NYSDOL Annualization of Fringe Supplements: Does it apply
to me?
Let’s take a look.
According to the New
York State Department of Labor (NYSDOL,) employers have three options when it
comes to providing NYS prevailing wage (PW) fringe supplements:
1 - Pay the PW fringe supplements as
cash in the paycheck, along with the required prevailing wage base
rate. Fringe supplements paid to an employee as cash are not
subject to the annualization calculation. The NYSDOL defines
“cash” as money given to the employee in a paycheck (reportable on an IRS Form
W2) subject to all employee taxes (i.e., federal and state
income tax) and subject to “burden” (i.e., FICA, possibly SUI.) Be
careful, NYS prevailing wage fringe supplements deposited into a fully vested,
qualified retirement plan are not
considered to be a cash payment of the fringe supplements by the NYSDOL and
are subject to NYSDOL annualization regulations.
2 - Use the fringe to provide a bona fide benefit plan for the employee, or
3 - A combination thereof.
If you are using NYS prevailing wage fringe supplements in part or in total
to provide bona fide fringe benefits, NYSDOL annualization regulations probably apply. It’s an easy
question to answer with the simple flow chart below:
If you are not subject NYSDOL annualization regulations, Congratulations!
Just remember, you are not taking full advantage of prevailing wage fringe
supplements to purchase benefits you provide to your employees, and, the answer
may change state to state and even in NY
if you are working under the Davis-Bacon Act or for HUD.
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