By virtue of working with the federal government, government contractors are subject to an assortment of rules, regulations, and laws that dictate how they work. Compliance with the Davis-Bacon Act, the Service Contract Act, and local prevailing wage laws is a must for any contractor. Here are just a few of the laws that govern contractors!
Davis-Bacon Act (DBA)
Construction contracts with the federal government are governed by the Davis-Bacon Act (DBA). The DBA was created to look out for local communities, when large federal government contracts enter the area. Workers employed on federal contracts are required under the DBA to be paid a local prevailing wage, as well as fringe benefits, on any contract valued in excess of $2000.
The DBA also stipulates how employees must be paid and what records the contractor must retain on all of their workers. These requirements include:
- Employees must be paid once a week with full wages and the employers’ option of fringe benefits or paying the fringe rate in cash.
- Companies must maintain basic records for all employees during the performance of the work and for at least three years after
- That record must contain hourly rates of pay, rates associated with the fringe, basic employee identification info, hours worked, and details on any fringe benefit plans and programs.
Service Contract Act (SCA)
One of the most important laws that contractors abide by is the McNamara-O’Hara Service Contract Act of 1965, also known as the Service Contract Act (SCA). The Service Contract Act affects every employee that is working on a services contract with the federal government over $2,500. Similarly to the DBA, the SCA requires that service employees working on a federal contract must be paid wages and provided with bona fide fringe benefits or the fringe rate equivalent paid out in cash.
For contractors working under the SCA, fringe benefit compliance, proper reporting and administration, and subcontractor compliance are all vital to avoiding penalties that could keep a contractor out of the game.
Prevailing Wage Laws
A prevailing wage is the standard hourly rate of wages and benefits paid to workers in a given location and working similar jobs. The purpose of the prevailing wage is for policymakers to use that rate to set appropriate compensation levels for workers performing on a contract in any location. Prevailing wages are a companion and requirement to the DBA and the SCA, ensuring that prime contractors and their subcontractors are paying a fair wage. The prevailing wage laws that impact government contractors vary from state to state, and sometimes from city to city!
Guiding Contractor Compliance
Boon has been helping contractors maintain compliance and craft better benefit solutions for 40 years. Our flexible benefit offerings meet contractors where they are and adapt to the needs of this always-changing industry. All of this offered with our consultative approach. Boon is your answer to contractor compliance concerns, challenges, and solutions!
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