What Is the Service Contract Act (SCA)?
The McNamara-O'Hara Service Contract Act (41 U.S.C. §§ 6701–6707) requires contractors and subcontractors performing services on federal contracts exceeding $2,500 to pay service employees at least the prevailing wages and fringe benefits found in the area where the services are performed.
Who Must Comply?
The SCA applies to federal service contracts exceeding $2,500 for services performed in the United States. Covered contractors must pay:
- At least the wages specified in the applicable SCA wage determination
- Fringe benefits totaling no less than the current Health & Welfare rate (H&W)
- 11 paid holidays per year
- At least the minimum wage established by Executive Order 14026
What Work Is Covered?
The SCA covers contracts principally for services. Covered occupations include:
Administrative assistants, secretaries, data entry operators
Building cleaners, janitors, grounds maintenance
Security guards, protective service workers
IT support, computer operators, help desk
Food service, cafeteria workers
Mechanics, maintenance technicians
SCA Fringe Benefits
SCA requires two types of fringe benefits:
- Health & Welfare (H&W) — a DOL-set hourly rate paid per hour worked (cash or benefits). Updated annually.
- Paid Holidays — 11 named federal holidays per year
Vacation (paid leave) requirements may also apply depending on the predecessor contract and collective bargaining agreements.
SCA vs. Davis-Bacon: Key Differences
| Feature | Davis-Bacon Act | Service Contract Act |
|---|---|---|
| Type of work | Construction | Services |
| Threshold | ≥$2,000 | >$2,500 |
| Worker type | Laborers & mechanics | Service employees |
| WD structure | By trade classification | By job title/occupation |
| Fringe types | H&W, pension, vacation, training | H&W rate, 11 holidays |
| Successor contracts | Not applicable | Must honor predecessor CBA wages for 1 year |