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    My question is this, once the Wage and Hour Division in Richmond. VA makes a final determination, IAW FAR 52.222-41(c)(2)(vi), of the (1) conformed classification, and (2) wage rates, how is the difference back paid the employee (Ms. D'Amato, Marlene)? I am not sure whether the contractor will have to do back pay to the employee and if they do whether we have to have funds for that or if they have to pay it out of their overhead since they are in violation of the SCA.


    The DOL generally oversees the repayment of SCA violations, so please verify the determination for payment specifications.  If it was determined to be accidental and no additional penalites were assessed, then it could be paid out as backpay, which is allowable based on FAR 31.205-6 (h).  Wages/direct labor are generally direct costs, not indirect.  Be sure to verify the contractor is following their disclosure statemet and cost accounting practices accordingly.

    FAR 31.205-6

    (h) Backpay. Backpay is a retroactive adjustment of prior years’ salaries or wages. Backpay is unallowable except as follows:

    (1) Payments to employees resulting from underpaid work actually performed are allowable, if required by a negotiated settlement, order, or court decree.

    (2) Payments to union employees for the difference in their past and current wage rates for working without a contract or labor agreement during labor management negotiation are allowable:

    (3) Payments to nonunion employees based upon results of union agreement negotiation are allowable only if--

    • (i) A formal agreement or understanding exists between management and the employees concerning these payments, or

      (ii) An established policy or practice exists and is followed by the contractor so consistently as to imply, in effect, an agreement to make such payments.


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