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Failure to Comply with the Service Contract Act Leads to Three Year Debarment of Forest Service Contractor

Alan I. Saltman
Smith, Currie & Hancock LLP - Washington Office

May 21, 2014

Previously published on May 1, 2014

In last month's edition of Legal Briefs for the Timber Industry, we reiterated the fact that holders of Integrated Resource Service Contracts (IRSCs) like all service contractors are legally required to ensure that all covered employees that work on the contract (including employees of subcontractors) are paid the minimum hourly wage and benefits provided in the Service Contract Act (SCA) Wage Determination that is attached to the contract. (Subcontractors are also responsible for seeing that their employees are paid the required wages and benefits.)

If we didn't make it absolutely clear that compliance with this requirement is important, perhaps this will -- Last Thursday the Department of Labor (DOL) debarred a contractor that worked on federal reforesting projects on the Superior National Forest in Minnesota and its president from all federal government contracting for three years for violating the SCA. The DOL found that the contractor had failed to pay the specified, minimum wages, overtime, fringe benefits and holiday pay to workers.

While the violation appeared to have begun as a good-faith effort to better accomplish an at-risk reforestation project, the Service Contract Act requires mandatory debarment for most violations according to the DOL Administrative Law Judge who issued the debarment order. Moreover, the debarment occurred here despite the fact that the contractor had promptly paid affected workers the back pay calculated by DOL investigators even though those calculations lacked supporting records to fully justify them.

We reiterate - holders of IRSCs and their subcontractors (like all other service contractors) must comply with the Service Contract Act. FAILURE TO DO SO CAN RESULT IN REAL TROUBLE.


The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.

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