Service Contract Labor Standards (SCLS) Wage Determinations, formerly known as the Service Contract Act (SCA) Wage Determinations, are legally mandated minimum wage and fringe benefit rates that must be paid to service employees performing work under federal service contracts. These wage determinations are issued by the U.S. Department of Labor (DOL) and are enforced under the Service Contract Labor Standards statute, codified at 41 U.S.C. Chapter 67 and implemented through FAR Subpart 22.10.
Wage determinations (WDs) ensure that contractors do not win federal contracts by underpaying their workers and that service employees receive wages and benefits comparable to local prevailing standards for similar work. They apply to a wide range of federal contracts exceeding $2,500 where the principal purpose is to provide services through the use of service employees.
Purpose and Legal Framework
The primary purpose of SCLS Wage Determinations is to establish fair labor standards for workers on federal service contracts. These determinations promote equity, reduce wage suppression, and support economic stability by aligning federal contractor compensation with local market conditions.
SCLS is enforced by the Department of Labor and incorporated into federal contracts via the FAR Clause 52.222-41. Contractors are required to pay covered employees at least the minimum wage and fringe benefits listed in the applicable wage determination. These obligations cannot be waived or negotiated and apply regardless of the contractor’s location or pricing strategy.
GSA Schedule contracts, particularly under professional services, logistics, facilities, and security-related SINs, frequently involve SCLS-covered positions. Contractors must take care to identify labor categories that fall under the statute and apply the correct WD when bidding or performing work.
What a Wage Determination Includes
A wage determination is a formal document that specifies the minimum wages and fringe benefits required for service employees working on federal contracts in a given locality. Each WD is tailored to a specific geographic area (usually by county or metropolitan area) and includes multiple labor categories commonly used in service contracting.
A typical SCLS Wage Determination includes the following elements:
- Job titles and position descriptions — aligned with the DOL’s Directory of Occupations, such as General Clerk I, Janitor, Electrician, or Security Guard
- Hourly wage rates — based on the prevailing wages in the locality for each occupation
- Fringe benefit requirements — such as health and welfare (a fixed hourly contribution), holiday pay, and paid vacation
- Area and WD number — unique identifier for tracking and compliance, tied to a specific county or group of counties
- Effective date and revision history — showing when the WD was last updated and whether changes to wage or benefit rates have occurred
Contractors must match their labor categories to the appropriate SCLS classifications and ensure that employees are paid no less than the listed rates, even if the company’s internal rates are lower or structured differently.
Applicability and Compliance Requirements
Contractors are responsible for identifying when SCLS applies to their contracts and ensuring full compliance. Misclassification of labor categories or failure to use the correct wage determination can result in back pay obligations, penalties, and contract performance issues.
SCLS Wage Determinations apply when:
- The contract value exceeds $2,500 and is primarily for services (as opposed to products or construction)
- Service employees are used, meaning non-exempt workers whose duties are covered by the SCLS definitions
- Work is performed in the United States, including its territories and possessions
- The contract is not exempt under specific regulatory exceptions, such as certain R&D or professional service contracts if all employees are exempt under FLSA
Contractors under GSA MAS contracts must also comply when proposing labor categories that align with SCLS job descriptions and when performing work under task orders where the SCLS clause is included.
Managing SCLS Compliance in Federal Contracts
Proper administration of SCLS compliance is essential for contractors delivering services under federal contracts. This includes mapping labor categories, applying the correct wage determination, and ensuring accurate employee classification and compensation.
Best practices for managing SCLS wage determination compliance include:
- Reviewing the most current wage determination from the DOL’s SAM.gov Wage Determinations tool or through solicitation documentation
- Matching internal labor categories to DOL’s Directory of Occupations, not just by title but by job duties and scope of work
- Tracking employee locations to apply the correct geographic WD for where the work is performed, not where the company is headquartered
- Including the appropriate SCLS clauses and references in proposals, subcontracts, and task order responses
- Budgeting fringe benefits properly, especially when health and welfare amounts change mid-performance or annually
- Updating employee pay promptly when new wage determinations are incorporated into the contract via modification
GSA contractors must also maintain documentation showing how labor mapping decisions were made and be prepared to provide wage and fringe benefit payment records in the event of a DOL audit or IOA Contractor Assessment.
Conclusion
Service Contract Labor Standards (SCLS) Wage Determinations are a critical component of federal service contracting. They protect workers, ensure fair competition, and enforce labor law compliance across all agencies. Contractors performing under GSA MAS contracts or any other service-based vehicle must understand how wage determinations work, how they are applied, and how to manage compliance throughout the life of the contract. By proactively aligning labor categories, compensation policies, and task order planning with SCLS requirements, contractors can avoid costly mistakes and ensure responsible contract performance in the federal space.
