What Are Commuter Benefits?
Commuter benefits, otherwise known as transportation fringe benefits, have been around for years. But recently, this employer-provided offering has started to boom, and it doesn’t seem to be slowing down.
Commuter benefits allow employees to set aside pre-tax dollars to pay for work-related transportation costs. This pre-tax benefit can cover fare cards, vouchers, and direct payments to the transit operator or participants’ debit cards. The benefits can also cover shared Uber or Lyft rides when used for a work-related commute, and in some cases, participants can use the benefit towards public parking.
What Are the Perks?
Employees who take advantage of this benefit can save their hard-earned cash before taxes to pay for this daily cost—plus reduce their taxable income. Employers who offer commuter and parking benefits to their employees can save up to 7.65% on their payroll taxes. And as part of a bigger benefits package, employers who offer the commuter benefit can use it as a way to attract and retain top talent.
The Timeline and Recent Legislation Changes
2009 marked the beginning of city-mandated commuter benefits legislation. In 2009, San Francisco was the first to pass a law requiring employers with 20 employees to offer commuter benefits. Berkeley and Richmond were soon to follow in California, as well as the rest of the Bay Area.
In 2016, both Washington D.C., and the five boroughs of New York City mandated that employers with 20 or more workers must offer commuter benefits.
More recently, Seattle, Washington enacted a commuter mandate—and even more ground breaking—the entire state of New Jersey passed commuter benefits legislation that requires any employer with 20 or more employees to offer the benefit.