New Bay Area Commuter Benefits Program Imposes Obligations on Employers

The California Legislature enacted the Bay Area Commuter Benefits Program in 2012 to require certain employers to provide financial incentives to employees to commute to and from work via some means other than driving alone.  The law has not attracted much attention to date because it was enacted two years ago but will not become effective until this fall. With the effective date of the new law now approaching, however, employers should familiarize themselves with the key terms of the law and prepare to comply, if necessary. 

The new law requires employers with 50 or more full-time employees within the nine Bay Area counties (Alameda, Contra Costa, Napa, Solano, Sonoma, Marin, Santa Clara, San Mateo and San Francisco) to offer certain commuter benefits to eligible employees.  Notably, the law does not define the number of hours an employee must work to be considered “full-time.”  Employees eligible for the benefit include those who worked on average at least 20 hours per week during the previous calendar month within the counties listed above.

To comply with their obligations under the Program, covered employers must (a) offer one or more of four specified commuter benefit options to eligible employees by September 30, 2014, (b) notify eligible employees of their options and how to take advantage of them, and (c) register with the Program by September 30, 2014.  The four options set forth in the Program consist of:

  • Option 1 – allowing eligible employees to exclude transit or vanpool costs from taxable income, to the maximum amount allowed by federal law (currently $130 per month);
  • Option 2 – providing a subsidy of up to $75 per month for  transit or vanpool costs incurred by eligible employees;
  • Option 3 – providing free or low cost bus, shuttle or vanpool service to eligible employees; and
  • Option 4 – an alternative company-provided commuter benefit that is as effective as in reducing single occupant vehicles as Options 1, 2 and 3.

For most employers, Option 1 will probably be the simplest and most cost-effective, since it requires no expenditure of money and can actually reduce payroll taxes. 

What Should Employers Do Now?

  • Employers that already offer one or more of the listed commuter benefits must appoint a Commuter Benefits Coordinator who should register with the Bay Area Air Quality Management District and the Metropolitan Transportation Commission through the Program’s website at http://www.511.org.
  • Employers that do not yet offer any of the listed commuter benefits must decide which of the benefits they will offer, notify eligible employees of their options by September 30, 2014, and appoint a Commuter Benefits Coordinator who should register with the Bay Area Air Quality Management District and the Metropolitan Transportation Commission through the Program’s website at http://www.511.org

We recommend that covered employers prepare a memorandum that explains the Commuter Benefits Program to their eligible employees and distribute the memorandum to employees no later than August 29, 2014.  We are available to assist covered employers in providing the required notice upon request. 

 

Topics:  Commuter Tax Benefits, Employee Benefits, Payroll Taxes, Subsidies

Published In: Labor & Employment Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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