Some cities, states and regions require employers above a set size to offer their employees a commuter benefit, such as a way to pay for transit or vanpool rides from pre-tax pay. Each law sets its own employer size and the employees it covers.
This page explains general rules, not legal or tax advice for your company. Rules change, and they depend on where your company is registered and where your people work. Before you act, check with your own lawyer, accountant or tax advisor.
Where a commuter benefit is required
This page covers these laws. Each one counts employees its own way. In the Bay Area and New York City, a full-time employee works an average of 30 or more hours a week. The Bay Area doesn’t count seasonal or temporary employees as full-time.What the laws require
San Francisco, the Bay Area, Berkeley, Richmond and Washington, DC each let an employer choose from a list of options. Their options include a pre-tax election for transit and vanpool costs, an employer-paid transit pass and transportation the employer provides. New Jersey and New York City require a pre-tax option. Seattle requires a monthly pre-tax payroll deduction for transit or vanpool costs, or a transit pass the employer pays for in part or in full. New York City and Seattle don’t require a parking benefit, and San Francisco’s pre-tax election leaves parking out. Federal tax law sets what counts as a qualified transportation benefit: a ride in a commuter highway vehicle between home and work, a transit pass and qualified parking. An employer can exclude them from an employee’s wages up to monthly limits that the IRS gives for each year in Publication 15-B. An employer can offer them on a pre-tax basis, letting employees choose the benefit instead of part of their cash pay.When to offer it
- In New York City, an employer makes a written offer by 4 weeks after an employee starts full-time work, and keeps a record of the offer and each employee’s response for 2 years.
- In Seattle, an employer makes a written offer within 60 calendar days after employment begins, and provides the benefit within 30 calendar days after the employee chooses it.
- In the Bay Area, an employer that becomes subject to the program registers and complies within 6 months, then updates its registration each year.
If an employer doesn’t offer one
In New Jersey and New York City, an employer has 90 days to correct a first violation before a penalty. San Francisco can fine an employer or issue an administrative citation. Washington, DC applies civil fines, and a violation of the Bay Area program carries civil penalties under California law.In Every
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