The Ten Percent Man: Conformance of Team Leader Positions Under the Service Contract Act
“A round man cannot be expected to fit a square hole right away. He must have time to modify his shape.”
—Mark Twain
A client asks me if team leaders are exempt positions or, if not exempt, how to compensate them under the Service Contract Act (“SCA”).
The short if non-definitive answer about the exemption status is that If the team leader’s primary duty is supervisory, and he or she has authority to hire or fire or make recommendations that have particular weight, and is paid on a salary basis, the worker might be executive exempt. If so, then pay on a salary in compliance with the salary basis test and treat them as exempt.
Assuming they are not exempt, then what is the proper “conformed rate” under the SCA to be paid to the “missing” job position? Of course, there generally is no pure team leader position to be found on the SCA wage determination (“WD”). That means the position likely has to be conformed, and a rate of pay proposed to the US Department of Labor (“DOL”). That conformance process will require the contractor to set a wage rate consistent with the extra duties and skills of the job position. Given that process, here are some practical if formulistic guidance on how to conform them.
There is no binding regulatory guidance as to how to conform a rate for team leaders and nonexempt supervisors. But DOL has furnished some policy guidance on the subject. Generally, DOL says as follows:
• Wage rates proposed for "leaders" should reflect the additional level of duties and responsibilities.
See Conformance Guide, https://static1.squarespace.com/static/5a6619f32278e7a092c86335/t/5a666885e4966b9ab1c99b2d/1516660871764/DOL%27s+Conformance+Guide.pdf at page 7. A footnote number 1 is added in that same publication which says: “(Note that the Federal Government often compensates leaders at 110 percent of the journeyman rate.)” Id.
Substantially the same guidance also appears in another DOL publication which says:
Conform a "leader" (see Appendix B) if the duties added to the journeyman position (in wage determination) are significant enough to create a new occupation not covered by the governing wage determination.
See the Department of Labor’s Conformance Resource Book at page 18. That out of circulation publication later says:
• Wage rates proposed for "leaders" should be commensurate with the level of duties added to the related journeyman duties. (Note that the Federal Government often compensates leaders at 110 percent of the journeyman rate.)
Id. at page 22. I take it from this that it isn’t required to pay a 10% premium, but that it is where they are guiding you.
The suggested extra 10% compensation factor for team leaders also appears in a proposed sample “leader” conformance with the following note:
Rationale: Propose the rate of $22.97. It is often customary for the Federal Government to compensate leaders at 110% more than subordinates.
GS-12 = 20.88
x 1.10
$22.97
Based on the above, here is my bottom-line practical advice. If you don’t want any trouble with DOL, I would suggest a 10% premium for the team leader over the existing journeyman rate on the wage determination.