How to Calculate Prevailing Wage Fringe Benefits for your Building Super & Staff
Ultimate Annualization Guide and FREE Fringe Benefits Calculator
If you're getting ready to pay your building staff (Building Super, Handy Person, Porter, Door Person, Freight Elevator Operator, or Security Staff) the Prevailing Wages Rates, but are already providing certain fringe benefits to them, the laws actually allow you to offset these costs (as "contributions").
To do so, you have to follow a formula set by the NYS Department of Labor ("DOL") called the "Annualization Method," which according to the DOL, "refers to the time frame (annual) over which contributions to benefit plans are divided to calculate an hourly cash 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."
(actual words from DOL website)
How do you calculate prevailing wage fringe benefits for your Building Super & Staff using the annualization method? The formula, stated here verbatim from the DOL website:
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).
An Example Below
(straight from the New York City Website)
Although the calculation is pretty straightforward and simple, things are not entirely clear.
In this article, we'll discuss what qualifies or is permitted as a "fringe benefit" (and which do not qualify), and how to properly offset it using annualization. But, don't pull out your pencil and pad just yet, because in this article you'll find a free calculator to automatically calculate the new cost of prevailing wage fringe benefits for your Building Super & Staff, based on:
- Actual going prevailing wage rates (and supplemental benefits rate) for your particular employee;
- How much you're allowed to deduct from this hourly rate based on your contributions using the annualization method;
- How much your total weekly and yearly fringe benefits costs are.
What counts and doesn't count for "annualization"?
What we do know from these two sources is:
- Types of Fringe Benefits allowed: According to DOL, you can offset pension, health insurance and dental plan. NYC.gov states that the Prevailing Wages fringe benefits are meant to cover: "medical or hospital care, pensions on retirement or death, compensation for injuries or illness resulting from occupational activity, or insurance to provide unemployment benefits, life insurance, disability and sickness insurance, accident insurance, vacation and holiday pay, cost of apprenticeship or other similar programs and other bona fide fringe benefits. Interestingly, DOL states that a bona fide "cafeteria pan" can be considered a fringe benefit.
- Fringe Benefits NOT allowed: Not allowed to be annualized are:
- Travel expenses, such as meals and lodging
- Use of company vehicle or gas, toll and vehicle reimbursements
- Meal allowances
- Reimbursement for tools or company provided equipment
- Uniforms or uniform cleaning
The list of permitted fringe benefits is not complete. Even NYC.gov suggests that their own list is incomplete and there may be "other similar programs and other bona fide fringe benefits."
The problem is, there's not much information out there on what can be included. And the public guidelines are not crystal clear. For instance, why is a "cafeteria plan" allowed and "meal allowances" not allowed? The DOL states that "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."
The good news is although the list is not exhaustive, we can still piece together what qualifies under the Prevailing Wages laws.
- 1Waiting periods or vesting schedules do NOT matter. As long as money was paid to the employee, it can be used as a cash credit;
- 2There should be a total dollar value that can be attached to the supplement plan;
- 3The employee must be informed with a total dollar amount of the plan,
- 4There must be an available option and means given to the employee to purchase a comparable plan on his or her own.
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