State, or local law, such as Federal or State withholding income taxes and Federal social security taxes.

(b) Any deduction of sums previously paid to the employee as a bona fide prepayment of wages when such prepayment is made without discount or interest. A "bona fide prepayment of wages" is considered to have been made only when cash or its equivalent has been advanced to the person employed in such manner as to give him complete freedom of disposition of the advanced funds.

(c) Any deduction of amounts required by court process to be paid to another, unless, the deduction is in favor of the contractor, subcontractor, or any affiliated person, or when collusion or collaboration exists.

(d) Any deduction constituting a contribution on behalf of the person employed to funds established by the employer or representatives of employees, or both, for the purpose of providing either from principal or income, or both, medical or hospital care, pensions or annuities on retirement, death benefits, compensation for injuries, illness, accidents, sickness, or disability, or for insurance to provide any of the foregoing, or unemployment benefits, vacation pay, savings accounts, or similar payments for the benefit of employees, their families and dependents: Provided, however, That the following standards are met: (1) The deduction is not otherwise prohibited by law; (2) it is either: (i) Voluntarily consented to by the employee in writing and in advance of the period in which the work is to be done and such consent is not a condition either for the obtaining of or for the continuation of employment, or (ii) provided for in a bona fide collective bargaining agreement between the contractor or subcontractor and representatives of its employees; (3) no profit or other benefit is otherwise obtained, directly or indirectly, by the contractor or subcontractor or any affiliated person in the form of commission, dividend, or otherwise; and (4) the deductions shall serve the convenience and interest of the employee.

(e) Any deduction contributing toward the purchase of United States Defense Stamps and Bonds when voluntarily authorized by the employee.

(f) Any deduction requested by the employee to enable him to repay loans to or to purchase shares in credit unions

organized and operated in accordance with Federal and State credit union statutes.

(g) Any deduction voluntarily authorized by the employee for the making of contributions to governmental or quasi-governmental agencies, such as the American Red Cross.

(h) Any deduction voluntarily authorized by the employee for the making of contributions to Community Chests, United Givers Funds, and similar charitable organizations.

(i) Any deductions to pay regular union initiation fees and membership dues, not including fines or special assessments: Provided, however, That a collective bargaining agreement between the contractor or subcontractor and representatives of its employees provides for such deductions and the deductions are not otherwise prohibited by law.

(j) Any deduction not more than for the "reasonable cost" of board, lodging, or other facilities meeting the requirements of section 3 (m) of the Fair Labor Standards Act of 1938, as amended, and Part 531 of this title. When such a deduction is made the additional records required under § 516.25(a) of this title shall be kept.

§ 3.6 Payroll deductions permissible with the approval of the Secretary of Labor.

Any contractor or subcontractor may apply to the Secretary of Labor for permission to make any deduction not permitted under § 3.5. The Secretary may grant permission whenever he finds that:

(a) The contractor, subcontractor, or any affiliated person does not make a profit or benefit directly or indirectly from the deduction either in the form of a commission, dividend, or otherwise;

(b) The deduction is not otherwise prohibited by law;

(c) The deduction is either (1) voluntarily consented to by the employee in writing and in advance of the period in which the work is to be done and such consent is not a condition either for the obtaining of employment or its continuance, or (2) provided for in a bona fide collective bargaining agreement between the contractor or subcontractor and representatives of its employees; and

(d) The deduction serves the convenience and interest of the employee.

§ 3.7 Applications for the approval of the Secretary of Labor.

Any application for the making of payroll deductions under § 3.6 shall comply with the requirements prescribed in the following paragraphs of this section:

(a) The application shall be in writing and shall be addressed to the Secretary of Labor.

(b) The application shall identify the contract or contracts under which the work in question is to be performed. Permission will be given for deductions only on specific, identified contracts, except upon a showing of exceptional circumstances.

