hcm-16 understanding the service contract act · 7© 2017 cbiz, inc. which employees are affected...

HCM-16Understanding the Service Contract Act

Bicknell Robbins JD CBIZ Government

Contracting Practice

© 2017 CBIZ, Inc. 2

Service Contract Act

Training 101

The information in this presentation may be privileged, confidential, and protected from disclosure. Any dissemination, distribution or copying is strictly prohibited.

© 2017 CBIZ, Inc. 3

TODAY’S AGENDA

- Overview of the Service Contract Act

• Intent

• Application

• Employees Affected

• Geographic Limits

• Enforcement

- Wage Determinations

- Labor Classifications & Wage Rates

• Directory of Occupations

• Conformances

• Payment of Wages

- Fringe Benefits

- Vacation & Holiday Pay

- Sick Leave – EO 13706

- Temporary & Part-time Employees

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MCNAMARA-O’HARA SERVICE CONTRACT ACT OF 1965

• Law passed in 1965 and became effective in January 1966.

• Amended in 1972 and 1976 for Collective Bargaining Agreement (CBA).

• Two rate system (high/low fringe or average/individual cost) until 1997 when unified national rate was introduced and gradually phased in.

• Single national rate fully implemented in 2004. Average vs. Individual Cost methods maintained (discussed below).

• Third rate added July 25, 2017 as part of EO 13706.

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SCA INTENT

• To level the playing field for Contractors.

• To remove labor costs as a bidding factor in

the competition for Federal Service Contracts.

• To maintain a certain amount of continuity for

SCA employees when contractors change.

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WHEN DOES SCA APPLY

• from any Federal Agency or any

other Federal Government entity

(such as government

corporations);

• to be performed in the U.S., its

territories, and possessions;

• principally for services;

• performed through the use of

service employees; and

• in excess of $2,500.00.

• Minimum Wage

• Minimum Vacation

• Minimum Holiday

• Minimum Health/Welfare - Fringe

SCA applies to contracts that are: SCA contract stipulations:

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WHICH EMPLOYEES ARE AFFECTED BY THE SCA?

Non-exempt employees – as defined by the FLSA (Fair Labor Standards Act, 29 CDR part 5.41)

1. Perform the Exemption Tests that fall under the Fair Labor Standards

Act (FLSA):

A. Executive (salary > $455)

B. Administrative (salary > $455)

C. Professional (salary > $455) – caution: Do you have

profession employees, e.g. engineers, paid on hourly basis?

D. Computer Professional exemption

(salary > $455 OR hourly rate >$27.63)

Employees performing duties that place them in an Exempt

category are NOT covered by SCA.

NOTE: An employee must meet all of the requirements for exemption to be

considered non-SCA. Misclassification is often the first place the DOL will look.

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SCA GEOGRAPHICAL LIMITS

• Any State

• The District of Columbia

• Puerto Rico

• Commonwealth of the Northern Mariana Islands

• Guam

• American Samoa

• Johnston Island

• Wake Island

• the Virgin Islands

• Outer Continental Shelf lands as defined in the Outer Continental Shelf Lands Act

The SCA applies to all work performed within the United States. For

purposes of the SCA, the term “United States” includes:

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IMPORTANT FACTS ABOUT SCA

• SCA is enforced solely by the DOL.

• If the contract is subject to SCA, but the agency does not specify SCA in the

contract, the DOL will notify the agency to insert the SCA contract clauses and

any applicable Wage Determination.

• Requires the payment of minimum wages and fringe benefits on a Wage

Determination.

• The Contractor is responsible for paying the wage rate and fringe benefits.

• Prime Contractor has responsibility for the sub to adhere and comply with SCA.

• Failure to pay may lead, in the worst cases, to debarment from all Government

contracts.

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SCA SANCTIONS & REMEDIES (29 CFR 4.187 THRU 4.190)

For violations, the US Government may:

1. Withhold from payment for the contract a sum adequate to pay back wages or fringe benefits to underpaid employees;

2. Bring legal action against the Contractor or surety for the amount of underpayment;

3. Terminate contract and hold Contractor liable for any resulting cost to the government; and

4. Not award contracts to a violator for up to 3 years (debarment).

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WHAT SHOULD I BE LOOKING FOR ON MY RFP/CONTRACT?

