Since January 2016, the Sustainable DC Act of 2014 has required employers with 20 or more DC employees to offer transit benefits to their DC employees. The law requires employers to offer at least one of the following commuter benefits to their DC employees:
- Employee pre-tax elections: Allow employees to elect pre-tax payroll deductions to pay for commuting by mass transit or vanpool;
- Employer-paid benefit: Provide employees with employer-paid passes or vouchers to use for commuting by mass transit or vanpool; or
- Employer-provided transportation: Provide commuter transportation, such as shuttle, bus, or vanpool services, at no cost to employees.
Since the goal is to reduce use of low-occupant vehicles by encouraging sustainable transportation, subsidized parking and parking reimbursement do not satisfy the requirements of the law. However, employers may choose to offer parking, bicycle, or any other commuter programs in conjunction with one or more of the three options above. Services may be managed by the employer or through a third party administrator.
Final rules published late this summer included new notice requirements and fines for non-compliance. Beginning November 14, 2019, employers who do not offer transit benefits to their covered DC employees will be assessed a fine of $100 per employee per month for the first offense. Fines increase to $200 per employee per month for a second offense, $400 per employee per month for the third offense, and finally $800 per employee per month for each additional offense.
Under the final rules, employers must provide employees with written notice describing the available benefits and how to access them, who to contact with questions, and how to submit a complaint to DC DOES. This notice may be provided by email, internal memo, posting on a bulletin board or the company intranet, or other appropriate means. Transit benefit details must also be included in an employee benefits package or attached to the Notice of Hire Form.
As a result of the Tax Cuts and Jobs Act of 2018, employers may no longer deduct expenses for providing commuter benefits to employees. However, under IRS Code Sec. 132, the value of these benefits should not be included in employees’ taxable income.
If you have any questions about the law or final rule, please contact your OneDigital account team.