SCA: Weekly Pay And Minimum Wage Buys A DoL Suit

All the usual suspects are ruminating over on Facebook about how they are screwing Labor while screwing the Internal Revenue Service (IRS) all at the same time. Normally, this would round out the problems; however, in the Mortgage Field Services Industry, the fact of the matter is that the US Department of Labor (DoL) Wage and Hour Division (WHD) has recently made its presence known alongside the US Department of Housing and Urban Development (HUD). So, let me first release that which HUD has stated and Foreclosurepedia recently obtained.

Unfortunately, SCA and Davis Bacon would both only apply to federal contracts (eg. FSM contracts awarded by HUD), but both acts do in fact have flowdown provisions that apply to subcontractors performing under federal contracts.  All private sector labor is solely covered under FLSA.  Davis Bacon is limited to construction, but covers some of the required repair work, like putting on a new roof, or replacing a set of stairs.  Almost all other services, such as debris removal, cleaning services, lawn care, etc. fall under SCA.  DOL randomly audits our FSM contracts (typically a few annually) to ensure compliance.

And to clarify, HUD has oversight upon both pre and post conveyance work,

The Mortgagee Letters would in fact flow down to the mortgagee’s prime pre-conveyance servicers.  However, HUD holds the mortgagee accountable, and not the pre-conveyance servicer directly.  It should be the mortgagees conducting the quality reviews of their primes.  However, I’m guessing many would rather risk getting their FHA claims reduced as a result for non-compliance rather than putting the necessary infrastructure in place to conduct the inspections.  Think of it this way, the FHA claim value is always going to be a better proposition than the risk they incur for non-FHA secured loans.  A partial claim is still better for the mortgagee than absorbing the entire loss themselves.

Percolating amongst the Drive By Social Media Pundits is the belief that they have found the Holy Grail with respect to how to avoid paying taxes; they believe that they are able to capitalize upon the benefits of an employee relationship and yet not be forced to Render Unto Caesar that Which Is Caesar’s and Render Unto Labor That Which Is Labor’s.

The erroneous benchmark appears to be that provided a person is paid more than minimum wage, it is fine with IRS, US Department of Housing and Urban Development (HUD) and the US Department of Labor (DoL) Wage and Hour Division (WHD).

To quote George HW Bush, “Read my lips.” What I mean is that first, if you are paying by the hour, you have an employee. Second, even if you pay by the job, the computational hourly rate must comply with the Service Contract Act (SCA). Before we go any further, I want to show you what SCA Prevailing Wage is. And remember, the designation of Refuse Collector means the guy doing debris removal.

SCA

From A Current GSA Schedule Functioning In The Facilities Management Sector — Yes That Is Foreclosure Work

Minimum wage does not have jack shit to do with the foreclosure industry. More on point, though, unless and until we have publicly accessible and transparent statistics with respect to each and every aspect of the Mortgage Field Services Industry, we are unable to even come to accord on both the language and time involved. For the purposes of argument sake, let us presume we are all on the same page for a moment.

If a cubic yard of debris takes half an hour to remove, then you had best be paying $45.47 an hour — slightly more or less depending upon geographical jurisdiction. Period. End of conversation. If an Initial Grass Cut takes roughly an hour — including the edging, clippings, etc. — you had best be paying $27.79 an hour. Period. End of conversation. If someone is processing your paperwork, you had best be paying $41.58 an hour. Period End of Conversation. Whether or not you are being paid these amounts is immaterial as you would have no one to blame but yourself as you negotiated the Contract!

The Service Contract Act applies to every contract entered into by the United States or the District of Columbia, the principal purpose of which is to furnish services in the United States through the use of service employees. Contractors and subcontractors performing on such Federal contracts must observe minimum wage and safety and health standards, and must maintain certain records, unless a specific exemption applies.

Every service employee performing any of the Government contract work under a service contract in excess of $2,500 must be paid not less than the monetary wages, and must be furnished fringe benefits, which the Secretary of Labor has determined to be prevailing in the locality for the classification in which the employee is working or the wage rates and fringe benefits (including any accrued or prospective wage rates and fringe benefits) contained in a predecessor contractor’s collective bargaining agreement. The wage rates and fringe benefits required are specified in the SCA wage determination included in the contract. If no wage determination has been made applicable to the contract, employees performing work under the contract must be paid not less than the federal minimum wage provided in section 6(a)(1) of the Fair Labor Standards Act.

The SCA provides authority to withhold contract funds to reimburse underpaid employees, terminate the contract, hold the contractor liable for associated costs to the government, and debar from future government contracts for a period of three years any persons or firms who have violated the SCA.

Every covered contract in excess of $2,500 contains a provision specifying the fringe benefits to be furnished to service employees and must be paid in addition to the minimum wage. The fringe benefit amount is listed in the wage determination. SCA makes no distinction, with respect to its compensation provisions, between temporary, part-time, and full-time employees. However, temporary and part-time employees are only entitled to an amount of the fringe benefits specified in an applicable determination which is proportionate to the amount of time spent in covered work.

The health and welfare rate is the result of a nationwide survey of private industry conducted by the Bureau of Labor Statistics. The Employment Cost Index private industry data is used to derive the single “total” benefits rate. It averages around an additional $2.56 per hour on top of the Prevailing Wage. Fringe benefits are required to be provided separate from and in addition to the specified minimum hourly rate provided on the wage determination.

I want to be quite clear here. I despise the ma and pa order mills; the Otherwise Unspecified Order Mills, more than I do the National Order Mills. The Nationals defraud at a wholesale level and do not single out people. The ma and pa outfits target, specifically, those even lower down the totem pole than themselves.

Those whom lurk on Facebook and prey upon Contractors and pat each other upon the back and congratulate themselves for paying just above minimum wage and pennies on the dollar for services rendered while passing the risk downward, I have already begun transmitting the information to the US Department of Housing and Urban Development (HUD) along with the Internal Revenue Service (IRS).

Atrocities committed on Labor by Labor is the lowest of that which may manifest itself. It is far worse than anything which even the Chief Architect of Evil, Eric Miller whom is the Executive Director of the National Association of Mortgage Field Services (NAMFS) is capable of. These people have tried to and continue to try to take something which is not theirs to take. They prey upon those whom they pretend to identify with. These people are, by definition, predators. We now leave the matter in the capable hands of the investigators of the US Government. And with specificity that the pretend, private groups actually mean jack shit? Tell that to those being fired and blackballed by Management every day of the week.

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