REFERENCE MATERIALS: REGULATIONS, 29 CFR Parts 4, 516, 531, and 785

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McNAMARA-O HARA SERVICE CONTRACT ACT COMPLIANCE GUIDE FOR U.S. POSTAL SERVICE MAIL HAULERS INDEX TO MAIL HAUL GUIDE REFERENCE MATERIALS: REGULATIONS, 29 CFR Parts 4, 516, 531, and 785 I Scope and Intent II Records Required III Wage Required by the McNamara-O Hara Service Contract Act IV Travel Time V Owner-Operator and Subcontract Consideration VI Frequent Questions VII Enforcement Offices VIII Glossary I. SCOPE AND INTENT Mail haulers are covered by the McNamara O Hara Service Contract Act (SCA) and the Fair Labor Standards Act (FLSA). Under SCA, mail hauling contractors are required to pay service employees the wage rates and fringe benefits listed in the wage determination included in the contract. Fringe benefits may be paid in cash or check but, in any case, must be recorded separately in your records to avoid a violation. This Guide has been created to assist service contractors on the performance of their contracts.

It is not a legal document. The source references stated within are to be used in conjunction with this Guide. COMPLIANCE Recent experience has shown certain types of noncompliance recur. In all cases, the contractors made an after the fact wage payment to their employees because: they paid a rate below the rate stipulated in the contract; they paid a trip rate which was insufficient to cover the stipulated rate and fringe benefits; they failed to pay for down time and start-up time needed for breakdown, dock waiting time, safety checks, gassing and warm-up of the vehicle; they failed to separately state fringe benefits; and they paid owner operators as though they were not subject to SCA. II. RECORDS REQUIRED United States mail haulers as contractors are required to keep certain records. The following are requirements that should be noted by contractor: 1. Service contractors are required to maintain the name, address, social security number, classification, rate of monetary wages paid, fringe benefits provided, and the number of daily and weekly hours worked, of each service employee. 2. Any deductions, rebates, or refunds from the total daily or weekly compensation of an employee are to be made of part of records maintained. 3. Payroll is required not less often than semi-monthly for all covered service employees. The records required for the SCA are similar to those required by

the more generally applicable FLSA. 4. Contractors should request a list of all of employees of the predecessor contractor. Such list should contain the anniversary dates of the employees on the contract. 5. Records are to be maintained for three ( 3) years from the completion of work on a contract. 6. Records are to be made available for inspection and transcription by authorized representatives of the Administrator, Wage and Hour Division. 7. Records must be kept for each service employee performing work under the contract for each workweek during the performance of the contract. 8. Each service contract should have a separate record of the covered work performed by the service employee. Reference: 29 CFR Part 4.6(g)(1) IlL WAGES REQUIRED UNDER SCA The wage requirements under SCA will be satisfied by the timely payments of such wages to the service employee either in cash or negotiable instruments payments at par. Whatever system of payment is used, the contractor must ensure that each hour of work in performance of the contract is compensated at not less than the required minimum rate, i.e. prevailing wage rate and fringe benefits. The Post Office Transportation Service Center will identif the required rates and attach them to the contract. Contractors may not include the cost of fringe benefits or equivalents furnished as a credit toward the hourly wage. Operating expenses of a personally owed or leased vehicle can not be borne by the owner

operator or lease operator, if such vehicle is to be used in conjunction with the contract. IV. TRAVEL TIME Consider the interpretations of 29 CFR Part 785 before you apply the points below. Contract your local Wage and Hour office for further information. The principles that apply in determining whether time spent in travel is working time or not depend upon the kind of travel involved. Points to Remember: 1. Time spent by an employee in travel as part of his/her principle activity, such as travel from post office to post office (i.e., job site to job site), during the workday must be counted as time worked. 2. Time worked includes: fueling the vehicle; time at a meeting place to receive instructions; the pick up or delivery of a trailer at a designated place or to pick up tools, the travel from that designated place to the work place is to be counted as hours worked. 3. Scheduled periods during which an employee is completely relieved from duty and which are long enough to enable him!her to use the time effectively for his/her own purpose are not hours worked. 4. If a driver reaches his/her destination and while awaiting the return trip is required to take care of his/her employer s property (i.e., fueling, waiting for a load, maintenance & unscheduled down time) must be considered working while waiting. 5. Driving a contract vehicle to the Post Office or a point designated in the contract is hours worked. An exception may be noted where the vehicle is a family car and the travel is home to work. Examples of covered and non-covered government contracts work on a given

trip: Home to post office (no) Post office to home (no) (normal home to work) Home to work shop (no)... Work shop to post office (yes) Post office... to post office.. to post office (yes) *post office (yes) to post office to work shop (yes).. to post post office (yes) unless the contractor receives no benefits from the travel V. OWNER -OPERATOR AND SUBCONTRACTOR CONSIDERATIONS A. To find out if the Post Office permits subcontracting a contractor should check with its Transportation Management Service Center. B. Record of hours worked must include the travel time required to drive the hauling vehicle to the pick up point. C. Companies employing owner-operators must pay all expenses incurred by the owner-operator during the pick up or delivery of mail. The expenses include, but are not limited to, the following: (1) fuel & oil, maintenance (2) depreciation on equipment (3) tires (4) insurance (5) registration D. Owner-operators may not sign away their rights to the benefits of SCA. E. Trip rates must equal the hourly rate equivalent of the minimum wage determination. Here again the fringe benefits must be on an hourly basis and separately stated.

