A new Philadelphia city ordinance effective December 31, 2022 requires employers with 50 or more “covered employees” to supply commuter benefits to such employees. Covered employees are those who performed an average of 30 hours of paid work per week in Philadelphia for the same employer over the last year. Thus, “covered employee” does not include new hires, volunteers, or unpaid personnel, such as interns.

Employers subject to the ordinance must offer at least one of the following commuter benefits to its covered employees:

• A transportation fringe benefit plan under Section 132(f) of the Code, which permits employees to elect to save money on a pre-tax basis to pay for mass transit expenses (such as a fare card or transportation in a commuter highway vehicle) or bicycle expenses;
• An employer-provided fare card with benefits equal to or greater than the maximum amount set out in Section 132(f)(2) of the Code; or 
• A combination of the two options. 

The City will investigate and attempt to mediate any complaints regarding non-compliant employers. The ordinance specifies that an employer that fails to comply with the ordinance after mediation will then receive a written warning, followed by imposition of fines that range from $150 to $300 per day for each day the employer remains non-compliant. 

Affected employers should implement a commuter benefit that satisfies these rules or review an existing commuter benefit for compliance with the new requirements. If you are an employer in Philadelphia subject to this new ordinance, or have questions about commuter benefits in general, please reach out to a member of the Kutak Rock Employee Benefits and Executive Compensation practice group.

Employee Benefits Newsletter Winter 2022