Either of the following two clauses:

1) FAR 52.222-41 Service Contract Act of 1965, as AmendedFAR (Federal Acquisition Regulations) are the rules and regulations that implement acquisition policies for federal agencies and Contractors.

– OR –

2) 29 CFR Part 4, Section 4.6The Code of Federal Regulations (CFR) is a compilation of the regulations that implement federal laws.

Applicable Wage Determination (WD)

– by reference; or– attachment as an exhibit

If these clauses and the WD are NOT included in the RFP/Contract, your RFP/Contract MAY STILL be subject to the SCA.

BE VERY CAREFUL!

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HOW DO I FIND THE REFERENCE TO THE SCA IN THE

CONTRACT?Uniform Contract Format

SECTION TITLE

Part I—The Schedule

A Solicitation/contract form

B Supplies or services and prices/costs

C Description/specifications/statement of work

D Packaging and marking

E Inspection and acceptance

F Deliveries or performance

G Contract administration data

H Special contract requirements

Part II—Contract Clauses

I Contract clauses

Part III—List of Documents, Exhibits, and Other Attachments

J List of attachments

Part IV—Representations and Instructions

K Representations, certifications, and other statements of offerors or

respondents

L Instructions, conditions, and notices to offerors or respondents

M Evaluation factors for award

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WAGE DETERMINATIONS

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A WD sets the minimum wages and fringe benefits for job classifications

for a specific geographical region.

• Minimum wage for the job position

• Minimum Health & Welfare Benefit

• Minimum Vacation Benefit

• Minimum Holiday Benefit

Note: SCA does not provide for a separate Sick Leave Benefit. However, beginning

1/1/2017 EO 13706 requires sick leave for workers on “new” contracts separate

from and in addition to the hourly H&W set forth in the WD.

WHAT IS A WAGE DETERMINATION (WD)?

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KEY TERMS IN WDS

• Fringe benefit

Health and welfare (H&W) benefits, included in the WDs, that the Contractor

must provide to the employees for “bona fide” benefits as defined by the DOL.

• SCA Directory of Occupations

A directory of job titles and descriptions. There can be multiple wage

determination for each contract, and for each site location. Contractor must

find all that apply.

• Conformance

The process by which wage rates are established for classes of employees

that are not included on the WD applicable to the contract . Be aware of any

positions that are not in the Directory of Operations and haven’t gone through

Conformance Process. You may be precluded from price adjustments on these

positions.

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WHAT SHOULD I BE LOOKING FOR ON THE WAGE DETERMINATION?

• Wage Determination #

• Revision #

• Date of Last Revision

• Areas Geographically Covered

(City, County, Region or State)

• Occupations

• Wage Rates

• H&W Rate

• Vacation

• Holidays

• Night/Sunday Pay

• Uniform Allowance

• Other: Hazard Duty Pay, Severance Pay, Shift Differential, etc.

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WAGE DETERMINATIONS

Q: Why do we need to get all of the Wage Determinations that are applicable to the RFP/Contract?

A: Wage Determinations are specific to government sites. They dictate the specific hourly wages and annual leave benefits applicable to the work

site location.

Remember: Contracts with multiple sites will have multiple wage determinations

with potentially different wage rates and vacation schedules. Make sure you have

all of the applicable wage determinations.

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Area WDs reflect prevailing wages paid to similar workers within a locality.

• Individual Cost WDs: Each SCA employee must receive the hourly

Health & Welfare Benefit

• Average Cost WDs: The total cost of benefits for all employees must

average the hourly H&W benefit set forth in the WD.

4(c) WDs reflect wages and benefits specified in a Collective Bargaining

Agreement (CBA), an agreement between the Contractor and its organized

employees/unions/ associations which includes the wages and benefits to be

paid.

