[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]



-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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).
---------------------------------------------------------------------------

    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