U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

PREVAILING WAGE RESOURCE BOOK 2010 VARIANCES & EXEMPTIONS 

 SCA ADMINISTRATIVE 

 VARIANCES & EXEMPTIONS 
U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

PREVAILING WAGE RESOURCE BOOK 2010 VARIANCES & EXEMPTIONS 

ADMINISTRATIVE LIMITATIONS, VARIANCES, 

TOLERANCES, AND EXEMPTIONS 

VARIANCE TO SCA PREVAILING WAGE REQUIREMENTS 

FOR CERTAIN SERVICE EMPLOYEES 

 WORKERS WITH DISABILITIES

 APPRENTICES 

CONTRACTS EXEMPT FROM ALL PROVISIONS OF SCA 

 POSTAL SERVICE CONTRACTS WITH COMMON CARRIERS

 POSTAL SERVICE MAIL CONTRACTS WITH OWNER OPERATORS

 CERTAIN “COMMERCIAL” SERVICES 
U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

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ADMINISTRATIVE LIMITATIONS, VARIANCES, 

TOLERANCES, AND EXEMPTIONS 

 Section 4(b) of the SCA authorizes DOL to provide reasonable limitations, variations, 

tolerances and exemptions from provisions of the SCA, but only in special 

circumstances where it is necessary and proper in the public interest or to avoid serious 

impairment of government business and is in accord with the remedial purpose to 

protect prevailing labor standards. SCA § 4(b) and 29 CFR 4.123. 
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VARIANCE TO SCA PREVAILING WAGE REQUIREMENTS 

FOR CERTAIN SERVICE EMPLOYEES 

Workers With Disabilities 29 C.F.R. § 4.6(o).

Workers with disabilities who are employed under certificates issued by the WHD may be 

paid at “special minimum wage” rates below the rates that would otherwise be required for 

such work. 

◊ SCA contractors are allowed to pay less than the SCA prevailing wage rates to 

workers with disabilities in competitive employment, workers with disabilities in 

rehabilitation facilities, and student learners, in accordance with section 14 of the 

Fair Labor Standards Act (FLSA). 

◊ Section 14 of the FLSA provides for the employment of certain workers at rates 

below the federal minimum wage to the extent necessary in order to prevent 

curtailment of employment opportunities . As stated in section 14(c): 

 The Secretary, to the extent necessary to prevent curtailment of 

opportunities for employment, shall by regulation or order provide for the 

employment, under special certificates, of individuals . . . whose earning or 

productive capacity is impaired by age, physical or mental deficiency, or 

injury, at wages which are – 

 (A) lower than the [FLSA] minimum wage; 

 (B) commensurate with those paid to non-handicapped workers 

employed in the vicinity in which the individuals under the certificates are 

employed, for essentially the same type, quality, and quantity of work; and 

 (C) related to the individual’s productivity. 

 The FLSA further requires employers to provide written assurances that the 

hourly wage rates of individuals will be reviewed regularly, and that the 

employees’ wages will be adjusted to reflect changes in the locally prevailing 

wages paid to experienced workers who do not have disabilities performing 

essentially the same work. 

Certification

◊ Employers must obtain an authorizing certificate from the WHD prior to paying 

special minimum wages to employees who have disabilities for the work being 

performed. Applications are available from the WHD’s Regional Offices. 

Completed applications must be mailed to the following address: U.S. 

Department of Labor, Employment Standards Administration, Wage and Hour 
U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

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Division, National Certification Team, 514, 230 South Dearborn Street, Room 

524, Chicago, Illinois 60604-1591. 

Disability

◊ The fact that a worker may have a disability is not in and of itself sufficient to 

warrant the payment of a special minimum wage. Section 14(c) does not apply 

unless the disability actually impairs the worker’s earning or productive capacity 

for the work being performed. A worker who has disabilities for the job being 

performed is one whose earning or productive capacity is impaired by a physical 

or mental disability, including those relating to age or injury. Disabilities which 

may affect productive capacity include blindness, mental illness, mental 

retardation, cerebral palsy, alcoholism and drug addiction. 