TYPES OF WDS

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NEW OR REVISED WDS

Wage Rates

• The DOL has changed the methodology for surveying wage rates in an

attempt to update them on a more regular basis.

• WDs numbers using the updated methodology will begin with “2015”.

Example: The WD for D.C. is 2015-4281

• The new method may result in a greater number of WDs covering

smaller geographic areas.

• During the transition, if the new method results in lower wages, the old

wages will be grandfathered.

• Effective 2017 a minimum wage rate was established. It’s currently

$10.35. If the WD Labor wage rate is less, must pay the minimum.

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NEW OR REVISED WDS

Fringe Benefits

• The new rate is issued each year in June or July with an effective date of

the contract anniversary date on or after the issuance date.

• It’s the contracting agency’s responsibility to incorporate the updated

WD in the contract. The increased fringe rate must be submitted to the

contracting officer and approved as a price adjustment/contract

modification before it goes into effect. If this approval is made after the

contract anniversary date, the increase is generally made retroactive to

that anniversary date.

• Multi-year contracts that are not subject to annual appropriation of

funds update WD every other year.

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LABOR

CLASSIFICATIONS AND

WAGE RATES

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LABOR CLASSIFICATIONS AND WAGE RATES

SCA Directory of Occupations

• Contains a listing of job classifications found on most WDs

• Includes a job description and list of responsibilities

• Should be used when assigning personnel to the contract, their

labor classification, responsibilities and wage rate

• If a given contract has an employee who’s specific duties don’t

match the Directory of Occupations, then the contractor must go

through the conformance process

• Conformance matches the job to the closest job classification in

the Directory of Occupations. Contracting officer must sign off

on the conformance classification.

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SCA Directory of Occupations

01011 ACCOUNTING CLERK I

This position is responsible for performing one or more

routine accounting clerical operations such as: examining,

verifying, and correcting various accounting documents to

ensure completeness and accuracy of data in accordance

to accounting procedures. Specific tasks/duties are

assigned under adequate supervision. Entry-level

reconciliation and posting will be assigned under detailed

guidance. In most instances, an employee in this position

will rely on the supervisors’ instructions. Completed work

will be reviewed for accuracy and compliance with

procedures.

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Wages established by wage determination, otherwise FLSA minimum wage.

EO13658 Established a SCA minimum wage of $10.20 beginning in 2017.

Currently at $10.60.

Calculated on fixed and regularly recurring workweek of 7 consecutive 24-

hour workday periods

• Payroll records kept on this basis

• Bi-weekly; semi-monthly pay periods if advance notice

Payment of Wages (29 C.F.R. § 4.165)

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Discharging Minimum Wage & Fringe Benefit Obligations

Under SCA, the contractor may not credit excess wage payment

against the Fringe Benefit (FB) obligation:

Yes No

Wage Determination: Employee Paid:

Wage $14.05 Wage $15.00

FB $ 4.27 FB $ 3.32

Total $18.32 Total $18.32

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FRINGE

BENEFITS

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FRINGE BENEFITS

Bona Fide Fringe Benefits General Requirements (29 C.F.R. § 4.171(a))

Constitute a legally enforceable obligation that:

• Is communicated in writing to employees

• Provides payment of benefits to employees

• Contains a definite formula for determining amount of

contribution and benefits provided

• Is paid irrevocably to an independent trustee or third person

pursuant to a fund, trust, or plan

• Meets criteria set forth by IRS and ERISA

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FRINGE BENEFITS REQUIREMENTS

The SCA requires employers to provide a certain amount of bona fide fringe benefits (BFFBs) to

all service employees. The amount is determined by the DOL and is currently $4.48/4.18 per

employee per hour. Some contracts may have the prior rate until the contract anniversary date.

– May use any combination of BFFBs or may supplement in cash

– May simply pay the entire fringe in cash

– Employee contributions not counted

– Employer contributions are irrevocable

– Can’t use fringe to pay for any item required by any other federal, state, or local law or

something required by the contract.

