Key Takeaway

If your contract includes FAR clause 52.222-41 and an attached Wage Determination, the Service Contract Act applies. You must pay covered employees at least the prevailing wage and provide Health & Welfare fringe benefits at the rate specified in your Wage Determination (currently $5.09/hour for most contracts, or $5.55/hour without Executive Order 13706). Getting this wrong is costly: DOL found violations in 68% of SCA cases investigated.

You Just Won an SCA Contract. Now What?

Winning your first federal service contract is a milestone. But if it's SCA-covered, you have a set of compliance obligations that kick in before your employees perform the first hour of work. The consequences of getting it wrong are real: back-pay liability, contract termination, and up to three years of debarment from federal contracting.

This post walks through the ten things you need to do, in order, to get compliant. For the full version with detailed sub-tasks for each step, see our complete SCA Compliance Checklist.

The 10-Step Quick Start

1. Confirm your contract is SCA-covered. Look for FAR clause 52.222-41 and a Wage Determination in your contract. If both are present, the SCA applies to all service employees on the contract.

2. Read your Wage Determination. This document specifies the minimum hourly wages by job classification, the H&W fringe benefit rate, and vacation/holiday requirements for your area. Everything else flows from this document.

3. Classify every employee correctly. Each employee must be mapped to a job classification in the Wage Determination based on their actual duties (not their job title). If their work doesn't match a listed classification, submit a conformance request (SF 1444) within 30 days.

4. Set up time tracking by contract. You need hours broken down by contract, not just total hours. If an employee works on multiple contracts or splits time between SCA and non-SCA work, you need that granularity. Daily records, not weekly summaries.

5. Calculate your H&W obligation. For odd-numbered Wage Determinations: H&W Rate x Compensated Hours (capped at 40/week). "Compensated hours" includes all paid time, not just hours worked.

6. Choose how to satisfy the H&W requirement. Employer-paid benefits (health insurance, 401k, dental, etc.), cash-in-lieu payments, or a combination. Only the employer-paid portion counts.

7. Set up compliant payroll records. Pay stubs must separately show base wages and fringe benefits. If they're lumped together, DOL may presume the entire amount was wages, leaving you on the hook for back-pay on benefits.

8. Post required notices. Display DOL Publication WH-1313 and the Wage Determination at every worksite before performance begins.

9. Flow down SCA requirements to subcontractors. Include FAR 52.222-41 and the Wage Determination in every subcontract. You're liable for their non-compliance.

10. Run compliance checks every pay period. Don't wait for a DOL audit to find out you're under-compliant. Calculate, compare, and fix shortfalls while they're small.

Where Contractors Typically Get Stuck

Based on 13 years working with hundreds of government contractors at GSA National, the compliance steps that cause the most confusion are employee classification (step 3), H&W calculation methodology (step 5), and multi-contract time tracking (step 4). These three areas account for the majority of violations DOL finds during investigations.

If you're managing compliance with spreadsheets, pay extra attention to the H&W calculation. The interaction between odd vs. even-numbered Wage Determinations, the 40-hour weekly cap, and multi-contract pro-rating creates edge cases that manual tracking consistently misses.

Next Steps

Bookmark the full SCA Compliance Checklist and work through it step by step. For detailed answers to specific compliance questions, our SCA Compliance FAQ covers 32 topics from Wage Determinations to DOL audit preparation.