Commensurate Rate

◊ A special minimum wage is a wage paid a worker with a disability that is 

commensurate with that worker’s individual productivity compared to the wages 

and productivity of experienced workers who do not have disabilities performing 

essentially the same type, quality, and quantity of work in the vicinity where the 

worker with a disability is employed. The commensurate wage is always a 

special minimum wage, i.e. a wage below that required by Section 6 of the FLSA 

or below the rate required under an applicable SCA wage determination. The 

commensurate rate is determined by the employer in accordance with 29 C.F.R. 

Part 525. 

 The key elements in determining commensurate rates are: 

 ◊◊ Determining the standard for workers who do not have disabilities, 

the objective gauge against which the productivity of the worker with 

a disability is measured. 

 ◊◊ Determining the prevailing wage. Most SCA contracts include a 

wage determination specifying the prevailing wage rates to be paid for 

work on the SCA contract. (On SCA contracts funded by 

appropriated funds, the contract will be amended annually to include a 

new prevailing wage determination.) 

 ◊◊ Evaluating the quantity and quality of the productivity of the worker 

with the disability. 

◊ The productivity of hourly rate workers must be reevaluated at least every six 

months. Also, all special minimum wages must be reviewed and adjusted 

regularly to assure that they reflect changes in locally prevailing wages. 

 Where a worker is performing work subject to the SCA, the wage rate listed on 

the wage determination for the classification of work performed is the prevailing 

wage. If a covered contract does not contain a wage determination, (because the 
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contract is for less than $2,500, or fewer than six service employees and no wage 

determination was available for the contract work to be performed), the employer 

should determine the prevailing wage rate in accordance with instructions 

provided at 29 C.F.R. § 525.10. 

Fringe Benefits and Overtime

◊ Workers paid special minimum wages must receive the full fringe benefits (or 

cash equivalents) listed on the wage determination when performing work subject 

to the SCA. Temporary and part-time employees are entitled to an amount of the 

fringe benefits specified in an applicable wage determination that is proportionate 

to the amount of time spent in covered work. SCA makes no distinction, with 

respect to its compensation provisions, between temporary, part-time, and fulltime employees. 

◊ Vacation pay and holiday pay may be based on the commensurate wage rate. 

◊ Generally, workers with disabilities are subject to the overtime provisions of the 

FLSA and/or CWHSSA and must be paid at least 11⁄2 times their regular rate of 

pay for all hours worked over 40 in a workweek. 

FLSA Minimum Wage Application to Employees Who Do Not Perform Work Subject 

to the SCA in an Establishment where SCA Contract Work is Performed

◊ Section 6(e)(1) of the FLSA extends application of the FLSA minimum wage to 

employees not employed on the SCA contract. Thus, for example, in a work 

center, where SCA contract work is performed, certain staff and employees not 

working on the service contract must be paid at least the FLSA minimum wage. 

(Commensurate rates would continue to apply to the disabled workers employed 

under special minimum wage certificates.) 

Applicable Regulations

◊ Regulations set forth at 29 C.F.R. Part 525, “Employment of Workers with 

Disabilities under Special Certificates” govern the issuance of certificates 

authorizing the employment of workers with disabilities at special minimum 

wages pursuant to section 14(c) of the FLSA. See also the SCA Regulations at 

29 C.F.R. § 4.6(o). 

Apprentices (29 C.F.R. § 4.6(p). 

◊ Apprentices will be permitted to work at less than the SCA predetermined rate for 

the work they perform when they are employed and individually registered in a 

“bona fide” apprenticeship program registered with a State apprenticeship agency 

that is recognized by the DOL, or, if no such recognized agency exists in a State, 
U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

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under a program registered with the DOL’s Employment Training 

Administration’s Office of Apprenticeship. See also 29 C.F.R. Part 29. 

◊ The terms and conditions of the approved program will be followed in the 

employment of apprentices. 

 ◊◊ Wage rates paid apprentices shall not be less than the wage rate for 

their level of progress set forth in the registered program, usually 

expressed as a percentage of the journeyman’s rate in the applicable 

wage determination. 

 ◊◊ The allowable ratio of apprentices to journeymen employed on the 

contract work shall not be greater than the ratio permitted to the 

contractor under the registered program. 