– Plan must comply with IRC and ERISA

– Contributions should be made no less often that quarterly

– Plan must be in writing and communicated to employees

– Plan must have a definite formula for the amount of the contribution and the amount of

benefit

– Plan must provide for the payment of benefits to employees

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FRINGE BENEFITS

Per person method (Individual Cost)

– Health and Welfare - $4.54 per hour or $4.22 per hour if subject to EO 13706

– WD typically ends in an odd number, for example 2005-2045

– Employees working on these contracts are entitled to the fringe rate for all hours paid, including paid

vacation and holiday hours, up to a maximum of 40 hours per week and 2080 hours per year

Average Cost Method

– Minimum employer contributions costing an average of $4.54/$4.22 per hour computed on the

basis of all hours worked by service employees on the contract

– WD typically ends in an even number, for example 2004-2046

– Contributions are made for all hours worked including overtime with no limit for the number of hours

worked in a week or year.

Does not include vacation and holiday hours. If subject to EO 13706, does not include sick leave

Amount of benefits provided to each employee may vary

– Compliance achieved when the total amount of contributions made on behalf of all employees on the

contract divided by the total hours worked equals or exceeds the fringe rate

– Any underpayment must be paid in the next pay period.

Types of Fringe Benefit Accounting

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FRINGE BENEFITS

Allowable Bona Fide Benefits

• Health insurance

• Vision care insurance

• Disability insurance

• AD&D

• Severance pay

• Qualified retirement plans

• Jury Duty

• Bereavement leave

• TPA Fees

• Dental Insurance

• Life Insurance

• Er Contribution to HSA

• Sick leave – if not covered under

EO 13706

• EAP (if not required for job)

• Military leave

• Other paid leaves

• Supplemental unemployment

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• Contributions to social functions

or parties for employees

• Employee rest or recreation

rooms

• Magazine subscriptions

• Club and professional

association dues

• Statutory payments (e.g. FICA,

unemployment insurance,

worker’s comp, other taxes

• Tool or equipment

reimbursements

• Flowers, cards, or gifts on

employee birthdays or

anniversaries

• Paid coffee breaks

• Reimbursement for travel

expenses

• In-house administrative costs

• Relocation expenses

• Uniforms required by the

employer

33

FRINGE BENEFITS

Not Considered Bona Fide Benefits

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FRINGE BENEFITS

Who decides what benefits are offered

Types and amounts of benefits and eligibility requirements are

strictly the Contractor’s prerogative!

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FRINGE BENEFITS

• Meeting the fringe requirements on individual cost versus

average cost contracts

• Wage determination mandates the type of contract

• Individual Cost WDs generally end in an odd number

• Average Cost WDs generally end in an even number

HEALTH & WELFARE: $4.54/$4.22 per hour

HEALTH & WELFARE: Life, accident, and health insurance plans, sick leave, pension

plans, civic and personal leave, severance pay, and savings and thrift plans.

Minimum employer contributions costing an average of $4.48/$4.18 per hour

computed on the basis of all hours worked by service employees employed on the

contract.

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FRINGE BENEFITS

“Average Cost”

• Originally applied to major base support contracts, A-76 contracts, or

contracts requiring bidders to be large national companies or

providers of highly technical services.

• After 1997 applied only to renewals of grandfathered contracts. No

new Average Cost contracts.

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FRINGE BENEFITS

“Average Cost” Benefits (29 C.F.R. § 4.175(b))

• Contributions may vary depending upon employee’s marital or employment

status

• Total contributions must average at least per hour H&W amount:

• Excludes paid leave time and holidays

• For all “HOURS WORKED” , including overtime.

• Compliance determined on a group basis, not an individual basis

• Can apply a hybrid method, i.e. provide each individual employee with per

hour H&W on the basis of all hours worked, including overtime.

