Is My Employer Required to Provide Commuter Benefits?
If you live in the San Francisco Bay Area and work for an employer with 50 or more full-time employees, the answer will soon be yes. Unfortunately, many employers have not heard about this new requirement and may be out of compliance.
According to the Bay Area Quality Management District, “Transportation is the largest source of air pollution in the [San Francisco] Bay Area, and commute travel accounts for nearly half of total motor vehicle travel on an average weekday.” In order to help combat air pollution and commuter traffic, in 2012 the California legislature passed SB 1339. SB 1339 authorized the Bay Area Air Quality Management District (Air District) and the Metropolitan Transportation Commission (MTC) to jointly adopt a regional commute benefit
program to promote the use of alternative commute modes such as transit, ridesharing, bicycling, and walking.
Unbeknownst to many in the Bay Area, the Air District and MTC adopted regulations that require employers with 50 or more full-time employees in the San Francisco Bay Area to provide commuter benefits to its employees. Employers must offer one of the following commuter benefits:
- Allow employees to exclude their transit or vanpooling costs from taxable income;
- Provide a transit or vanpool subsidy to reduce or cover employees’ monthly transit/vanpool costs;
- Provide a low-cost or free shuttle, vanpool or bus service, operated by or for the employer; or
- Provide an alternative commuter benefit that would be as effective as the other options in reducing drive-alone commuter trips (and/or vehicle emissions).
It appears the only no- (or at least low-) cost option is to allow employees to exclude their transit or vanpooling costs from taxable income. This option requires the employer to set up a section 132 plan allowing the employee to make a pre-tax payment for commute costs (similar to an HSA or Flexible Spending Account for health benefits). Employers will likely incur some administration costs to set up and maintain the 132 plan. Employers can check with their existing payroll companies about setting up a commuter benefits plan.
To comply with the Program, employers must select one (or more) of four commuter benefit options, notify employees about how to take advantage of the benefit, and register with the Program by September 30, 2014. Employers can contact the Air District at commuterbenefits@ for questions or comments.
Many employers do not even know they will be required to offer these benefits. Employers should not wait until the last minute to choose an option, as it may take time to set up whichever option the employer chooses.
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