service employee in the locality where a contract is to be performed. The proposed regulations would require the prevailing wage to be a minimum of $10.10 per hour.
As explained in a recent DOL letter, last summer DOL raised the prevailing wage and added fringe benefits for fast food workers on federal service contracts, including those working on military bases. At the request of the Navy, DOL then lowered the amount of the fringe benefit from $3.81 to $.92 per hour this spring.
Characterizing it as a “unilateral” change, the Senators seek “an explanation of how these shifts in policy regarding the calculation of ‘Fast Food Industry’ wage determinations under the Service Contract Act came about, whether military families were consulted in this decision, and whether fast food restaurants can expect additional increases in the future.”
The foregoing may be just a taste of the type of challenge the President’s minimum wage order may face in the near future. In that regard, there is still time to submit comments on the Federal contractor minimum wage proposed regulations.