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FRINGE BENEFITS

“Average Cost” Example

Employee Hours Worked Contributions

Libby 250 $750

Jean 150 $550

Ann 250 $750

Tim 50 $ 0

Tom 100 $350

Total 800 $2400

$2400/800 = $3.00 average FB contributions

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FRINGE BENEFITS

“Average Cost” Benefits Contributions Cash Differential Example

Employee Hours Shortfall Total

Libby 250 $1.22 $305.00

Jean 150 $1.22 $183.00

Ann 250 $1.22 $305.00

Tim 50 $1.22 $ 61.00

Tom 100 $1.22 $122.00

Total 800 $976

$2400 benefits + $976 cash = $3376/800 hours = $4.22 per hour average cost

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FRINGE BENEFITS

Collectively Bargained Fringe Benefits

• Based on CBA

• Required to be paid by successor contractor under section 4(c) of SCA

• Need not provide specifically the FBs stipulated in CBA. Equivalent benefits may be provided

• Cash equivalent payments can be used to offset the FBs due

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FRINGE BENEFITS

Payment of Fringe Benefits

1) Cash payments in lieu of fringe benefit must be paid on the

regular pay date. (29 CFR 4.165)

2) Payments into bona fide fringe benefit plans must be made no

less often than quarterly. (29 CFR 4.175 {d})

3) The cost of providing fringe benefits may not be credited

towards meeting the SCA wage requirements under the

contract. (29 CFR 4.167)

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FRINGE BENEFITS

SCA Fringe Calculation – Historical Method (allocated fringe)

• This sample fringe calculation assumes the employee works 40 hours per week or

173.33 hours per month (40 hours/week times 52 weeks divided by 12 months)

• The fringe is calculated by taking the Employer contribution amount and dividing by

173.33 to get the per hour cost

• Below is an example of how the fringe is calculated for an employee who selects

employee only coverage for medical and dental.

Plan Minimum Benefit Level Total Premium EE Contribution ER ContributionPer Hour (40/wk)

Medical EE Only $ 620.13 $ - $ 620.13 $ 3.598

Dental Single $ 26.00 $ - $ 26.00 $ 0.15

Life/ADD $50,000 $ 6.93 $ - $ 6.93 $ 0.04

BTA $500,000 $ 0.17 $ - $ 0.17 $ 0.01

STD 70% to $400/wk $ 17.33 $ - $ 17.33 $ 0.10

LTD 60% up to $6,000/month $ 10.40 $ - $ 10.40 $ 0.06

EAP $ 1.45 $ - $ 1.45 $ 0.01

TPA Fees Admin $ 16.00 $ - $ 16.00 $ 0.09

Total $ 696.79 $ - $ 696.79 $ 4.02

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EE Only EE + SP

Scheduled H&W (80 Hours @ $4.48/hr $ 358.40 $ 358.40

Admin Fee $ 6.92 $ 6.92

Basic Life & AD&D $ 2.54 $ 2.54

Basic STD $ 3.16 $ 3.16

Medical $ 243.77 $ 511.96

Dental $ 17.22 $ 34.44

Vision $ 2.91 $ 5.43

Total per pay period premium $ 276.51 $ 564.44

Remaining H&W, or $ 81.89

Per Pay Period Deduction $ 206.04

FRINGE BENEFITS

Fringe Flex Pool Method (CBIZ Best Practice)

This method uses the scheduled H&W as an Employer Benefit Contribution

pool to be used as benefits are elected. Benefits are charged to the contribution

pool based on a designated hierarchy, non-waivable benefits first, then

medical, dental and vision. Once the full employer contribution pool is

exhausted, the cost of additional elections results in a payroll deduction.

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VACATION & HOLIDAY

BENEFITS

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TODAY’S AGENDA

• Historical PTO under the SCA

• Vacation & Holiday Pay

• Temporary & Part-time Employees

• Sick leave prior to EO 13706

• Sick leave under EO 13706

• New two rate fringe Wage Determinations

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VACATION BENEFITS (29 CFR 4.173)

• Vacation fringe benefits are vested and become due after the employee’s Anniversary date.

• Vacation benefits do not need to be paid immediately after the Anniversary date, but must be discharged before the next Anniversary date, completion of the contract, or when the employee terminates, whichever occurs first.

• “Continuous service” includes the whole span of continuous service with the present Contractor or successor, wherever employed, and with the predecessor Contractors in the performance of similar work at the same Federal facility.

