Purpose:
The purpose of this bulletin is to inform agencies of the processing of the 2024 Prepaid Legal Service Benefit.
Affected Employees:
The following employees are affected:
- Employees represented by Communication Workers of America (CWA), Local 1180 in Bargaining Unit SD.
- Employees represented by District Council 37 in Bargaining Unit SK who reside within the zip codes as identified below:
| New York City | |
|---|---|
| Brooklyn | Entire Borough |
| Bronx | Entire Borough |
| Queens | Entire Borough |
| Manhattan | Entire Borough |
| Staten Island | Entire Borough |
| New York State | |
|---|---|
| Nassau County | Entire County |
| Westchester County | Entire County |
| Suffolk County | All zip codes except 11719, 11764, 11778, 11786, 11789, and 11792 |
| Rockland County | 10901, 10911, 10913, 10920, 10923, 10927, 10931, 10952, 10954, 10956, 10960, 10962, 10964, 10965, 10968, 10970, 10974, 10976, 10977, 10980, 10982, 10983, 10984, 10986, 10989, 10993, and 10994 |
Note: The Zip Code criteria is only applicable to members of District Council 37.
Background:
Pursuant to Internal Revenue Code Section 61, certain fringe benefits including employer-funded group legal service benefits are considered taxable income. Therefore, the value of this benefit will be added to the employee’s taxable gross wages, for tax withholding purposes, and reflected on the 2024 Form W-2 (Wage and Tax Statement).
Effective Dates:
Effective as of paycheck dated November 6, 2024 (Administration).
OSC Actions:
OSC will automatically apply the Prepaid Legal Service Benefit for the 2024 calendar year for employees who were in a status of Active or Paid Leave and received salary from a position in one of the designated bargaining units at any time during calendar year 2024.
Listed below are the unions, bargaining units, values of the Prepaid Legal Service Benefit and the Earnings Codes:
| Union | Bargaining Units | Value | Earnings Code |
|---|---|---|---|
| District Council 37 | SK | $107.00 | PL3 |
| CWA, Local 1180 | SD | $100.13 | PL5 |
District Council 37 has determined that non-resident aliens are eligible to receive this benefit. The Earnings Codes used to process the benefit for non-resident aliens who meet the criteria stated above are as follows:
| Earnings Code | NRA Income Code |
|---|---|
| XPL | 18 |
| YPL | 19 |
| ZPL | 20 |
OSC will set up a Social Security and Medicare tax deficiency deduction for any employee who is inactive at the time the benefit is applied. As a result, the deficiency will automatically be recovered through payroll deduction should the employee later return to the payroll.
Agency Actions:
Agencies must notify affected employees.
Control-D Report:
Control-D report NPAY771 (Time Entry Payment Report) identifies all employees for whom the Prepaid Legal Service Benefit was applied.
Tax Information:
The Prepaid Legal Service Benefit is supplemental taxable income, will be added to the employee’s taxable gross wages, for tax withholding purposes, and is subject to employment and income taxes.
Federal, State, and New York City income tax withholding will be calculated using the Aggregate method. Yonkers income tax withholding will be calculated using the Flat Rate method. Yonkers Flat Rate withholding is 1.95975% for Yonkers residents and 0.50% for Yonkers non-residents.
Payroll Register and Employee’s Paycheck/Advice:
The applicable earnings code and associated value will be displayed on the agency’s payroll register and the employee’s paycheck and/or direct deposit advice.
Questions:
Questions regarding this bulletin may be directed to the Tax and Compliance mailbox.