Credits For Prevailing Supplemental Benefits On New York Public Work

Ah, summer is almost here. The birds are singing, the sun is shining, and construction work is just about gearing up into full swing. What's wrong with this picture? Well, it seems as if some employers performing public work in New York (and elsewhere probably) may be making mistakes with respect to credits to which they are entitled when calculating the payment of supplemental benefits.

Avid readers of this humble, little blog should know that New York Labor Law Section 220, et seq., governs the prevailing wage and prevailing supplemental benefits to be paid to workers on public works construction projects within the State. The New York Law is modeled on the Federal Davis-Bacon Act, and most, if not all States have their own "mini" Davis-Bacon acts. Note that the statute has two components ... the prevailing wage portion and the portion for prevailing supplemental benefits, both of which are set forth on the applicable prevailing rate schedule published by the New York State Department of Labor. The two portions must be combined and paid in full to the worker in order to ensure compliance with Labor Law Section 220.

One area of concern to construction employers is the hourly credit to be taken for prevailing supplemental benefits provided where the employer provides health care and other such benefits to its workers through a bona fide ERISA plan. If such a plan exists, the employer is entitled to a dollar for dollar credit for the hourly cost of the particular benefit covered by the plan as calculated after performing a benefits annualization analysis. As a general proposition, if you perform public work within New York, the payment of prevailing supplemental benefits for each worker must be annualized based on all public AND private work performed by that worker during the year ... typically, the hourly credit is calculated based on dividing the annual cost of the benefit by the actual number of hours worked (if available) or a standard of 2,080 hours. So, for example, if contributions to a health plan totalled $6,000 for the year and the individual worked 2,080 hours for all jobs, the employer would be entitled to a benefit credit of $2.88 per hour (i.e., 6,000 divided by 2,080). Conversely, if the employer has no ERISA plan of any kind, then the benefit portion must be paid the worker directly, usually by separate check. Sometimes, it may be paid in cash, but I've never been a fan of that payment method since it's ripe for abuse on both ends of the equation.

There are certain items which do not qualify as a supplemental benefit for the purposes of complying with Labor Law Section 220, including but not limited to: (a) travel expenses such as meals and lodging; (b) use of a company vehicle or gas, toll and vehicle reimbursements; (c) meal allowances; (d) reimbursement for tools or company provided equipment; and (e) uniforms or uniform cleaning. In short, these items can be the employer's achille's heel; an underpayment is likely to result if an employer uses the payment for such items as a credit against the hourly supplemental benefit to be paid to the worker under the New York statute.

Navigating the vagaries of prevailing rate laws is pretty tough stuff. Don't try this at home, kids.