Q: What is annualization?
A: Annualization simply refers to the time frame (annual) over which contributions to benefit plans are divided to calculate an hourly credit toward the amount an employer is required to pay according to the prevailing wage schedule. Total annual contributions per employee are divided by the total annual hours worked by that employee, on both public and private jobs.
Q: When referring to annualization, what time period is used?
A: The Department will generally look to the time frame used by the employer, i.e. fiscal year, calendar year, plan year, etc. If the employer has not utilized a specific time frame to calculate their credit, in most instances the Department will use a calendar year. An employer needs to be consistent in using the same twelve-month period year to year.
Q: How can I determine the hourly cash credit for supplements provided?
A: In order to calculate the hourly cash credit, the Department’s regulation on supplements provides the formula for making that determination.
a) Determine the actual annual contribution made for supplements for each employee.
b) Determine the total annual hours worked by each employee on both public and private work.
c) Divide the actual contribution or cost in (a) by the total number of hours worked in (b).
Once that credit is determined, if there is a deficiency between the required supplement amount and the hourly credit amount, it must be made up weekly with the employee’s wages.
Where such proof of total hours worked by each employee is not provided by the employer, the Commissioner of Labor will:
1. divide the amount in (a) above by 2080 hours (8 hours per day x 5 days per week x 52 weeks); or
2. divide the amount in (a) above) by 1820 hours (7 hours per day x 5 days per week x 52 weeks) where proof is provided establishing that the employee worked only 7 hours per day.
Q: Does an employer receive credit for contributions to plans that have waiting periods to qualify for health insurance benefits or pension plans with extended vesting schedules?
A: Yes. The New York State Department of Labor (NYS DOL) does not regulate waiting periods, vesting schedules, etc. That responsibility lies with the United States Department of Labor’s Employee Benefit Security Administration.
The NYS DOL will verify that:
a. The plan is a bona fide plan; and
b. The employee is a plan participant; and
c. The monies claimed to have been contributed on behalf of each employee have in fact been contributed.
Q: Does an employer have to provide a full range of benefits such as pension, health insurance, dental, etc., or can they just provide one or a combination of some?
A: It is the employer’s choice as to the type and level of particular benefit they provide as long as they calculate any contributions to bona fide benefit plans according to the NYS DOL regulation.
Q: Would a cafeteria plan comply with the annualization requirement?
A: Yes. A true cafeteria plan, where the total dollar value of the supplement amount is provided to the employee and the employee is provided the option or vehicle to purchase their own benefits, is considered the same as cash.
Q: Are there any “benefits” that an employer is not allowed to take credit for when calculating supplemental benefit cost and contributions?
A: Yes. The following are some items which do not qualify as a supplemental benefit for the purposes of complying with the Article 8:
Travel expenses such as meals and lodging
Use of company vehicle or gas, toll and vehicle reimbursements
Reimbursement for tools or company provided equipment
Uniforms or uniform cleaning
If you have a question on whether or not an item you provide would qualify for credit towards your supplemental benefit requirement, please contact the Bureau of Public Work.
Thanks for the feedback! It will help us improve your experience.