I am sure by now that if you commute anywhere in Washington, D.C., you have seen the signs encouraging employees to ask their employers about transit benefits for 2016. The District of Columbia passed a new Commuter Benefit Ordinance that will take effect January 1, 2016. The ordinance will require businesses with more than 20 employees located in Washington to offer commuter transit benefits to their employees.
Key Provisions of the D.C. Commuter Benefit Ordinance:
- Employers with more than 20 employees will be required to provide one of three commuter benefit options including:
- Employee-paid pre-tax benefit
- Employer-paid direct benefit
- Employer-provided transportation
- Every part-time and full-time employee will count towards the 20 employee requirement.
- The Mayor has the authority to expand the ordinance to include employers with fewer than 20 employees beginning January 1, 2017.
- The transportation benefits will follow the rules and definitions in Section 132(f) of the Internal Revenue Code.
- Employers who fail to offer at least one of the required transportation benefit options will be subject to civil fines and penalties as governed by the Department of Consumer and Regulatory Affairs Civil Infraction Act.
Employee-Paid Pre-Tax Benefit
This will allow employees to set aside pre-tax dollars to pay for workplace commuting expenses incurred by transit on metro, bus, or van pool. This would include transportation expenses for the Washington Metropolitan Area Transit Authority, Maryland Area Regional Commuter, Virginia Railway Express or Amtrak. An employee-paid pre-tax benefit program is typically the easiest and least costly option for employers to implement to comply with the law. Many employers already have this option in place, and this is the option often recommended.
Employer-Paid Direct Benefit
With an employer-paid benefit program, the employer would give employees the option to elect a transportation benefit that would be used to pay for public transportation. The employer would directly pay for the cost of the benefit.
Under the employer-provided transportation option, the employer would provide transportation directly to the employee in a vanpool, shared cars such as Uber and Lyft, or buses operated by or for the employer. There would be no charge to the employees.