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VACATION BENEFITS

The amount of vacation time an employee is entitled to is set

forth in the contract’s Area Wage Determination

Unlike the H&W fringe rate, vacation schedules will vary by regional

wage determination.

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VACATION BENEFITS

Sample SCA Vacation Schedule

Contract Years of Service Vested Vacation

Less than 1 None

1 to 4 2 weeks

5-14 3 weeks

15 or more 4 weeks

Unlike the H&W fringe rate, vacation schedules will vary by regional

wage determination.

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VACATION BENEFITS

Determining Years of Service

Two key concepts: Anniversary Date and Continuous Service

• The Anniversary date is the date the SCA

employee began work on an SCA contract at a

specific government work site.

• Continuous Service means both continuous

service with the present contractor (both

commercial work and on the contract) and

continuous service with any predecessor

contractor performing similar functions at the

same Federal facility.

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VACATION BENEFITS

Determining Years of Service

Break in Continuous Service

• Continuous service does not require the

combination of two entirely separate periods

of employment.

• Whether a “break in service” has occurred is

a facts and circumstances test. No minimum

period specified.

• Absence due to illness, strike, temporary

layoff or facility closure for renovation

purposes is not a break.

• Voluntary or for cause termination is a break.

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VACATION FRINGE BENEFITS

Q: When must the earned vacation be provided?

A: Once earned (vested), paid vacation must be provided or

payment in lieu of vacation time made before the employee’s

next anniversary date, termination of employment or

completion of the current contract, whichever occurs first.

Vacation may be scheduled during the year according to a

reasonable plan mutually agreed to and communicated to

the employees.

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VACATION BENEFITS

Common Variances and Challenges Between Standard Company PTO Policy and SCA Vacation Regulations

• Accrual vs. Vesting

• Pre-accrual before completion of one year of service

• Calendar Year vs. Anniversary Year

• Use it or lose it or carry over vs. pay out

• Vacation liability at contract transition – outgoing and incoming

contractor

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VACATION BENEFITS

What is the difference between accrued and vested leave benefits?

ACCRUAL

1. Each pay period leave is

earned.

2. Leave earned is usually

available for immediate use.

3. Some unused accrued leave is

usually rolled over each year.

VESTING

1. Leave vests after completion

of a specific time period.

2. Leave is only available after

vested.

3. Unused leave is paid out if not

used before next Anniversary

date.

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36

912

1518

2225

2831

3437

4043

4649

5255

5862

6568

7174

7780

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26

Accrual

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

80

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

Vesting

Pay Period Pay Period

H

o

u

r

s

E

a

r

n

e

d

Vacation Accrual vs. Vesting

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VACATION BENEFITS

Common Variances and Challenges Between Standard Company PTO Policy and SCA Vacation Regulations

• Accrual vs. Vesting

• Pre-accrual before completion of one year of service

• Calendar Year vs. Anniversary Year

• Use it or lose it or carry over vs. pay out

• Vacation liability at contract transition – outgoing and incoming

contractor

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HOLIDAY FRINGE BENEFITS (29 CFR 4.174)

• If any work is performed in a work week in which the holiday falls, the

employee is entitled to holiday pay. (Including Part-Timers)

• Holiday Pay is generally not applicable to days in which the Federal

Government is closed by proclamation, such as the day before Christmas

or on snow days, in other words, any holiday not named in the Contract

or Wage Determination.

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OPTIONS FOR SUBSTITUTED HOLIDAYS

A Contractor may substitute for any of the named holidays another

day off with pay in accordance with a plan communicated to the

employees involved. (See 29 CFR 4.174)

HOLIDAYS: A minimum of ten paid holidays per year, New Year's Day, Martin Luther King Jr's Birthday, Washington's Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day, and Christmas Day. (A contractor may substitute for any of the named holidays another day off with pay in accordance with a plan communicated to the employees involved.) (See 29 CFR 4174)

Example of holiday provision in the wage determination:

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SICK LEAVE BENEFITS

Executive Order 13706

• Effective 1/1/17, “New” Contracts must provide employees 1 hour of sick leave for every 30 hours worked, to a maximum of 56 hours per year.

