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Note: Service Contract Act functionality is for cloud customers only.
The Service Contract Act (SCA) is a federal government act that directs how employees who work on service contracts are paid. It establishes standards for wage rates, health and welfare, vacation, and holidays.
The SCA wage determination lists minimum wage rates for occupations, by locations such as by county and sometimes by city. See https://sam.gov/content/wage-determinations for more information. There is no import for wage determinations. They must be added on the Wage Determination page.
Projects are associated with labor categories, which can be associated with an SCA occupation. SCA occupations can be associated with a wage determination. A labor category can be associated with no more than one SCA occupation, but an SCA occupation can be associated to multiple labor categories. See Setup Labor Categories for more information.
Topics covered on this help page include:
Administrators set up the SCA Occupations on the Admin >> Setup SCA Occupations page. This page comes pre-loaded with all of the current SCA occupations. Administrators can add, edit, or delete occupations.
HR Administrators can award leave as a block grant to SCA employees on their anniversary date for compliance with SCA regulations. They can select the On Anniversary option for Yearly Period Types on the Admin >> Setup Accrual Plans page. They can also limit the total amount of hours an employee can accrue on the Schedule tab, as determined by the SCA wage determination guidelines. For yearly accrual plans where On Anniversary is true, the accrual post should happen daily. The posting may occur automatically or manually. Employees earn their leave on the anniversary of their hire date. For hire dates of 2/29, 3/1 is the anniversary date for non-leap years.
Administrators can set up default accounts on the Admin >> Setup Posting Groups page for posting pay in lieu of benefits.
Administrators can set up an email notification that is triggered when a Wage Determination has been associated with a contract for one year. See Admin >> Setup Email Notifications and Admin Schedule. The purpose of this notification is to remind managers to check if the rates have changed for the wage determinations.
The SCA requires that an employee be provided a benefit package where the employer cost of the benefits is worth a certain minimum amount per hour for each wage determination. If the value of the provided benefit package is less than the required amount, the employer must pay the employee the difference. This is known as pay in lieu of benefits. The minimum required amount is specified in the Wage Determination Profile Health and Welfare Benefits Rate field. The per period value of the benefits package comes from the Person Profile >> Benefits Value page.
Pay in Lieu of Benefits is calculated as follows:
Pay in Lieu of Benefits Rate = Health and Welfare Benefit rate from Wage Determination Profile - Benefits Amount per Pay Period from Person Profile >> Benefits Value / Number of SCA Hours Worked in Pay Period
If the Pay in Lieu of Benefits rate is greater than zero:
If the Wage Determination is odd-numbered (i.e., Wage Determination identifier is 2005-2019), then Pay in Lieu of Benefits Amount = (Pay in Lieu of Benefits rate) * (Hours worked for the project in the specified time up to the maximum number of hours noted on the Wage Determination)
If the Wage Determination is even-numbered (i.e., Wage Determination identifier is 2005-2022), then Pay in Lieu of Benefits Amount = (Pay in Lieu of Benefits rate) * (all Hours worked for the project in the specified time)
The Pay in Lieu of Benefits Cost Post process provides a means to calculate how much pay is due each SCA employee in a given time period. This post only applies to:
The process will post transactions into the General Ledger (GL) if posting to GL is enabled and the post date is on or after the post to GL effective date. A pay in lieu of benefits posting group category determines the rules for deriving the posting organization and account. In the event that a time period spans multiple fiscal periods, the administrator can choose one of these options:
post all transactions for the time period into the fiscal period that contains the last day of the time period
split the transactions into two parts: days in time period that fit into earlier fiscal period, and days in time period that fit into the later fiscal period
Administrators can set the Posting Level for the Pay in Lieu of Benefits transactions which get posted to the General Ledger using the following properties:
The Pay in Lieu of Benefits Unpost process provides a means to remove all journals and General Ledger (GL) transactions generated by a pay in lieu of benefits post. The journal entries retain the project information. However, the GL transactions for pay in lieu of benefits are not associated to a project.
Contract Managers can maintain the list of Wage Determinations which are used in time sheet rating and Pay in Lieu of Benefits Cost Post. Wage determinations can be associated to multiple contracts (they are not contract specific).
Use the Wage Determination >> Occupations screens to record the wages assigned to occupations associated with the wage determination so that the amount paid to Service Contract Act (SCA) employees will be correct.
Tip: While the Wage Determination may list hundreds of Occupations, consider entering only those occupations which pertain to your business.
The People Profile >> Rates tab has an SCA Wage Applies field to indicate that a person's rate should come from the wage determination.
Contract Managers can associate a wage determination to a contract so that employees who are covered by the SCA clause can be paid at the rates established by the wage determination.
To apply the correct wage determination cost rate for employees, the following must be true:
A contract associated to the project may have more than one Wage Determination record. The system will determine the right one to use based on the following:
For projects that are associated to a contract which has the SCA provision set to true, you can select from the following rates on the Contract Provisions page:
Wage Determination Rate: pays the employee only the value set by the Wage Determination record for their defined labor category/occupation.
The employee's Labor Category must be associated to an Occupation Code.
The Occupation Code must be associated with a Wage Determination associated to the contract. The rate identified for the occupation will be used to pay the person per hour.
If no corresponding Occupation Code is found, then the Wage Determination's minimum wage will be used.
If SCA rates cannot be determined, then the employee's base rate will be used.
Base Rate: pays the employee their system calculated rate if it is higher than the Wage Determination occupation rate, otherwise pays the Wage Determination rate, i.e., the employee is paid the higher rate of the two.
Pay codes for overtime and hazard pay are still applied as an additive to the rate.
When any of the following is updated:
then non-extracted and non-locked timesheets meeting the following criteria will be adjusted:
The values set up on the Admin >> Setup Accrual Plans >> Schedule page for Accrual Cap Type and Accrual Cap Hours limit the total number of hours a user can accrue in a specified period in the Admin >> Accruals posting process. For example, if the timesheet user has an Accrual Cap Type of Per-Period and Accrual Cap Hours set to 8, then the user can only earn a maximum of 8 hours for that period, even if they have worked enough hours to accrue more than 8 hours. The user can earn another 8 hours in the next period.
For employees covered under the Service Contract Act, this cap is set according to the Service Contract Act wage determination guidelines.
Users can search for Pay in Lieu of Benefits document type in the Journal Details Report, Journal Summary Report, GL Details Report, and Admin Export for General Ledger.
Administrators can perform the following:
import and export the person benefit values so that the system can calculate pay in lieu of benefits correctly.
export the pay in lieu of benefits posted records in order for the payroll company or a third party benefits administrator to oversee the distribution of funds to the employees in an SCA compliant manner.
