[Federal Register Volume 60, Number 193 (Thursday, October 5, 1995)]
[Notices]
[Pages 52215-52216]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24776]
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DEPARTMENT OF LABOR
Employment Standards Administration
Wage and Hour Division
Application of the McNamara-O'Hara Service Contract Act to Motor
Carriers
AGENCY: Wage and Hour Division, Employment Standards Administration,
Labor.
ACTION: Notice.
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SUMMARY: The Wage and Hour Division has issued All Agency Memorandum
No. 185 to contracting agencies of the Federal and District of Columbia
governments. Memorandum No. 185 provides guidance on the applicability
of the exemption provided in Section 7(3) of the McNamara-O'Hara
Service Contract Act of 1965, as amended (SCA), for contracts for
carriage subject to published tariff rates. In order to widely
disseminate the guidance discussed in Memorandum No. 185, it is being
published as a part of this Notice.
DATES: This Notice is effective October 5, 1995.
FOR FURTHER INFORMATION CONTACT:
Branch of Service Contract Operations, Wage and Hour Division,
Employment Standards Administration, U.S. Department of Labor, Room S-
3018, 200 Constitution Avenue, NW, Washington, DC 20210; telephone
(202) 219-7541. This is not a toll free number.
SUPPLEMENTARY INFORMATION: All Agency Memorandum was issued on
September 28, 1995, to all contracting agencies of the Federal and
District of Columbia governments. This document repeats that
Memorandum.
September 28, 1995
MEMORANDUM NO. 185
TO: All Government Contracting Agencies of the Federal Government and
the District of Columbia
FROM: MARIA ECHAVESTE, Administrator, Wage and Hour Division
SUBJECT: Application of Section 7(3) of the McNamara-O'Hara Service
Contract Act to Motor Carriers
The McNamara-O'Hara Service Contract Act (SCA), 41 U.S.C. 351 et
seq., applies to all service contracts entered into by the Federal
government and District of Columbia ``the principal
[[Page 52216]]
purpose of which is to furnish services in the United States through
the use of service employees.'' The SCA requires that contractors and
subcontractors with contracts (and any bid specification) in excess of
$2,500 pay their service workers no less than the wages and fringe
benefits specified by the Secretary of Labor. However, section 7 of the
Act (41 U.S.C. 356) provides for several exemptions from the Act's
coverage.
Section 7(3) of the SCA provides that ``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'' will not be subject to the Act's coverage. The
regulations at 29 CFR 4.118 further elaborate that:
a contract for transportation service does not come within this
exemption unless the service contracted for is actually governed by
published tariff rates in effect pursuant to State or Federal law
for such carriage. The contracts excluded from the reach of the Act
by this exemption are typically those where there is on file with
the Interstate Commerce Commission or an appropriate State or local
regulatory body a tariff rate applicable to the transportation
involved, and the transportation contract between the Government and
the carrier is evidenced by a Government bill of lading citing the
published tariff rate.
In 1994, Congress enacted two pieces of legislation--the Trucking
Industry Regulatory Reform Act of 1994 (TIRRA), Pub. L. 103-311
(effective August 26, 1994), and the Federal Aviation Administration
Authorization Act of 1994 (FAA Authorization Act), Pub. L. No. 103-305,
(effective January 1, 1995)--which amend certain provisions of the
Interstate Commerce Act (ICA). As a consequence, interstate and
intrastate motor common carriers providing transportation of property,
other than household goods,\1\ are no longer required to file tariff
rates with the ICC or any State. See 49 U.S.C. 10761 and 10762. On an
administrative basis, the ICC had earlier exempted motor contract
carriers from such filing requirements, and TIRRA codified this
regulatory action. See 49 U.S.C. 10762(a)(1). This exemption from
filing rates includes motor carriers providing express service in
transporting property. Therefore, motor carriers, with very limited
exceptions,\2\ clearly can no longer qualify for the statutory
exemption.
\1\ Generally, household goods are ``personal effects and
property used or to be used in a dwelling,'' but they may also
include ``furniture, fixtures, equipment, and the property of
stores, offices, museums, institutions, hospitals or other
establishments when a part of the stock, equipment, or supply of
such stores, offices,* * *'' 49 U.S.C. 10102(11) (A) and (B).
\2\ Motor common carriers that engage in the transportation of
household goods or passengers are presently still required to
publish and file their tariff rates with the ICC. Also motor common
carriers who are members of rate bureaus, which are now relatively
few in number, may still be subject to tariff rates filed with the
ICC by the bureau. See 49 U.S.C. 10706(b)(2).
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These changes in the transportation law are the result of the
increasingly competitive nature of the transportation of property or
freight in the industry. Consequently, the basis for the SCA's section
7(3) exemption with regard to such motor carriers, is no longer
compatible with the SCA's mission to protect service employees from the
payment of substandard wages. The exemption was provided to ``regulated
industries'' subject to published tariff rates because there did not
exist the competitive situation faced in service contract cases
generally. See Congressional Record, Vol. 111, 89th Cong., 1st Sess.,
24387 (September 20, 1965) (statement of Rep. O'Hara). Under published
tariff rates, contractors were required to offer services to the
general public at a uniform rate. Because of the nature of the
published tariff, contractors were not motivated to reduce their
employees' wages in order to undercut bidders and obtain business.
Conversely, however, the further deregulation of motor carriers
providing transportation of property may induce some contractors to
engage in substandard labor practices.
Therefore, contracts performed by a motor carrier, including those
providing express service, for the interstate carriage of freight other
than household goods awarded, or entered into beginning August 26,
1994, and such contracts for the intrastate carriage of freight other
than household goods awarded, or entered into beginning January 1,
1995, fail to qualify for the section 7(3) exemption of the Service
Contract Act. It is important to remember in applying this guidance
that an option period or contract extension is normally a new contract
for SCA purposes. See 29 C.F.R. 4.143-4.145.
Concerning whether another type of contract, such as a contract by
a motor carrier for the carriage of personnel, personnel and freight,
household goods, or a contract involving carriage by both a motor
carrier and some other form of transportation, qualifies for the
section 7(3) exemption will depend on the facts of each case. The Wage
and Hour Division of the Department of Labor should be contacted
concerning any question in that regard or with respect to the guidance
provided in this memorandum.
Document Preparation
This document was prepared under the direction and control of Maria
Echaveste, Administrator, Wage and Hour Division, Employment Standards
Administration, U.S. Department of Labor.
Signed at Washington, D.C., on this 29th day of September, 1995.
Maria Echaveste,
Administrator, Wage and Hour Division.
[FR Doc. 95-24776 Filed 10-4-95; 8:45 am]
BILLING CODE 4510-27-M
