Blog Two: Timing of New Wage Determinations for Remote Workers – Service Contract Act (“SCA”) Telework Issues

I keep a close watch on this heart of mine

I keep my eyes wide open all the time

I keep the ends out for the tie that binds

Because you're mine, I walk the line

 --Johnny Cash, I Walk the Line.

Two weeks ago, as part of my so-called “Three Blog Night” on remote work or telework, I summarized some proposed federal legislation and gave you my own ambiguous opinions on the subject of remote work. https://www.awrcounsel.com/blog/2024/5/28/it-is-a-three-blog-night-blog-one-remote-work-in-the-government-contracts-world For this blog, let’s return to the same subject, but examine some of the substantive issues  it raises under the Service Contract Act (“SCA”). By the way, I previously covered some related SCA remote worker issues in a prior 2021 blog found here: https://www.awrcounsel.com/blog/2021/10/25/remote-or-home-workers-does-the-service-contract-act-wage-rate-change?rq=telework%20.

Under the SCA, FAR 22.1009-4 and 52-222-49 both allow for the addition of a new SCA wage determination (“WD”) for a new locale for the work to be added after award with no price adjustment. For fixed priced contracts, that means no adjustment upward if the cost of labor is more than anticipated; it also means no adjustment downward if the cost of labor is less than anticipated.

The instructions for using the FAR 52.222-49 clause is found in FAR 22.1006(f) and 22.1099-4(f). Neither proviso makes any distinction between cost reimbursement work and fixed price work. If the contracting officer expects performance in different locales, he or she is supposed to include the clause in either kind of procurement. The requirement to insert the clause is implemented by the word “shall” which connotes a mandatory requirement.  See FAR 22.1006(f).

So, you ask if an employee is working remotely under the SCA contract, when does the FAR require a contracting officer to incorporate a WD for a new location? Here is the common scenario for hiring a remote worker. After the contract is awarded, an SCA covered worker is hired to telework. Or  an existing worker asks to become a remote employee and work from out of state. The contract has been awarded. It has a finite number of WDs incorporated therein. How does the contractor accommodate those kinds of situations?

Based on FAR 22.1007 and 29 CFR 4.4, it seems that the contracting officer is only required to obtain a WD prior to any invitation for binds, request for proposals, commencement of negotiations, exercise of option or contract extension, annual anniversary date of multi-year contract subject to annual fiscal appropriations of Congress or each biennial anniversary date of a multi-year contract not subject to such annual appropriations, if so authorized by the Wage and Hour Division. Of course, the contracting officer may add a WD at any time voluntarily.

Accordingly, at the minimum, even if not incorporated retroactively and made effective on day one of the contract, pursuant to FAR 22.1007 and 29 CFR 4.4, the contracting officer should be urged  to incorporate the most current versions of the applicable WDs for the new locales to the contract at each option period of the contract and not less often than every two years for multi-year funded contracts. This is particularly relevant for employees engaged at remote work sites and teleworking, since their place of work is not established until after they are hired or after they move residences. If the contract includes FAR 52.222-49, that gives authority to add the WD whenever the contracting officer wishes and bars the contractor from getting any price adjustment.  

For service contracts that do not include FAR 52.222-49 the requirement to add new WDs may vary.  Pursuant to FAR 22.1008-1(e) (Obtaining Wage Determinations) – “To obtain the applicable wage determination for each contract action, the contracting officer shall determine the following information concerning the service employees expected to be employed by the contractor and any subcontractors in performing the contract:

(1)   Determine the classes of service employees to be utilized in performance of the contract using the Wage and Hour Division’s Service Contract Act Directory of Occupations (Directory). The Directory can be found on Wage Determinations at SAM.gov Library Page, and is for sale by the Superintendent of Documents, U.S. Government Publishing Office. (2) Determine the locality where the services will be performed (see 22.1009). (3) Determine whether 41 U.S.C. 6707(c) applies (see 22.1008-2, 22.1010 and 22.1002-2). (4) Determine the wage rate that would be paid each class if employed by the agency and subject to the wage provisions of 5 U.S.C. 5341 and/or 5332 (see 22.1016).

FAR 22.1008-1(e) thus appears to impose an obligation on the contracting officer to determine the locality of where the services will be performed at each option action (presumably each of the contract actions specified in FAR 22.1007). Therefore, if the contractor hires a new SCA remote worker in a new location for which there is not a WD currently attached to the contract, the contractor should request for the contracting officer to add that new WD to the contract at the start of the option period.

For the Firm-Fixed Price Contracts that do not include FAR 52.222-49, what WD should contractors use when hiring a SCA remote worker in a new location until that location’s WD can be added to the contract at the option period? Based on long-standing but unwritten informal guidance from the Department of Labor, it is our view that during the interregnum before a remote locality WD is added to the contract, the contractor should apply one of the existing WD locations actually attached to the contract until such new locality WD is actually incorporated into the contract, usually in the contract’s next option year. That advice is based on 29 CFR 4.4(a)(3)(i), which states:

Where the place of performance of a contract for services subject to the Act is unknown at the time of solicitation, the solicitation need not initially contain a wage determination. The contracting agency, upon identification of firms participating in the procurement in response to an initial solicitation, shall obtain a wage determination for each location where the work may be performed as indicated by participating firms. An applicable wage determination must be obtained for each firm participating in the bidding for the location in which it would perform the contract. The appropriate wage determination shall be incorporated in the resultant contract documents and shall be applicable to all work performed thereunder (regardless of whether the successful contractor subsequently changes the place(s) of contract performance).

However, 29 CFR 4.4(a)(3)(i) contemplates the scenario of when the place of performance is unknown at the time of solicitation. It would likely be reasonable for the contractor to have an internal default policy which is applied consistently – for example, the corporate headquarters WD for the contractor will be used for any new localities added mid period of performance until the actual location’s WD is added to the contract. We would not advise contractor’s to just pick one of the current attached WDs that is closest to the actual new locality’s wage rates. If it is higher, DOL would pocket the concession and if it is lower, they may dispute it. (Yes, Delores, that is how DOL thinks!). We recommend using the HQ or main place of performance of the work, and being consistent in these kinds of situations, until you get a new WD for the missing location.