Resources
Fringe benefit credit and annualization basics
Fringe credit connects benefit payments with the worker and the wage determination. Start with the contribution evidence and the hours supporting the calculation, especially when a crew works on both public and private projects.
Last reviewed:
General information, not legal or tax advice.
Separate benefit contributions from cash wages
The Labor Commissioner’s manual describes satisfying part of the total hourly rate through cash or eligible employer contributions. It also describes credit up to the aggregate benefits in the determination rather than limiting credit to each individual benefit category. Review eligibility and payment evidence before treating a cost as credit.
Sources: California Labor Commissioner, Public Works Manual (October 2023 edition)
Build the credit for each worker
The manual requires a separate calculation for each worker and disallows averaging a benefit payment across a group. It also describes regular contributions or costs paid no less than quarterly. Keep worker-level contribution detail, dates and plan records available for the reviewer.
Sources: California Labor Commissioner, Public Works Manual (October 2023 edition)
Bring public and private hours into the calculation
The manual’s basic annualization explanation divides the benefit contribution by annual hours on all projects, including public and private work. A job-only timesheet cannot support that broader denominator. Reconcile the hour records with payroll and preserve the period used in the calculation.
Sources: California Labor Commissioner, Public Works Manual (October 2023 edition)
Apply the chaptered AB 889 change carefully
AB 889 requires annualization when employer payments are higher for public works than private construction. The chaptered bill removed the Director’s exception that annualization would not serve the law’s purposes and revoked annualization exemptions authorized before January 1, 2026. 2026 is the first full year under these rules; do not rely on the older manual’s Director-exception language.
Carry reviewed credit into the payroll support
DIR’s XML guidelines describe fringe entries as hourly amounts. Keep the supporting calculation and contribution evidence with the payroll report so the hourly entry is traceable. A payment total entered without conversion or review can obscure what the reported credit represents.
Sources: fringe credit and annualization
Organize benefit records for annualization review
Tidwell helps assemble contributions and public and private hours for certified payroll support, working with your CPA and other advisers.