United States: Most New York City Employers Must Offer Commuter Transportation Benefits To Full-Time Employees

Last Updated: December 22 2015
Article by Steven J. Friedman, Stefanie H. Kastrinsky and Ndidi Menkiti

New York City's Mass Transit Benefit Law requires that most New York City employers with at least 20 full-time employees offer such full-time employees the opportunity to use their pre-tax earnings, up to $130 per month,1 to pay for certain "qualified transportation fringe benefits," but not qualified parking.2  Although the Mass Transit Benefit Law takes effect on January 1, 2016, covered employers essentially have a six-month grace period to comply because the law provides that penalties will not be assessed for violations that occur before July 1, 2016.3  With this law, New York City joins San Francisco and Washington, D.C. in mandating that employers offer transportation benefits to their employees.4

Federal Transit Benefits

Under federal tax law, employers are permitted, but not required, to offer qualified transportation fringe benefits to any of their employees.  These benefits include commuter highway vehicle and mass transit tickets and passes (for use on services provided by entities such as MTA, Long Island Rail Road, Amtrak, New Jersey Transit, Metro North, and certain ferry and water taxi services).  An employee uses this benefit by electing that a certain amount of his or her pre-tax pay (up to a maximum of $130 per month) will be used to purchase transit tickets and passes.

The Mass Transit Benefit Law provides that when employees opt to use this benefit, there is a tax savings to both the employee and the employer. When an employee pays for transit expenses with pre-tax income, such benefits are, in effect, not included in his or her taxable income.  The employer can exclude any amount that is exempt from income tax from the employee's wages, thereby reducing its share of federal payroll taxes.

Two Alternatives for New York City Employers

Employers must offer one of two benefits to their eligible full-time employees. They may provide the employee the opportunity to use pre-tax earnings up to the federal maximum qualified transportation fringe benefit ($130 per month in 2016) to purchase eligible transit benefits.  The offer must be made by the later of January 1, 2016, or four weeks after the employee's start date.5

Alternatively, per rules recently issued by the New York City Department of Consumer Affairs ("DCA"), employers may directly pay for tickets or transit passes or make other forms of payment to employees to be used for mass transit or commuter highway vehicle expenses ("employer-paid transit benefit").6  If the employer-paid transit benefit is less than the federal maximum qualified transportation fringe benefit, the employer must offer employees the opportunity to use pre-tax earnings to pay for the difference between the value of the employer-paid transit benefit and the federal maximum transportation fringe benefit, to purchase eligible transportation fringe benefits. 

Which Employers Are Covered?

The New York City Mass Transit Benefit Law applies to most for-profit and not-for-profit employers with 20 or more full-time employees in New York City.7  However, it does not cover:

  • Governmental employers (e.g., the federal government, New York State, New York City, local governments, etc.);
  • Employers that are not subject to federal, state, and city payroll taxes;
  • Employers operating under a collective bargaining agreement (except that if the employer has 20 or more full-time, non-collectively bargained employees, then the full-time, non-collectively bargained employees must still be offered the transit benefit); and
  • Employers that qualify for a "financial hardship exemption."  The DCA may grant a financial hardship exemption to an employer that presents "compelling evidence that complying with the Transportation Benefits Law would be impracticable and create a severe financial hardship."8 Unfortunately, neither the Mass Transit Benefits Law nor the DCA's rules define financial hardship.

To determine the number of full-time employees, employers must calculate the average number of full-time employees working during the most recent consecutive three-month period.9  If the employer has been in operation for fewer than three months, the employer must calculate the average number of full-time employees per week for the period of time it has been in operation.

Importantly, once a full-time employee qualifies for eligible transit benefits, the employer must continue to offer the eligible transit benefits to him or her for as long as full-time employment continues -- even if the employer's number of full-time employees drops below 20.10

Employers and Chain Businesses with More Than One Location

For employers and chain businesses with more than one location in New York City, determining whether the 20 full-time employee threshold is met involves looking at all locations in New York City that share a common owner or principal where such establishments engage in the same business or operate pursuant to a franchise agreement with the same franchisor.11  For chain businesses, the common owner or principal must own a majority of each establishment.

Temporary Help Firms

For purposes of the Mass Transit Benefit Law, "temporary help firms" are considered the "employer" of the full-time employees they supply to other organizations.  Accordingly, a temporary help firm must offer eligible transit benefits to the "temporary help" full-time employee if it has 20 or more full-time employees, regardless of the size of the client organization.  The temporary help firm determines whether an employee is full-time by aggregating the employees' hours worked at all placements in the most recent four weeks. 

Who is a Full-Time Employee?

"Full-time employees" are those employees working an average of 30 or more hours per week, any portion of which is in New York City.12  Independent contractors, partners, sole proprietors, and 2% shareholders of S corporations are not considered employees.  Whether an employee averages 30 or more hours per week is based on the number of hours worked during the most recent four weeks.13


Beginning July 1, 2106, an employer may be liable for a civil penalty ranging from $100 to $250 for its first violation of the law. However, the DCA, which is charged with enforcement of the law, must give employers 90 days to "cure" the first violation before it can assess the penalty.14  After the end of the 90-day cure period, a covered employer is deemed to commit a subsequent violation for every 30-day period it does not offer the transit benefit.  For each subsequent violation, there is a $250 civil penalty.15

Recordkeeping Requirements

Under DCA rules, employers must maintain records for two years that demonstrate that each eligible full-time employee was offered transportation fringe benefits in compliance with the Mass Transit Benefit Law and, and indicate whether the employee accepted or declined the offer.16  The DCA has posted an "Employer Compliance Form" on its website that employers may use to document compliance.  The form is available at:  http://www1.nyc.gov/site/dca/about/pre-tax-transit-benefits-law.page.


1. 26 U.S.C. § 132(f).  This is the monthly maximum set by federal tax law.  The Internal Revenue Service has the authority to adjust this limit each year for inflation.

2. Local Law No. 53 (2014) of City of New York (hereinafter "Local Law No. 53").

3. Local Law No. 53 § 2.

4. See Michelle Thomas, Rachel Hill, and Eunju Park, District of Columbia Employers Must Provide Transportation Benefit Programs by the New Year, Littler Insight (Nov. 23, 2015; Christopher Cobey and Anne Sweeney Jordan, San Francisco Bay Area Employers Must Comply with Commuter Benefits Program by September 30, 2014, Littler Insight (Apr. 23, 2014).

5. 6 RCNY § 8-04(a).

6. 6 RCNY § 8-07.

7. N.Y. Admin. Code § 20-926(c).

8. 6 RCNY § 8-08.

9. 6 RCNY § 8-02.

10. New York City Admin. Code § 20-926(a); 6 RCNY § 8-04(b).

11. 6 RCNY §§ 8-01.

12. New York City Admin. Code § 20-926(a).

13. 6 RCNY § 8-01.

14. N.Y.C. Admin. Code§ 20-926(b).

15. Id.

16. 6 RCNY §8-06.

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.

Steven J. Friedman
In association with
Related Video
Up-coming Events Search
Font Size:
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
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
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.


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.


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.


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.


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.


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.


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.