United States: New Transit Benefit Requirements For D.C. And New York Employers Effective January 1, 2016

Two new laws require employers in Washington, D.C. (D.C.) and New York City (NYC) to offer pre-tax transit benefits, effective on January 1, 2016. Employers with employees in these cities must take action quickly to ensure compliance with the new requirements.

D.C.

Under D.C. law (D.C. Transit Ordinance, D.C. Law 20-142), by January 1, 2016, employers with 20 or more employees in Washington, D.C., (including nonprofits) must provide at least one of the following benefits to employees:

  • A transportation fringe benefits program allowing 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 (Code), with benefit levels at least equal to the maximum gross income deduction allowed for such programs under Code Section 132(f)(2);
  • An employer-paid benefit program in which the employer provides a transit 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 transit pass for an equivalent trip on a public transit system; or
  • Employer-provided transportation at no cost to the covered employee in a vanpool or bus operated by or for the employer.

Although the law currently only applies to employers with 20 or more employees in Washington, D.C.; under the terms of the law the mayor of D.C. may, through a future rulemaking, require employers with less than 20 employees to provide such benefits. This less than 20 employee requirement will not go into effect until January 1, 2017, if at all. For purposes of this law, an 'employer' is defined as "any individual, partnership, association, corporation, business trust, or any person or group of persons acting directly or indirectly in the interest of an employer in relation to an employee" (excluding the United States and the District of Columbia as employers), and an 'employee' is any individual employed by an employer (excluding certain volunteers, babysitters and lay persons elected or appointed to office in a religious organization). Thus, an individual who is employed by any such employer in Washington, D.C., must receive one of the specified benefits, even if the individual does not reside in D.C.

Employers failing to offer at least one of the specified benefit programs will be subject to civil fines and penalties under the D.C. Department of Consumer and Regulatory Affairs Civil Infractions Act.

NYC

Under NYC law (NYC Transit Ordinance, Local Law 53), New York City employers (including nonprofits) with 20 or more full-time employees (this includes employers within the five boroughs of NYC) must offer those full-time employees the opportunity to use pre-tax earnings to buy qualified transportation fringe benefits (other than qualified parking), in accordance with federal law. Under federal law, a qualified transportation fringe benefit includes vanpooling/commuter highway transportation, transit passes and bicycle commuting reimbursement.

Under the terms of the law, full-time employees are those working 30 hours or more per week for the employer. If an employer's number of full-time employees drops below 20, any employee who was eligible to purchase pre-tax qualified transportation fringe benefits under this requirement prior to the reduction must continue to have such an opportunity for the entirety of that employee's employment.

The new requirement is effective January 1, 2016, but employers will not be subject to penalties for violations occurring before July 1, 2016. An employer who fails to comply with this requirement has 90 days to cure the first violation before a penalty is imposed. After 90 days, the employer is subject to a fine of not less than $100 and not more than $250 for the first violation, and every subsequent 30-day period in which the employer fails to offer the required benefit constitutes an additional violation. Each additional violation results in a $250 penalty. A penalty will not be imposed on an individual employer more than once in any 30-day period.

This requirement does not apply to the federal government, New York state government or the city of New York government as employers; where a collective bargaining agreement exists between employers and employees, except where 20 or more full-time employees are not covered by the agreement (in which case all such employees must be offered the pre-tax transportation benefits option); or to employers who are not required to pay federal, state and city payroll taxes. In addition, this requirement can be waived if an employer demonstrates that offering the benefit would be a financial hardship for the employer.

Proposed rules provide clarification on the new requirement, including the following:

  • The required benefit need not be offered to full-time employees who work remotely and do not commute to a physical office or work site in NYC.
  • An employer's number of full-time employees is determined by calculating the average number of full-time employees for the most recent consecutive three-month period (or the number of full-time employees per week for the period of time in which the employer has been in operation, if less than three months), counting the full-time employees at all of the employer's NYC locations.
  • A full-time employee for purposes of the requirement is an 'employee,' 'manual worker,' 'railroad worker,' 'commission salesman,' and 'clerical or other worker' (as those terms are defined in New York State Labor Law) who has worked an average of 30 hours or more per week in the most recent four weeks, any portion of which was in NYC, for a single employer. An individual need not reside in NYC to be an employee for this purpose.
  • The required benefit must be offered by the later of January 1, 2016, and four weeks after the full-time employee begins employment with the employer.
  • Employers must retain, for two years, records that are sufficient to demonstrate that (1) each eligible full-time employee was offered the opportunity to use pre-tax earnings to buy qualified transportation fringe benefits as required under the law, and (2) whether the employee accepted or declined the offer (a form is available to document compliance).
  • Instead of offering the opportunity to purchase pre-tax transportation fringe benefits, an employer may provide (at the employer's expense) a transit pass or similar form of payment for transportation on public or privately owned mass transit to commute to or from a workplace or work location in NYC. If the employer-provided transit pass or similar form of payment is less than the maximum qualified transportation fringe benefit allowed under federal law, then the employer must offer employees the opportunity to make up the difference in pre-tax payroll deductions.

Next Steps for Employers

In light of these new laws, employers need to determine whether their current transit benefit programs, if any, comply with the new D.C. and NYC requirements, and update these benefits as necessary, effective by January 1, 2016. In addition, employers, who are subject to the new requirements and do not currently offer any transportation benefit programs, need to establish such programs in compliance with the new laws, effective by January 1, 2016.

New Transit Benefit Requirements For D.C. And New York Employers Effective January 1, 2016

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.