- Labor Categories seem like a simple enough idea. The contract defines all the different tasks to be performed on that job. (i.e) how much to pay a person per hour for completing a set task.
- But, ask anyone who does contract payroll and they'll tell you, it's not that straightforward.
Understanding Labor Categories
- Employees can sometimes work three or four different job classifications in a given day. Sometimes the type of labor performed isn't even listed, leaving them to guess the appropriate rate / labor category.
- If labor categories were simple, then a company like Lockheed Martin that specializes in government contracting would get it correct? However, a company with their level of expertise and resources can still make costly labor category mistakes.
Lack of 'Required Job Qualifications' Can Be Costly
- One method the Department of Labor (DOL) uses to make incorrect labor categories sting is what we like to call the "Lost Toll Ticket" system. If you've ever been on a toll road / turnpike and lost your ticket, you know what happens. You get charged the highest fare because you can't prove anything different.
Multiple Labor Categories
- The DOL takes the exact same approach on labor category violations. If you can't prove by their standards what hours your employee worked at what rate, you owe at the highest rate for all of it (including overtime). This could end up costing you a lot of money.
Job Misclassifications = Potential Violations
- Another place the DOL can make compliance violations hurt is during the bidding process (future contracts). Compliance violations follow you around for years and it's become a significant factor in determining contract award status. Essentially, a few misclassifications can give your entire government contracting efforts a gloomy outlook.
- At Axim Fringe Solutions Group, we've found government contractors take one of three approaches to combat labor category issues.
What Can You Do?
- The first method (no cross-classification) will keep you relatively safe, but it's also a more costly approach. The second and most popular method adds more burden to internal staff and there's no guarantee it's done correctly.
- A third and relatively new option that's growing in popularity is subcontracting compliance management as part of the fringe spend.
- Not only do we save you time and money, but we also guarantee your compliance. As a "zero cost" contractor Axim will remove the burden of labor categories and SCA compliance from your internal staff.
- Three Common Service Contract Act Compliance (SCA) Stumbling Blocks
- How Cash-in-lieu Opt-Outs Increase Costs for Federal Contractors
- The Government Contractor’s Guide to Service Contract Act (SCA) Compliance
- How “No Change” to the SCA Health & Welfare Benefit Rate Impacts Government Contractors
- SCA Compliance Checklist Part 8: Fringe Benefits
- SCA Compliance Checklist Part 7: ACA Compliance
- SCA Compliance Checklist Part 6: Subcontractor Compliance
- SCA Compliance Checklist Part 5: Fringe Rate
- SCA Compliance Checklist Part 4: Base Wages
- SCA Compliance Checklist Part 3: Labor Categories