Purpose: 

The purpose of this bulletin is to inform agencies of OSC’s automatic processing of the July 2026 retroactive increases to Inconvenience Pay, Location Pay and Location Mid-Hudson Pay as well as the new Mid-Hudson Location Pay for employees in Ulster County and provide instructions for payments not processed automatically.

Affected Employees: 

All employees in Bargaining Unit 08 represented by UUP who meet the eligibility criteria are affected.

Background: 

Chapter 129 of the Laws of 2026, which implements the 2026-2031 Agreement between the State of New York and UUP provides for a retroactive increase in Inconvenience Pay (Earnings Codes IPF, X43, Y43, Z43, IPP, X44, Y44, Z44), Location Pay for employees located Downstate who are currently receiving Location Pay (Earnings Code LOC, XLC, YLC, ZLC) and employees located in the counties of Dutchess, Putnam or Orange currently receiving Location Mid-Hudson Pay (Earnings Code LMH, XLM, YLM, ZLM). In addition, Ulster County has been added as an eligible county to receive Location Mid-Hudson Pay (Earnings Code LMH, XLM, YLM, ZLM).

Effective Dates: 

The increases to Inconvenience Pay, Location Pay, Location Mid-Hudson Pay, including the new Location Mid-Hudson Pay for employees in Ulster County, will be paid using the following effective date and check date:

Eligibility Criteria:  

Employees in a Bargaining Unit 08 on or after the applicable effective date listed above who currently receive Location Pay, Location Mid-Hudson Pay, Inconvenience Pay and/or Inconvenience Pay Partial are eligible for the following increases: 

In addition, employees in Bargaining Unit 08 on or after the applicable effective dates listed above, with an Employee Status of A or P and a Position Loc Code in Ulster County (56xx) are eligible to begin receiving LMH as follows:

OSC Actions:  

Increasing Location Pay (Earnings Code LOC) and Location Mid-Hudson Pay (Earnings Code LMH) 

OSC will automatically insert a row on the Additional Pay page using the applicable Effective Date from the Effective Dates section to reflect the July 2026 increase (as applicable) for eligible employees as follows:

Location Pay Downstate Adjustment (LOC, XLC, YLC, ZLC)

Location Mid-Hudson Pay Adjustment (LMH, XLM, YLM, ZLM)

OSC will automatically update any eligible subsequent rows

Effectuating Location Mid-Hudson Pay (Earnings Code LMH, XLC, YLC, ZLC) for Ulster County

OSC will automatically insert a row to effectuate the new July 2026 Location Mid-Hudson Pay for employees in Ulster County who are eligible as follows.

Increasing Inconvenience Pay (Earnings Codes IPF, X43, Y43, Z43) and Inconvenience Pay Partial (IPP, X44, Y44, Z44) 

OSC will automatically insert a row on the Additional Pay page using the applicable Effective Date from the Effective Dates section to reflect the July 2026 increase for eligible employees as follows:

Note: Employees currently receiving Earnings Code IPP at a rate not listed above will not be automatically updated by OSC. Please see Agency Actions below.

Increasing Intermittent Inconvenience Pay (Earnings Codes IIU, X14, Y14, Z14, IP7, IP8 and OIU)

OSC has automatically increased the hourly rate in PayServ for the following Time Entry Earnings Codes using the above effective dates:

OSC will automatically submit an adjustment on the Time Entry Page to reflect the July 2026 increase for eligible employees who have received Earnings Codes IIU, X14, Y14, Z14, IP7, IP8 and OIU with an Earnings Begin Date on or after 07/02/2026 as follows:

Automatic Retroactive Processing

OSC will automatically calculate retroactive adjustments for Time Entry earnings that are calculated by the system and include Location Pay (Earnings Code LOC, XLC, YLC, ZLC), Location Mid-Hudson Pay (Earnings Code LMH, XLM, YLM, ZLM) and/or Inconvenience Pay (Earnings Code IPF, X43, Y43, Z43, IPP, X44, Y44, Z44) such as OT for Annuals (Earnings Code OTA). 

If an employee is eligible for a retroactive increase or newly approved Location Mid-Hudson Pay and has been paid by multiple agencies in the same Employee Record Number since the effective date of the increase or effectuation, all retroactive adjustments will be paid in the most current agency within that record number. If an employee has been paid in multiple Employee Record Numbers, each record number will be evaluated separately, and retroactive payments will be processed in the record number in which the increase occurred.

