Any Contractor who has contracts subject to the Service Contracts Act of 1965 is familiar with the term Wage Determination, as well as with the requirements to compensate employees according to their labor classification (i.e., “pay the prevailing wage”). But what happens when the positions to be used in the performance of the work are nowhere to be found in the Wage Determination the contracting office incorporated into the awarded contract? How will you classify your employees? What rate should they be paid?
In comes the Conformance Process.
Conforming a position simply means requesting (and hopefully, receiving) approval from the Department of Labor to:
- Use an occupation/position that is not listed in the Wage Determination, and
- Propose (based on objective research) what hourly rate the occupation should receive.
Do I really need a conformance?
The conformance process should only be followed if there is no job classification in the Wage Determination that accurately describes the duties to be performed by the unlisted position(s). Contractors should first review the Department of Labor’s Directory of Occupations, analyze the job descriptions of all relevant labor classifications listed in the Wage Determination and find one that matches the position’s duties.
If any classification listed in the Directory matches the duties of the occupation in question, the Contractor should classify employees as such. In contrast, if none of the classifications listed in the Directory come close to having the duties of the occupation in question, the Contractor should initiate the Conformance Process.
What materials/information do I need?
First, the Official request must be submitted using Standard Form Number 1444 (SF-1444). This form is used as the official “Request for Authorization of Additional Classification and Rate.”
The Contractor must also clearly define the job title as well as the duties of the position in question (i.e., what exactly will the employees be doing?). Therefore, a clear and descriptive job description shall be developed if the Contractor does not already have one on file.
The conformance process requires the proposed position’s compensation to “bear a reasonable relationship to the wage rates listed in the applicable wage determination for occupations with similar skills and work duties.” Therefore, the Contractor must analyze the applicable Wage Determination and determine:
- In which of the broad Labor Categories the proposed, new classification belongs. There is a total of twenty–five (25) Labor Categories, some of these are: 01000 – Administrative Support and Clerical Occupations, 07000 – Food Preparation and Service Occupations, 11000 – General Services and Support Occupations, 12000 – Health Occupations, 21000 – Materials handling and Packing Occupations, 23000 – Mechanics and Maintenance and Repair Occupations and 99000 – Miscellaneous Occupations.
- Once the broad Occupational Category has been determined, the Contractor shall identify which labor classifications in said category most closely approximates the proposed occupation in terms of duties. The Contractor should pick all the classifications he considers to be similar to the new unlisted occupation appropriate.
- The Contractor then must find the Federal Grade Equivalent compensation rate for the positions in questions, whether that be in the General Schedule (GS) for white collar occupations or the Wage Grade (WG) compensation system. This information is available in the Directory of Occupations’ Table of Contents and Federal Grade Equivalents.
Armed with this information, the Contractor is now ready to calculate and propose an hourly rate for the new occupation being requested.
Calculating the rate
Now it’s time for the real research. Based on the information obtained, the Contractor must calculate an hourly rate that, as I mentioned earlier, bears a reasonable relationship to the rates that are listed in the Wage Determination. In other words, one sure way to have the request disapproved is to randomly assign an hourly rate to the position or to assign a rate that is too low when compared to the occupations he/she determined to be similar to the one being conformed.
The Contractor must consider the wages commanded by said similar occupations when proposing a rate.
A conformance is a process that requires time and effort; it is a research-intensive activity that must be approached carefully and methodically. The Contractor must consider multiple factors, including the position’s duties, the level of skill required by the position, as well as the compensation level of similar positions.
In my upcoming posts, I will provide a way Contractors can calculate proposed rates as well as how to properly complete and submit a Standard Form 1444.
Service Compliance Manager at the Onsi Group