Following in the footsteps of California’s Bay Area, New York City and Washington, D.C. recently passed laws requiring employers to offer commuter benefit programs to their employees. (Our article on the Bay Area commuter benefit program can be found here.) Both laws take effect January 1, 2016. A summary of the Affordable Transit Act (the NYC Act) and the Transit Benefit Requirements Act (the D.C. Act) is below.
New York, NY
All private employers with 20 or more full-time employees in the city will be impacted by the NYC Act. (A full-time employee is one that works 30 or more hours per week for the employer. Note that once an employee is eligible for the benefit, the employee remains eligible for the program throughout the duration of his or her employment with the employer, even if the employer’s workforce drops below 20 full-time employees.)
To comply with the NYC Act, covered employers will need to offer a pre-tax transportation benefit program to their full-time employees. The program must offer employees the ability to purchase qualified transportation fringe benefits (other than parking) with their pre-tax earnings. Federal limits for 2015 allow employees to fund their transportation accounts with up to $130 per month to pay for transit passes and commuter vehicle costs.
The Department for Consumer Affairs (DCA) is charged with enforcing the NYC Act. The NYC Act includes a six-month grace period for employers to come into compliance, so the DCA will not impose penalties for noncompliance until July 1, 2016. Employers will also have a 90-day grace period to cure a first violation. Penalties range from $100-$250.
All employers (other than the federal government or the District of Columbia) with 20 or more employees will be impacted by the D.C. Act.
To comply with the D.C. Act, covered employers will need to provide at least one of the following commuter benefit options to its employees: (1) an employee-paid program that allows employees to use pre-tax dollars to pay for transit fares, up to the annual federal limit; (2) an employer-paid program where the employer subsidizes (at the employee’s election) employee transit, vanpool or bicycling costs, up to the federal annual limit; or (3) employer-provided transportation (at no cost to the employees) via a vanpool or bus operated by the employer. It is unclear whether covered employers will need to provide commuter benefits to all their employees, or just to their employees who work in the District.
If a covered employer fails to offer at least one of the transportation benefit programs listed above, it will be subject to civil fines and penalties. The amount of these penalties is yet unknown.
If you have any questions about New York’s Affordable Transit Act, D.C.’s Transit Benefits Requirement Act, or would like specific information on how to comply with these laws’ provisions, please contact your Kutak Rock attorney or a member of the Kutak Rock employee benefits practice group.