Agency Actions:   

Increasing Location Pay (Earnings Code LOC, XLC, YLC, ZLC) and Location Mid-Hudson Pay (Earnings Code LMH, XLM, YLM, ZLM)

To pay the July 2026 retroactive increases to eligible employees not processed automatically or who return from an authorized leave of absence, the agency must submit the following information on the Additional Pay page using the appropriate Earnings Code

Location Pay Downstate Adjustment (LOC, XLC, YLC, ZLC)

Location Mid-Hudson Pay Adjustment (LMH, XLM, YLM, ZLM)

Effectuating Location Mid-Hudson Pay (Earnings Code LMH, XLM, YLM, ZLM) for Ulster County

To effectuate the new July 2026 Location Mid-Hudson Pay for eligible employees in Ulster County not processed automatically or who return from an authorized leave of absence, the agency must submit the following information on the Additional Pay page:

Increasing Inconvenience Pay (Earnings Codes IPF, X43, Y43, Z43) and Inconvenience Pay Partial (IPP, X44, Y44, Z44) 

To pay the July 2026 retroactive increases to eligible employees not processed automatically or who return from an authorized leave of absence, the agency must submit the following information on the Additional Pay page using the appropriate Earnings Code:

Agency Actions - Retroactive Processing

Reporting Retroactive Adjustments

Time Entry earnings codes that are submitted with an amount will not be adjusted automatically. Therefore, beginning in Administration Pay Period 14L, agencies must report the adjustment amount for earnings codes such as OT Override (Earnings Code OTO).

Correcting an Automatic Retroactive Adjustment

When certain conditions exist in an employee’s record, the automatic retroactive adjustment may be incorrect. Therefore, the agency is responsible for identifying employees who meet the following conditions and, if necessary, submitting the necessary adjustment:

• If an employee has a check returned or exchanged on an AC-230 for dates on or after the effective date of the payment, the payroll system does not consider the AC-230 when calculating the automatic retroactive adjustment.
• Adjustments for earnings that are calculated automatically, such as OT for Annuals  (Earnings Code OTA), will be calculated incorrectly if the dates previously reported as a single entry on the Time Entry page overlap the effective date of the payment. The system will calculate an adjustment for all earnings reported in a single entry based on the salary in effect on the Earnings End Date.
• For employees who had a change reported on the Job Data page since the effective date of the payment and the action resulted in an overpayment of earnings, the automatic negative retroactive adjustment may not have been processed because the overpayment was either not recoverable or was recovered using an overpayment earnings code or an AC-230. In this case, the negative retroactive adjustment may be re-generated when the payment is processed. OSC will turn off (not process) the automatic negative adjustment for these employees since in most cases these overpayments were either not recoverable or recovered using another method.

If an overpayment of earnings is identified after the automatic payment is processed but before the paycheck is received by the employee, the employee must be notified of the overpayment and the adjustment that will be reported in a subsequent pay period.

Submitting an Adjustment

When an adjustment is needed for overtime or recall such as OT Override (Earnings Code OTT), Earnings Code ARO (Adj Retro Raise for OT and RCL) must be used to process the adjustment. Please refer to Payroll Bulletin No. 1893 – Reporting Adjustments to Overtime for more information. Agencies must continue to use Earnings Code AJR (Adjust Raise) for all other override Time Entry Earnings Codes requiring a manual adjustment as a result of a retro salary increase.

To process a retroactive adjustment or correct an automatic retroactive adjustment, agencies must submit the following information on the Time Entry page or the Time Entry Interface (NPAY502) using the Earnings Code AJR or ARO:

Military Stipend Leave: 

OSC will recalculate the military stipend amount for employees who were placed on a Paid or Unpaid Military Stipend Leave on or after the effective date of the payment as the result of new military orders. 

