Rice Business Report May 2019 Rice Business Report | Page 52

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Is Your Company SCA Compliant? Figure It Out Before the
United States Department of Labor Figures It Out for You
Continued from page 51…….
It is the company's responsibility to ensure that SCA covered independent contractors receive the appro-
priate wages and fringe benefits. A failure to do so can result in the company's liability for any underpay-
ments. This creates something of a burden for contractors who may have hired independent contractors
to reduce their administrative burden in the first place. There are many solutions to this issue, though in
choosing any of them, companies must limit their control of independent contractor work to avoid cre-
ating any appearance that they are “employees” (for tax and withholding purposes).
As potential solutions, contractors might consider requiring independent contractors to bill hourly or bill
flat rates (but record time such that the contractor can ensure that the pay exceeds the minimum re-
quired under the WDs). Companies should also consider contractually requiring that independent con-
tractors certify that they are paying the appropriate wages, allow auditing by the contractor and indemni-
fy the company from any SCA violations. As part of a company's ongoing contract administration proce-
dures (perhaps annually), it should review independent contractor pay, recordkeeping, and certifica-
tions. (The same advice is applicable to subcontractors, which as the relevant SCA provisions are con-
cerned, are really just larger independent contractors.
Conclusion
SCA compliance can be difficult at best even for what appear to be the most straightforward issues. But
many current compliance issues are far from straightforward and require difficult business judgments
that may be questioned by aggressive DOL investigators down the road. If there is one unifying point to
the issues discussed above, it is that SCA compliance cannot be delegated to just one company func-
tion. SCA compliance is a whole-company effort that requires coordination throughout an SCA covered
contract's lifespan between legal, human resources, program management, payroll, timekeeping, busi-
ness capture, purchasing and supplier management, and executive leadership. Companies that take such
a holistic approach to compliance will find themselves well positioned should they ever be subject to an
SCA investigation.
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