◊ Any employee who is not registered as an apprentice in an approved program 

shall be paid the wage rate and fringe benefits contained in the applicable wage 

determination for the journeyman classification of work actually performed. 
U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

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CONTRACTS EXEMPT FROM ALL SCA PROVISIONS 

Postal Service Contracts With Common Carriers 2 9 C.F.R. § 4.123(d)(1). 

Postal Service contracts entered into with common carriers for carriage of mail by rail, 

air (except air star routes, bus and ocean vessel on regularly scheduled runs over 

regularly established routes where the revenue received for the carriage of the mail is 

an insubstantial portion of the revenue) are exempt from the SCA. 

Postal Service Mail Contracts With Owner Operators

◊ SCA does not apply to Postal Service contracts entered into with an individual 

owner-operator of vehicles for transporting mail where it is not contemplated at 

the time of contract award that such owner-operators will hire any service 

employee(s) to perform the services under the contract except for short (brief) 

periods of vacation time or for unexpected emergency situations such as illness or 

accident. 29 C.F.R. § 4.123(d)(2). 

◊ The term "owner-operator" refers to an "individual," not a partnership, not two 

closely related individuals (mom & pop operation), nor a corporation. According 

to the specific language of this administrative exemption, the contract is exempt 

from SCA if the facts show that at the time of award, the individual awarded the 

contract intended to deliver the mail himself or herself without using other drivers 

(except for the short periods permitted). 

◊ This exemption would not be applicable in situations where, due to the numbers 

or timing of the required mail runs or other contracts for which the contractor 

may be responsible, it is not physically possible for the individual contractor to 

perform the contract services without using other drivers. 

 Note: Contracts for transportation are exempt from CWHSSA coverage under section 

103(b) of such Act. Accordingly, CWHSSA does not apply to drivers on Postal 

Service mail haul contracts. 

Certain “Commercial” Services

 `There are two administrative exemptions that apply to specific types of “commercial” 

services. 29 C.F.R. § 4.123(e). 
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Equipment items exemption 29 C.F.R. § 4.123(e)(1). 

◊ Where certain conditions are met, this exemption applies to contracts or 

subcontracts for the maintenance, calibration, and/or repair of: 

 ◊◊ Automated data processing equipment and office information/word 

processing systems, 

 ◊◊ Scientific and medical apparatus or equipment where the application of 

microelectronic circuitry or other technology of at least similar 

sophistication is an essential element, 

 ◊◊ Office/business machines not otherwise exempt, where the services are 

performed by the manufacturer or supplier. 

◊ Contracts and subcontracts principally for the maintenance, calibration, and/or 

repair of such equipment are exempt from SCA requirements where: 

 ◊◊ The equipment serviced are commercial items “sold or traded by the 

contractor (or subcontractor) in substantial quantities to the general public 

in the course of normal business operations,” 

 ◊◊ The services are furnished based on the established market price or 

established catalog price charged the general public for such maintenance, 

calibration, and/or repair services, and 

 ◊◊ The contractor uses the same compensation plan for service employees 

performing under the government contract as the contractor uses for the 

same and equivalent employees servicing the same equipment of 

commercial customers. 

 ◊◊ The contractor certifies as to the compliance with these provisions. The 

certification is included in the prime contract or subcontract, and the 

certification by the prime contractor as to its compliance with respect to the 

prime contract also constitutes its certification as to compliance by its 

subcontractor if it subcontracts out the exempt services. 

◊ For this exemption to apply with regard to the prime contract, the contracting 

officer determines applicability on or before contract award, considering all 

factors, and by making an affirmative determination that all four conditions 

described above have been met. Similarly, for it to apply to a subcontract, the 

prime contractor determines applicability of the exemption on or before 

subcontract award, based on all factors, and by making an affirmative 

determination that all of the four conditions have been met. 
U.S. DEPARTMENT OF LABOR SCA ADMINISTRATIVE 

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“Commercial” services exemption 29 C.F.R. § 4.123(e)(2). 

◊ This exemption applies to contracts or subcontracts for the following seven 

services (provided that certain criteria for applicability are met). 