(c) The application shall state affirmatively that there is compliance with the standards set forth in the provisions of § 3.6. The affirmation shall be accompanied by a full statement of the facts indicating such compliance.

(d) The application shall include a description of the proposed deduction, the purpose to be served thereby, and the classes of laborers or mechanics from whose wages the proposed deduction would be made.

(e) The application shall state the name and business of any third person to whom any funds obtained from the proposed deductions are to be transmitted and the affiliation of such person, if any, with the applicant.

§ 3.8 Action by the Secretary of Labor upon applications.

The Secretary of Labor shall decide whether or not the requested deduction is permissible under provisions of § 3.6; and shall notify the applicant in writing of his decision. § 3.9

Prohibited payroll deductions. Deductions not elsewhere provided for by this part and which are not found to be permissible under § 3.6 are prohibited.

§ 3.10 Methods of payment of wages.

The payment of wages shall be by cash, negotiable instruments payable on demand, or the additional forms of compensation for which deductions are permissible under this part. No other methods of payment shall be recognized on work subject to the Copeland Act. §3.11 Regulations part of contract.

All contracts made with respect to the construction, prosecution, completion, or repair of any public building or public

AUTHORITY: The provisions of this Part 4 issued under sec. 2(a) and 4, 79 Stat. 1035; R.S. 161, 5 U.S.C. 22, Secretary's Order 36-65 (30 F.R. 15305).

SOURCE: The provisions of this Part 4 appear at 30 F.R. 15585, Dec. 17, 1965, unless otherwise noted.

§ 4.1 Purpose and scope.

This part contains the Department of Labor's rules relating to the administration of the Service Contract Act of 1965. § 4.2 Payment of minimum wage specified in section 6(a)(1) of the Fair Labor Standards Act of 1938 under all service contracts.

Section 2(b)(1) of the Service Contract Act of 1965 provides in effect that, regardless of contract amount, no contractor or subcontractor performing work under any Federal contract the principal purpose of which is to furnish services through the use of service employees shall pay any of his employees engaged in such work less than the minimum wage specified in section 6(a) (1) of the Fair Labor Standards Act of 1938, as amended ($1.25 per hour as of January 20, 1966).

determine the minimum monetary wages and specify the fringe benefits to be furnished the various classes of service employees for the several localities in which they are to be employed under contracts subject to such determinations under the Act. These determinations and specifications will be communicated to the several procurement agencies in an orderly series designed to permit contracting officers to keep a current register of such minimum wages and fringe benefits. Such a register will be available for public inspection during business hours at the national and regional offices of the Wage and Hour and Public Contracts Divisions of the United States Department of Labor.

§ 4.4 Notice of intention to make a service contract.

Not less than 30 days prior to any invitation for bids or the commencement of negotiations for any contract exceeding $2,500 which may be subject to the Act, or as soon as practicable where exceptional circumstances prevent such notice within 30 days, the contracting agency will file with the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor its notice of intention to make a service contract specifying:

(a) A description of the service to be performed;

(b) The place of performance, if known, and the fact that the place of performance is unknown if that is the

case;

(c) The date bids will be invited or negotiations commenced;

(d) Each class of service employee likely to be employed in the performance of the contract;

(e) The minimum wages and specification of fringe benefits to be included in the contract taken from the currently effective determinations included in the register of determinations provided in § 4.3;

(f) The numbers of persons to be employed and the minimum rates and specifications of fringe benefits to be paid for each class of service employees listed under paragraph (d) of this section but for whom no minimum wages have been found pursuant to paragraph (e) of this section as best the procurement agency is able to discover or estimate such data from the current contract providing such service or otherwise.

§ 4.5 Contract minimum wage determinations and fringe benefit specifications.

