Professional Development Committee

JANUARY 7, 2016

National Employment

Focus on Washington, D.C. and New York City

New Laws Mandate Employer-Provided Transportation Benefit Plans

On January 1, 2016, Washington, D.C. and New York City began enforcing statutes requiring employers within the cities to provide commuter transportation benefits to their workers. Several California cities, including San Francisco, Berkeley, Richmond and nine counties in the San Francisco Bay Area, have already enacted similar regulations. Proponents of employer-provided transportation benefits assert that promoting public transportation commutes reduces traffic and pollution.

Under D.C. Law 20-142, employers with 20 or more employees in the District of Columbia must offer one of the following benefit plans:

  • A transportation fringe benefits program that allows employees to make pre-tax deductions for commuter highway vehicle, transit or bicycling costs, consistent with section 132(f)(1)(A), (B), and (D) of the Internal Revenue Code. Under this plan, benefit levels must be at least equal to the maximum gross income deduction allowed under Code Section 132(f)(2) (currently $100 per month for transportation in a commuter highway vehicle or public transit pass and $175 for parking);
  • An employer-paid benefit program in which the employer provides a pass for a public transit system requested by each covered employee or reimbursement of vanpool or bicycling costs that are at least equal to the purchase price of a pass for an equivalent trip on a public transit system; or
  • Transportation provided by the employer at no cost to the covered employee in a vanpool or bus operated by or for the employer.

Employers that do not offer compliant transportation benefit plans are subject to fines and penalties.

Similarly, New York City employers with 20 or more full-time employees must comply with NYC Transit Ordinance, Local Law 53. The law requires employers to offer full-time employees (i.e. employees who have worked an average of 30 hours or more per week in the most recent four weeks) the opportunity to use pre-tax earnings to pay for qualified transportation fringe benefits. Qualified benefits include transportation in a commuter highway vehicle or any public transit pass. The benefit need not be extended to full-time employees who work remotely and do not commute to a physical work location in the city. Although the ordinance took effect on January 1, 2016, employers will not face penalties for any violations that occur before July 1, 2016. Employers that fail to comply with the ordinance thereafter may face fines issued by the NYC Department of Consumer Affairs.

This newsletter is prepared by Shook, Hardy & Bacon's National Employment Litigation & Policy PracticeTM. Contributors to this issue: Meg Inomata and Bill Martucci.

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