FAR 52.222-41 — Service Contract Labor Standards
Formerly the Service Contract Act, this clause requires payment of prevailing wages and fringe benefits set by Department of Labor wage determinations. It is the single largest source of unexpected cost on federal services work.
- Clause
- FAR 52.222-41
- Applies to
- Service contracts over $2,500 using service employees
- Flows down to subs
- Yes
- Primary risk
- Back-wage liability
Key takeaways
- Read the clause as incorporated in your contract — tailoring and alternates change obligations.
- Flowdown obligations are your responsibility; a noncompliant subcontractor is your problem.
- Document compliance contemporaneously; after-the-fact reconstruction rarely satisfies auditors.
- When a clause is unclear, ask the contracting officer in writing before award, not after.
What the clause requires
You must pay covered service employees at least the wage rate and fringe benefit amount in the applicable wage determination, post required notices, maintain records, and apply conformance procedures for job classifications not listed.
How to comply in practice
Price from the wage determination attached to the solicitation, not from your commercial rates. Build a labor category crosswalk, account for health and welfare, vacation, and holidays, and plan for annual wage determination updates that flow into option year pricing.
Common mistakes
Underpricing because commercial rates were used, misclassifying employees into cheaper categories, and ignoring the fringe benefit obligation are the recurring failures. Each creates back-wage liability that can exceed the contract's profit.
FAQ
Are exempt professionals covered?
Bona fide executive, administrative, and professional employees are generally exempt; misclassification is a common audit issue.
What if my labor category isn't listed?
Use the conformance process to establish a rate with Department of Labor approval.
Do wage determinations change?
Yes, typically annually, and updated determinations flow into option periods.
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