Federal contracting implicates industries with significant employment of BIPOC, women, and LGTBQ+ workers, as well as workers with disabilities. Millions of contracts are signed each year between federal agencies and companies providing services like building maintenance, customer service, equipment maintenance, security, landscaping, and food service. While the recent executive order raising the minimum wage for federally contracted workers will provide needed relief to workers who provide these services, the Department of Labor can and should do more to ensure workers' wages are fair and that they actually receive what they are due. Prospective contractors in these industries, which are already characterized by low wages and high incidence of wage theft, may be tempted to submit very low bids for federal work that rest on poor employment practices and unrealistically low pay. The Department of Labor (DOL) already has extensive authority to remove that temptation through its powers to set and apply wage determinations under the Service Contract Act (SCA) and to strongly enforce contractor adherence to labor standards.
The SCA statute exempts certain categories of contracts from coverage, see 41 U.S.C. § 6702(b), but also gives the Secretary of Labor authority to create additional exemptions, see 41 U.S.C. § 6707(b). To expand the Act's benefits to more workers, the current regulatory exemptions and definitions should be re-visited to assure they are consistent with the statutory mandate that they are necessary. DOL can also issue subregulatory guidance that clarifies the narrow scope of the SCA's statutory exemptions for contracting agencies and contractors. Ambiguities in SCA coverage is a likely culprit in why contracting officers do not always include SCA clauses in covered federal contracts. All Agency Memoranda are a tool available to DOL to stop this problem.
DOL should update its process for issuing wage determinations and its methodology for setting wage and fringe benefits, including recognizing the efforts of workers to negotiate a collective bargaining agreement by exploring if the DOL can require CBA wage determinations to be incorporated into federal contracts immediately.
At the same time, Wage and Hour Division (WHD) should publish a variance implementing a one-time increase in the SCA fringe rate, currently set at $4.54/hour, for all wage determinations. Contractors and unions agree the current rate is not adequate. WHD under the Clinton administration similarly issued a variance to increase wages across the board, see DOL All Agency Memorandum 173, 58 Fed. Reg. 49,192 (Sept. 22, 1993).