• If the employee received a stipend, OSC will insert a row on the employee’s Job Data page effective the date the employee is entitled to the increase using the Action/Reason Code of Pay Rate Change/MSC (Military Stipend Change) and will increase the employee’s biweekly stipend amount. In addition, updates will be made to all subsequent rows requiring an increased biweekly stipend amount. 
• If the employee did not receive a stipend but becomes eligible for a stipend as a result of the payment, OSC will insert the following in PayServ: 
• A row on the employee’s Job Data page effective the date the employee is entitled to a stipend using the Action/Reason Code of Paid Leave of Absence/MLS (Mil Stip) and the new biweekly stipend amount. 
• A row on the employee’s Job Data page for each affected subsequent row using the Action/Reason Code of Pay Rate Change/MSC (Military Stipend Change) and the new biweekly stipend amount. 
• A row on the Time Entry page using the Earnings Code MSP (Military Stipend Payment) to pay the stipend for each pay period the employee is eligible. 
• Any additional adjustment that is required due to the increased biweekly stipend amount that will not be calculated automatically will be reported by OSC on the Time Entry page using the Earnings Code AMS (Adjust Military Stipend). 

Control-D Reports Available After Processing:

The following Control-D report will be available after processing of the automatic increases:

NHRP703 Mass Salary Additional Pay Report

This report identifies all employees receiving an automatic increase for Location Pay (Earnings Code LOC, XLC, YLC, ZLC), Location Mid-Hudson Pay (Earnings Code LMH, XLM, YLM, ZLM), Inconvenience Pay (Earnings Codes IPF, X43, Y43, Z43) and Inconvenience Pay Partial (IPP, X44, Y44, Z44). Fields on this report include EmplID, Employee Record Number, Employee Name, Earn Code, Grade, Salary Plan, Bargaining Unit, and Additional Pay Amount.

NHRP738 Excel to Control-D Report – Intermittent Inconvenience Adjustment Report

This report identifies all employees who received an automatic adjustment for Intermittent Inconvenience earnings which were paid using Earnings Codes AJR or AOR.

Deductions: 

All deductions for employees whose Payroll Status is Terminated, Retired, or Deceased will be automatically canceled by OSC with the exception of percentage-based dues and deductions marked “No” on the Deduction Codes list found in the PayServ Information section of the Payroll Manual. 

Tax Information:    

These funds are taxable income subject to all employment taxes and income taxes, will be included in the employee’s taxable gross, and will be reported on the employee’s Form W-2.

The adjustments (XAR, YAR, ZAR, AJR, ARO, and Retro (RXX)) are supplemental taxable wages, will be included in the employee’s taxable gross and are subject to all 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 Earnings Codes referenced above and the amount paid will be displayed on the Payroll Register. The corresponding Earnings Description and the amount paid will be displayed on the employee’s paycheck stub or direct deposit advice. If the number of earnings codes exceeds 13, agencies should utilize Locked Query LQ_PCD_PAYCHECK_EARNINGS_BY_ID to identify a complete list of earnings

Special Wage Payments for Individuals Who Filed for Retirement Social Security Benefits: 

Per Internal Revenue Service Publication 957, OSC will be reporting retroactive payments made to individuals who have filed for Social Security benefits to the Social Security Administration (SSA).

As PayServ does not include this information, OSC will be mailing a Request for Special Wage Payment Report to inactive individuals who are 62 or older in the calendar year and to active employees with “RET” selected on the New York Retiree Indicator in Modify a Person who receive the retroactive payment. Recipients of this mailing will be asked to fill out the request and return it to OSC for inclusion on the Special Wage Payment Report to SSA. This report will be submitted to SSA after the close of the 2026 tax year.

It is important that agencies ensure the New York Retiree Indicator is accurate for rehired retirees.

Undeliverable Checks:

When a valid payroll check is undeliverable due to the agency’s inability to locate the employee, the agency should follow the Agency Actions identified in Payroll Bulletin No. 1786 – Non-Negotiated and/or Undeliverable New York State Payroll Checks.

Checks issued to eligible employees who are now deceased should be submitted as a stop payment request with a reason of Exchange in PayServ. The Report of Check Exchange (AC 1476-P), Next of Kin Affidavit (AC 934-P) and original death certificate should be submitted to the Payroll Reversal and Exchange mailbox at the same time as the stop payment request. If a Next of Kin Affidavit has been previously submitted for a deceased employee’s payroll check, OSC will accept a photocopy of this form along with a new Report of Check Exchange. These forms can be found here: Payroll Forms | Office of the New York State Comptroller

Questions: 

Questions regarding this bulletin may be directed to the Payroll Earnings mailbox.

Questions regarding taxes may be directed to the Tax and Compliance mailbox.