 ◊◊ Automobile or other vehicle maintenance services (e.g. aircraft) 

maintenance; other than contracts to operate a motor pool or similar 

facility); 

 ◊◊ Financial services involving the issuance and servicing of cards, such as 

credit, debit, purchase, smart cards, and similar card services; 

 ◊◊ Contracts with hotels/motels for conferences of limited duration (e.g. one to 

five days), including lodging and/or meals which are part of the contract for 

the conference, (excluding ongoing contracts for lodging on an as needed or 

continuing basis – such as longer term contracts to fulfill a continuing 

lodging need, e.g. lodging military recruits or government employees 

attending training at an agency training center); 

 ◊◊ Transportation of persons by common carrier by air, motor vehicle, rail or 

marine vessel on regularly scheduled routes or by standard commercial 

services (not charter services); 

 ◊◊ Real estate services related to acquiring and disposal of real property owned 

by the federal government (e.g. real property appraisal, broker, space 

planning, lease acquisition, lease negotiation, tax abatement, and real 

property disposal); and 

 ◊◊ Relocation services to assist federal employees or military personnel 

transferred to new duty stations anywhere within the continental United 

States and Puerto Rico and offer a multitude of services such as home 

marketing assistance, home sales services, destination area services, 

management reporting services, mortgage counseling, property 

management services, and other related services, but excludes actual 

moving or storage of household goods and related services. 

◊ This) exemption applies only when all of the following criteria are met: 

 (A) The services are “commercial” services, “i.e., they are offered and sold 

regularly to non-Governmental customers, and are provided by the 

contractor (or subcontractor in the case of an exempt subcontract) to the 

general public in substantial quantities in the course of normal business 

operations,” 

 (B) The contract (or subcontract) will be awarded on a sole source basis or the 

contractor/subcontractor will be selected on the basis of factors in addition 
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to price (i.e., the combination of other non-price or cost factors must be 

equally or more important than price in selecting the contractor/ 

 subcontractor), 

 (C) The services are furnished at prices that are, or are based on, established 

catalog prices available to the general public or market prices established by 

trade between buyers and sellers free to bargain for such services, 

 (D) Each service employee who will perform services under the government 

contract/subcontract will spend only a small portion of his or her time 

servicing the government contract/subcontract – less than 20 percent of the 

individual’s available hours (during the contract period if the contract 

period is less than a month, otherwise monthly average on an annualized 

basis). This exemption cannot apply if the contractor will perform the 

services with a dedicated workforce. 

 (E) The contractor uses the same compensation (wages and fringe benefits) 

plan for all service employees performing work under the contract as the 

contractor uses for these and equivalent employees servicing the same 

equipment of commercial customers. 

 (F) The contracting officer (or prime contractor with respect to a subcontract) 

determines in advance, that all or nearly all offerors will meet the above 

requirements). However, if the contracting officer determines when bids 

are received that the earlier determination that all or nearly all bidders 

would meet the exemption requirements was incorrect, SCA requirements 

shall be applied to the procurement;, and 

 (G) The contractor certifies in the prime contract or subcontract, as applicable, 

to the requirements in paragraphs A through C, and E, above. Certification 

by the prime contractor as to its compliance with respect to the prime 

contract also constitutes its certification as to compliance by its 

subcontractor if it subcontracts out the exempt services. If the contracting 

officer or prime contractor has reason to doubt the validity of the 

certification, SCA stipulations shall be included in the prime contract or 

subcontract. 

◊ There are three categories of contracts not exempt from the application of SCA 

requirements under the 29 C.F.R. § 4.123(e)(2) exemption: 

 ◊◊ Contracts subject to collectively bargained wages and fringe benefits 

applicable to a successor contract where such rates and benefits apply under 

section 4(c) of the SCA (as well as any options or extensions to such 

contracts); 
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 ◊◊ Contracts for the operation of a Government facility or portion thereof (the 

exemption may apply to subcontracts under such contracts if the 

subcontracts meet the criteria for exemption); and 

 ◊◊ Contracts entered into under the Javits-Wagner-O’Day Act (41 U.S.C. 47).