The invitation for bids actually issued and the negotiations actually commenced, as well as any contract agreed upon, in excess of $2,500, shall contain the minimum wages and fringe benefits specified in § 4.4(e) as supplemented or revised by:

(a) Any responsive communication from the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor; or

(b) Any revision of the register of minimum wages and fringe benefits pursuant to § 4.3 received by the contracting agency prior to the issuance of the invitation for bids or commencement of negotiations. To avoid serious impairment of the conduct of Government business, it is hereby found necessary and proper to provide exemption (1) from the determined wage and fringe benefits section of the Act (2(a) (1) and (2)), but not the minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended (2(b) of this Act), of all contracts for which no such wage has been determined for any class of service employees to be employed thereunder and (2) from the fringe benefits section (2(a)(2)) of all contracts and of all classes of service employeees employed thereunder for which such benefits have not been determined. Accordingly, such exemptions are hereby provided. These exemptions do not extend to undetermined wages in contracts for which one or more, but not all, classes of service employees are the subject of an applicable determination. See § 4.6(b) (1).

§ 4.6 Labor standards clauses for Federal service contracts exceeding $2,500.

(a) The clauses set forth in paragraph (b) of this section shall be included in every contract (and any bid specification therefor) entered into by the United States or the District of Columbia in excess of $2,500 the principal purpose of which is to furnish services through the use of service employees, except those identified in paragraph (c) of this section.

(b) Service Contract Act of 1965: This contract, to the extent that it is of the character to which the Service Contract Act of 1965 (P.L. 89-286) applies, is sub

ject to the following provisions and to all other applicable provisions of the Act and the regulations of the Secretary of Labor thereunder (this part 4).

(1) Each service employee employed in the performance of this contract by the contractor or any subcontractor shall be paid the minimum monetary wage and shall be furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor or his authorized representative, as specified in any attachment to this contract. If there is such an attachment, any class of service employee which is not listed therein but which is to be employed under this contract, shall be classified or reclassified and paid wages conformably to the Secretary's determination as specified in such attachment, by agreement between the interested parties, and the contracting officer shall report the action to the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor. If the interested parties do not agree on a classification or reclassification which is, in fact, conformable, the contracting officer shall submit the question, together with his recommendation, to the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor or his authorized representative for final determination. In addition, nonservice employees shall be paid not less than the minimum wage specified under section 6(a) (1) of the Fair Labor Standards Act of 1938, as amended ($1.25 per hour as of January 20, 1966).

of

(2) The contractor or subcontractor may discharge the obligation to furnish fringe benefits specified in the attachment by furnishing any equivalent combinations fringe benefits, or by making equivalent or differential payments in cash, pursuant to applicable rules of the Administrator of the Wage and Hour and Public Contracts Divisions of the Department of Labor.

(3) In the absence of a minimum wage attachment for this contract, neither the contractor nor any subcontractor under this contract shall pay any of his employees performing work under the contract (regardless of whether they are service employees) less than the minimum wage specified by section 6(a)(1) of the Fair Labor Standards Act of 1938 ($1.25 per hour as of January 20, 1966). Nothing in this provision shall relieve the contractor or any subcontractor of any other obligation under law or contract for the payment of a higher wage to any employee.

(4) The contractor shall notify each service employee commencing work on this contract of the minimum monetary wage and any fringe benefits required to be paid pursuant to this contract, or shall post a notice of such wages and benefits in a prominent and accessible place at the worksite, using such poster as may be provided by the Department of Labor.

(5) The contractor shall not permit any part of the services called for by this contract to be performed in buildings or surroundings or under working conditions provided by or under the control or supervision of the contractor which are unsanitary or hazardous or dangerous to the health or safety of service employees engaged to furnish these services. (6) Each contractor or subcontractor performing work subject to the Act shall make and maintain for 3 years from the completion of the work the records identified below for each service employee performing work under the contract, and shall make them available for inspection and transcription by authorized representatives of the Administrator of the Wage and Hour and Public Contracts Divisions of the United States Department of Labor.

(i) His name and address.