• New Contract means one awarded as a result of a solicitation issued on or after 1/1/2017 or awarded after that date outside the solicitation process.

• Does not include unilateral exercise of option year extension.• May include bi-lateral renewal, extension (other than short-term limited

extension) or amended pursuant to a mod outside the contract scope.

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SICK LEAVE BENEFITS


• Covered contracts include SCA, DBA, Concession and certain federal lands contracts

• Covered employees include those covered under the Wage Determination and those covered under the FLSA including exempt employees.

• Applies only to contracts performed in whole or in part in the U.S. – but only to the part performed in the U.S.

• Applies to covered employees working on or in connection with a covered contract – excluded if less than 20% of hours in a week are in connection with a covered contract

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SICK LEAVE BENEFITS


• CBAs ratified before 9/30/2016 with 56 hours of sick leave exempt until earlier of termination of CBA or 1/1/2020

• CBAs with less than 56 hours must comply with respect to the difference

• Contractor must still comply with applicable state or local sick leave laws – i.e. if the state or local law is more generous, follow that.

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SICK LEAVE BENEFITS


• Accrued sick leave is carried over• Not more than 56 hours need be available at any one time• Termed employees do not need to be paid out, but if rehired on a

covered contract within 12 months, accrued sick leave needs to be reinstated

• Amount of available sick leave needs to be communicated in writing or electronically if available.

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SICK LEAVE BENEFITS


• Available for medical care, treatment, etc. for self and family members• Domestic violence• Broad definition of family member• Can request reasonable notice for foreseeable absence• Can request certification from a medical practitioner for absence of 3 or

more consecutive days• Grants can be communicated orally or in writing. • Denials must be communicated in writing with explanation.

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SICK LEAVE BENEFITS


Two Rate Wage Determinations

• Because sick leave under the EO is in addition to and not chargeable to the hourly fringe, the DOL has established a separate fringe rate for contracts subject to the EO.

• Current H&W rate for contracts subject to EO is $4.22 vs. $4.54• The effective annual value of this difference for a FTE is $665.60. In

other words, the government has determined that the annual average cost to the contractor to comply with the EO is $665.60/FTE.

• The actual cost of the EO sick leave benefit depends on the employee’s rate of pay. This presents new challenges for proposal pricing. Advise your procurement teams!

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PART-TIME & TEMPORARY EMPLOYEES (29 CFR 4.176)

Part-time employees must be paid a proportionate amount of the mandated fringe benefits.

Examples:

• A full-time employee is entitled to 2 weeks (80 hours) of vacation. A part-time employee who works 20 hours per week would be entitled to ½ (40 hours) the paid vacation benefits at the end of the anniversary year.

• The same part-time employee would be entitled to ½ the holiday pay benefits (e.g., 4 hours).

• The same part-time employee would be entitled to the same hourly rate of the health & welfare and pension benefits.

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VACATION FOR PART-TIMERS/TEMPS

• Employees working a regularly scheduled workweek receive the

proportionate amount of vacation pay.

• If the employee works an irregular schedule, vacation is based on the total

hours worked during the previous year ÷ 2080 hours.

• The pro-rata share of leave benefits must be used prior to the next

Anniversary date.

• If not used, the balance of vacation hours must be cashed out on the pay

period following the next Anniversary date.

• Any cash out of unused vested vacation benefits is at the minimum WD

hourly rate.

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The information contained herein is not intended to be legal, accounting, or other

professional advice, nor are these comments directed to specific situations. The

information contained herein is provided as general guidance and may be affected

by changes in law or regulation.

The information contained herein is not intended to replace or substitute for legal or

other professional advice. Attorneys or other legal advisors must be consulted for

assistance in specific situations. This information is provided as-is, with no

warranties of any kind. CBIZ shall not be liable for any damages whatsoever in

connection with its use and assumes no obligation to inform the reader of any

changes in laws or other factors that could affect the information contained herein.