Mandatory Commuter Benefit Ordinances
Employer’s offering transit benefits cannot administer this program by reimbursing employees with cash or payroll deposits. The IRS (Rev. Rul. 20014-32) states that employer-provided transit benefit programs cannot include cash reimbursement. Providers that offer reimbursements via cash or payroll deposits are non-compliant and put employers at risk for back taxes and penalties.
The New Jersey Commuter Benefit Ordinance will go into effect on April 1, 2020. It excludes tax-exempt organizations and applies to all other employers with 20 or employees. Eligible employees must work an average of 10 hours or more per week. Employees do not have to be residents of New Jersey to qualify for the benefit, they only have to work in the state.
*The first statewide ordinance signed March 1, 2019.
The DC Commuter Benefits Law is part of the Sustainable DC Omnibus Amendment Act of 2014 and requires all District companies with 20 or more employees to offer Commuter Benefits for Transit to their employees (including nonprofits). Employers have three options of how they can offer a Transit Benefit Program:
- Employee-paid pre-tax benefit – Allow employees to set aside income on a pre-tax basis to cover the cost of commuting by mass transit or vanpools, up to the IRS pre-tax maximum a month
- Employer-paid direct benefit – Offer a tax-free subsidy for transit up to IRS pre-tax maximum per month and for bicycling up to $20 per month
- Employer-provided transportation – Provide shuttle or vanpool service at no cost to employees
New York City
The NYC Transit Ordinance, also known as INT. No. 295- A and Local Law 53, requires New York City employers, located in the five boroughs (Manhattan, Brooklyn, the Bronx, Queens, and Staten Island), with 20 or more fulltime employees to offer the pre-tax commuter benefit for transit. NYC employers DO NOT have to offer Parking Benefits. The law defines a full-time employee as someone who works on average 30 hours or more per week for an employer. If employees are commuting from the suburbs to an office in one of the five boroughs are eligible for the benefit.
The Seattle Commuter Benefit Ordinance will go into effect on January 1, 2020. It applies to all other employers with 20 or employees, excluding tax-exempt organizations. Eligible employees must work an average of 10 hours or more per week. Employees do not have to be residents of the city of Seattle to qualify for the benefit, they only must work within the city.
San Francisco Bay Area
Bay Area Commuter Benefits Program requires employers (private, public or non-profit entity) with 50 or more full-time employees in one of the nine-county San Francisco Bay Area to offer commuter benefits to their employees. A “full-time employee” is defined as an employee who normally works at least 30 hours per week.
Option 1: Pre-Tax Benefit: The employer allows employees to exclude their transit or vanpool costs from taxable income to the maximum extent permitted by federal.
Option 2: Employer-provided Subsidy: The employer provides a transit or vanpool subsidy to cover or reduce the employee’s monthly transit or vanpool costs. The amount provided is to cover the total cost of the commute up to an inflation-adjusted maximum.
Option 3: Employer-provided Transit: The employer provides a free or low-cost bus, shuttle, or vanpool service for employees.
The Richmond Commuter Benefits Ordinance requires all registered businesses in Richmond that have ten (10) or more employees who work an average of at least ten (10) hours per week to offer one of the following:
- Option 1: A Pre-Tax Election: A program, consistent with Internal Revenue Code 132(f), allowing employees to elect to exclude from taxable wages and compensation.
- Option 2: Employer Paid Benefit: A program whereby the employer supplies a transit pass or reimbursement for equivalent vanpool charges at least equal in value to the purchase price of the adult monthly transit pass for the local transit agency system(s) requested by each employee to complete the trip to the workplace.
- Option 3: Employer-Provided Transit: Transportation furnished by the employer at no cost to the employee in a vanpool, bus or similar multi-passenger vehicle operated by or for the employer.
Berkeley Municipal Code 9.88 required all employers in Berkeley with 10 or more employees (full-time, part-time, or temporary–anyone who works an average of 10 hours per week or more in Berkeley) must offer one or more of the following options:
- Pre-tax Transit/Vanpool: Employer provides a payroll deduction program under existing Federal Tax Law 132(f).
- Employer Paid Transit/Vanpool/Bicycle Benefits: Employer pays for employee’s transit, vanpool or bicycle commute expenses.
- Employer-Provided Transit: Employer offers workers free shuttle service on a company-funded vehicle between home and workplace.