New York contractors and subcontractors performing prevailing wage work are entering a new phase of compliance. Electronic certified payroll reporting is here. Documentation expectations around supplements are increasing. Annualization is under greater scrutiny, particularly for employers whose workforce performs both public and private work.
Now is a good time to step back and evaluate your processes. Understanding how PTO and other benefits factor into supplements, as well as how annualization affects your payroll credits, is critical for staying ahead of regulatory requirements.
Who Is Impacted
These requirements apply broadly to contractors and subcontractors performing public work and other covered prevailing wage projects in New York.
In practice, this includes:
- A prime contractor or subcontractor employing laborers, workers, or mechanics on public work
- Performing work on projects subject to Article 8, including certain privately owned projects that are deemed “covered”
- Bidding on or performing public work in New York
Registration with the New York State Department of Labor is required in order to bid or begin covered work. If you have not confirmed your registration status recently, that should move to the top of your list.
Electronic Certified Payroll Reporting Is Now in Effect
As of January 1, 2026, all contractors and subcontractors performing public work or covered private work subject to prevailing wage are required to submit certified payrolls electronically to the Bureau of Public Work and Prevailing Wage Enforcement.
Under New York Labor Law Section 220-J, required payroll records must be furnished monthly, unless a contract requires more frequent reporting. Many public owners already expect weekly certified payrolls, so always follow the stricter statutory and contract requirements.
What Must Be in Your Payroll Records
Prevailing wage payroll records must be contemporaneous, true, and accurate, and retained for at least six years. At a minimum, records should show for each worker on a public work project:
- Name and address
- Last four digits of Social Security number
- Classification or classifications worked
- Hourly wage rates paid
- Supplements paid or provided
- Daily and weekly hours worked in each classification
Certified payroll transcripts must be sworn or affirmed as true under penalty of perjury. Payroll systems that do not clearly capture hours by classification and supplement treatment are a common compliance gap that should be addressed immediately.
Worker Notification Requirements
Contractors and subcontractors must provide written notice of the prevailing wage and supplement rate for the worker’s classification on each pay stub.
This becomes more complex when a worker performs multiple classifications in the same week. Your payroll statements or required attachments should clearly reflect prevailing wage and supplement rates by classification.
A quick review of your pay stub format can prevent unnecessary exposure.
PTO & Prevailing Wage: Does It Have to Be in a Trust?
The short answer is no. There is no universal rule in New York that PTO must be held in a third-party trust to count as a prevailing wage supplement.
The real compliance question is how you are satisfying the supplement requirement and whether you can substantiate the credit you are taking.
Prevailing wage schedules treat supplements as noncash remuneration and often include vacation benefits and holiday pay as examples. In practice, PTO is commonly structured as part of a vacation or holiday benefit program.
The New York State Department of Labor recognizes multiple methods for satisfying supplements:
- Cash payment in lieu of supplements paid in the employee’s paycheck while working on a public work project
- Contributions to a bona fide benefit plan on behalf of the employee
- A combination of cash and contributions
If you are paying supplements as cash each week, documentation tends to be more straightforward.
If you are taking credit for a benefit program such as a PTO or vacation plan, the documentation expectations increase and annualization rules may apply.
The trust question is often secondary. The primary issue is whether the benefit structure is bona fide, properly documented, and correctly credited.
Annualization: Why It Matters More Than Ever
Annualization is one of the most misunderstood aspects of prevailing wage compliance.
In short, it ensures employers do not over credit benefits toward prevailing wage supplements when employees work on both public and private jobs.
If benefit contributions are not made hourly for all hours worked, the employer’s hourly supplement credit must be determined through an annualization calculation.
How the Calculation Works
1. Determine the actual annual contribution made for supplements for each employee.
2. Determine the total annual hours worked by that employee on both public and private projects.
3. Divide the annual contribution by total annual hours to compute the hourly credit.
If total hours cannot be documented, the Department of Labor may default to dividing by 2,080 hours, or 1,820 hours if proof shows a seven-hour day schedule.
If the resulting hourly credit is less than the required supplement, the difference must be paid weekly along with wages.
An annualization statement should document:
- Total annual supplement contributions per employee
- Total annual hours worked, both public and private
- The resulting hourly credit
- Any weekly cash true-up to cover deficiencies
For employees moving between public and private work, annualization should be structured, documented, and repeatable.
Risk of Noncompliance
Failure to furnish required payroll records can result in a $100 per day penalty while in violation, subject to procedural timing requirements.
Underpayment findings can lead to:
- Payment of wages and supplements found due
- Interest from the date of underpayment
- Civil penalties of up to 25 percent of the total amount found due
Repeated willful violations can result in debarment from public work for up to five years after a second final determination within a six-year period.
This is not simply an administrative issue. It can directly affect your ability to bid and perform future public work.
What Contractors Should Do Now
Contractors should treat prevailing wage compliance as an ongoing operational control. Current best practices include:
- Confirm NYSDOL registration status and ensure information is current
- Map payroll data fields to required prevailing wage elements and address gaps
- Review pay stubs to confirm classification-specific prevailing wage and supplement notices are correct
- Decide how supplements will be satisfied—cash, benefit contributions, or a blended approach
- Implement an annualization process if taking credit for PTO or benefit plans
- Assemble “audit-ready” documentation, including plan documents, proof of contributions, time records, and payroll registers
- Confirm reporting cadence aligns with contracts and statutory requirements
Ongoing controls should include maintaining payroll records for at least six years and accurately tracking hours by classification, especially when employees work multiple classifications in the same week.
Final Thoughts
Prevailing wage compliance in New York has always required attention to detail. Today, the expectation for accurate, documented, and electronically submitted records is higher than ever. In order to protect margins, preserve eligibility for public work, and respond confidently to audits, contractors should make compliance a core operational focus.
If your team has not reviewed its supplement strategy or annualization methodology recently, now is the time.
If you have any questions or are interested in learning more, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