VI. COMMONLY ASKED QUESTIONS Q. Am I required to pay vacation pay to employees who remained at the same job site and were previously working for the predecessor of the contract that I now have? A. Yes. Service employees are due vacation from whomever was their employer on their anniversary date. Q. Am I allowed to make cash fringe benefit payments? A. Yes, provided that such cash amount is equivalent to the cost of the fringe benefit required. (Ref. 29 CFR Part 4.177 (a) (1) & (d)) Q. If I have only one or two employees who haul mail part-time, am I still required to keep records on them? If so, what type? A. Yes. Records such as name, addresses, social security number, work classification, rate of monetary wages paid, fringe benefits provided, number of daily and weekly hours worked are to be maintained on all service employees. (Ref. 29 CFR 4.6(g) (i) thru (vi), (2), (3)) Q. Is it necessary that I inform the service employees working on my contract of the rates and fringe benefits attached to the contract? A. Each service employee commencing work on the contract shall be notified of the minimum monetary wage and of any fringe benefits required to be paid pursuant to the contract; or the contractor shall the wage determination attached to the contract. (Ref. 29 CFR Part 4.6(e)) Q. How long am I allowed to wait to pay my employees between pay periods?

A. Each employee, subject to the Act, shall be paid unconditionally by the contractor all wages due free and clear no later than one pay period following the end of the regular pay period in which such wages were earned or accrued; and may not be a pay period of any duration longer than semi-monthly. (Ref. 29 CRF Part 4. 6 (h)) Q. If I provide paid coffee breaks to my service employees, can that be counted towards minimum wage and fringe benefit obligations? A. No. A contractor cannot take credit towards its minimum wage and fringe benefit obligations for the cost of providing for its employees coffee breaks, parties, tiowers, cards, gifts and certain other items. (Ref. 29 CFR Part 4.168) Q. Are contractors or subcontractors in violation of the SCA if they failed to pay holiday benefits to temporary or casual employees hired during a holiday week, but after the holiday? A. No. However, if an employee is newly hired and the holiday falls in the first week of a contract all employees who worked during the first week would be entitled to that day. (For example, if the contract is for the period January 1 through December 31 and New Year s Day was the named holiday in the fringe benefit determin ation and New Year s Day was officially celebrated on January 2 in the year in question because January 1 fell on a Sunday, then employees hired to begin work on January 3 would be entitled to holiday for New Years Day.) (Ref. 29 CFR Part 4.174 (b)) Q. Is a part-time employee working a regular scheduled workweek of only 16 hours entitled to 40 hours of paid vacation? Would he/she be paid for a full eight-hour

day when holiday pay is an issue? A. A part-time employee working a regular scheduled workweek of 16 hours would only be entitled to 16 hours per week of vacation or its equivalent, if he/she has met the qualifications. In the case of holidays, the part-time employee (in this instance) would be entitled to two-fifths (i.e., a pro-rata share) of the holiday pay due full-time employees. (Ref. 29 CFR Part 4.176 (a) (1) and (2)) Points of interest: Full time employees, in most cases, are eligible to receive up to 8 hours to pay for a named holiday. Full time employees who work on a designated holiday are entitled to that day s work at the rate specified in the wage determination in addition to the holiday pay or be furnished with another day off with pay. VII. ENFORCEMENT OFFICES The Wage and Hour Division of the Department of Labor enforces and administers SCA along with many other labor laws. Compliance investigators, acting as authorized Wage and Hour representatives, have the authority to conduct investigations and gather all data necessary to determine compliance. Violators of the contract stipulations required by Section 2(a) (1), 2(a) (2), or 2(b) of the Act are subject to Section 3(a) of the Act that any violations shall render the party responsible for the amounts of any deductions, rebates, refunds or underpayments (which includes non-payment of compensation due to an employee engaged on the performance of the contract). The Department of Labor may request that payment due on a contract be withheld in cases where it is necessary to pay restitution to the employees.

For further information you may contact the local Wage and Hour Office of the Department of Labor in your area. It is listed in most telephone directories in the U.S. (Federal) Government section of the telephone directory. VIII. GLOSSARY The McNamara-O Hara Service Contract Act requires payment of prevailing wage rates and fringe benefits on contracts to provide services for the federal government. Service employees are persons engaged in the performance of a contract other than any person employed in a bona fide executive, administrative, or professional capacity as set forth in 29 CFR Part 541; and service employees also include all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons. Wage determination includes any determination of minimum wage rates or fringe benefits made pursuant to the provisions of sections 2(a) andlor 4(c) of the Act for application to the employment in a locality of any class or classes of employees in the performance of any contract in excess of $2,500 which is subject to provisions of the McNamaraO THaraService Contract Act of 1965. Contractor (interchangeable with employer) includes any subcontractor whose subcontracts are subject to the provisions of the Act. (The U.S. Government, its agencies, and instrumentalities are not contractors, subcontractors, or joint employers for purpose of compliance with the provisions of the Act). Administrator means the Administrator of the Wage and Hour Division or authorized representative. Wage and Hour Division is an organizational unit in the Employment Standards Administration of the Department of Labor to which is assigned the functions of the Secretary of Labor under the McNamara-O Hara Service Contract Act 1965, as

amended. Fringe benefits include such, but not exclusively, health, welfare, pensions, holidays & vacations; but do not include any benefits required by any other Federal, State or local law (e.g., workers compensation, unemployment insurance).