Recently, the DOL’s Wage and Hour Division (WHD) released guidance in the form of questions and answers for employers with federal contracts covered by the Service Contract Act (SCA) and the Davis-Bacon Act regarding the appropriate wage rate to use when providing paid leave under the Families First Coronavirus Response Act’s (FFCRA’s) paid sick leave and expanded FMLA provisions. More specifically, the Q&A clarifies when an employer would have to include fringe benefits in compensation for paid leave under the FFCRA.
WHD explains that an employer must pay its federal contractors the SCA health and welfare fringe benefit rate (in addition to the SCA wage rate) only if such federal contractors take FFCRA leave concurrently with leave provided under the SCA or Executive Order 13706. Otherwise, if the federal contractor is taking FFCRA paid sick leave, an employer is required to provide compensation based on the higher of the federal contractor’s regular rate of pay, the federal minimum wage under the FLSA, or the applicable state or local minimum wage. Further, if the federal contractor is taking expanded FMLA leave, compensation is based on the employee’s regular rate. (As background, the SCA health and welfare rate is usually not included in the regular rate of pay.)
Importantly, for employers who have been providing health insurance to its federal contractors, health insurance must be maintained during FFCRA leave. In addition, if a federal contractor takes FFCRA leave concurrently with leave provided under the SCA or Executive Order 13706, an employer must provide health and welfare payments for all hours paid under the SCA (up to 40 hours per week and 2,080 per year on each contract).
The above guidance also generally applies for contracts covered by the Davis-Bacon Act. That said, employers with service contracts with the federal government covered by the SCA and contracts covered by the Davis-Bacon Act should be aware of this guidance to maintain compliance under the FFCRA.
COVID-19 and the Service Contract Act: Questions and Answers