(ii) His work classification or classifications, rate or rates of monetary wages and fringe benefits provided, rate or rates of fringe benefit payments in lieu thereof, and total daily and weekly compensation.

(iii) His daily and weekly hours so worked. (iv) Any deductions, rebates, or refunds from his total daily or weekly compensation. (7) The contracting officer may withhold or cause to be withheld from the Government Prime Contractor under this or any other Government contract such sums as are necessary to pay underpaid employees. Additionally, any failure to comply with the requirements of these clauses relating to the Service Contract Act of 1965 may be grounds for termination of his right to proceed with the contract work. In such event, the Government may enter into other contracts or arrangements for completion of the work, charging the contractor with any additional cost.

(8) The contractor agrees to insert these clauses relating to the Service Contract Act of 1965 in all subcontracts. The term "contractor" as used in these clauses in any subcontract, shall be deemed to refer to the subcontractor, except in the term "Government Prime Contractor."

(9) As used in these clauses relating to the Service Contract Act of 1965, the term "service employee" means guards, watchmen, and any person engaged in a recognized trade or craft, or other skilled mechanical craft, or in unskilled, semiskilled, or skilled manual labor occupations; and any other employee including a foreman or supervisor in a position having trade, craft, or laboring experias the paramount requirement; and shall include all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons.

ence

(c) These clauses relating to the Service Contract Act of 1965 shall not apply to the following:

(1) Any contract of the United States or District of Columbia for construction,

including

alteration and/or repair, painting and decorating of public buildings or public works;

(2) Any work required to be done in accordance with the provisions of the Walsh-Healey Public Contracts Act (49 Stat. 2036);

(3) Any contract for the carriage of freight or personnel by vessel, airplane, bus, truck, express, railway line or oil or gas pipeline where published tariff rates are in effect;

(4) Any contract for the furnishing of services by raido, telephone, telegraph, or cable companies, subject to the Communications Act of 1934;

(5) Any contract for public utility services, including electric light and power, water, steam and gas;

(6) Any employment contract providing for direct services to a Federal agency by an individual or individuals; and

(7) Any contract with the Post Office Department, the principal purpose of which is the operation of postal contract stations.

(8) Any services to be furnished outside the United States. For geographic purposes, the "United States" is defined in section 8(d) of the Service Contract Act to include any State of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf Lands as defined in the Outer Continental Shelf Lands Act, American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, Johnston Island. It does not include any other territory under the jurisdiction of the United States or any United States base or possession within a foreign country.

(9) Any contract exempted by the Secretary of Labor under section 4 (b) of the Service Contract Act of 1965.

January 20, 1966) and are subject to the regulations of the Secretary of Labor thereunder (29 CFR Part 4).

§ 4.8 Notice of award.

Whenever an agency of the United States or the District of Columbia shall award a contract in excess of $2,500 subject to the Act, it shall furnish the Administrator of the Wage and Hour and Public Contracts Divisions, on the form used pursuant to 41 CFR 50-201.1201, the information required by such form.

§ 4.9 Effective date.

(a) Except as provided in paragraph (b) of this section, the provisions of this part shall be effective on December 15, 1965.

(b) Sections 4.2, 4.5, 4.6, 4.7, and 4.8 shall be effective as to contracts entered into pursuant to negotiations concluded or invitations for bids issued on or after January 20, 1966.

Contract provisions and related matters.

5.6

5.7

Every contract with the Federal Government which is not in excess of $2,500 but has as its principal purpose the furnishing of services through the use of service employees, except those identified in § 4.6(c), shall contain the following clause:

Service Contract Act of 1965. The contractor and any subcontractor hereunder shall pay all of their employees engaged in performing work on the contract not less than the minimum wage specified under section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended ($1.25 per hour as of

Enforcement.

Reports to the Secretary of Labor. Review of recommendations for an appropriate adjustment in liquidated damages under the Contract Work Hours Standards Act.

Suspension of funds.

5.10 Restitution, criminal action.