San Francisco Bay Area Employers Must Comply with Commuter Benefits Program by Sept. 30, 2014

by Davis Wright Tremaine LLP

Employers with 50 or more employees in any combination of nine San Francisco Bay Area counties have until Sept. 30, 2014, to come into compliance with the Bay Area Commuter Benefits Program (CBP). Intended to encourage the use of public transit, the CBP requires covered employers to select at least one of four commuter benefit options, notify employees of the selected benefit and how to take advantage of it, and register the selection with the Bay Area Air Quality Management District (Air District). A covered employer that already is complying with a pre-existing commuter benefit ordinance in one of four local jurisdictions (the cities of San Francisco, Richmond, and Berkeley and the San Francisco International Airport) still must register for the CBP and indicate which option is being provided.

Covered employers
The CBP applies to any public, private, or non-profit employer having an average of 50 or more full-time employees working anywhere within the Air District—that is, the counties of Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, and Santa Clara, as well as the western portion of Solano County and the southern portion of Sonoma County. “Full-time” is defined as an average of at least 30 hours per week within the previous calendar month, not counting seasonal and temporary employees.

Covered employees
Employees of covered employers who averaged at least 20 hours of work per week within the previous calendar month within the covered area, excluding seasonal and temporary employees, are entitled to participate in the CBP-mandated benefit.

Benefit options
Covered employers must provide to covered employees at least one of these benefits:

  • Option 1 (“Pre-tax option”) — Allow employees to exclude their transit or vanpool costs from taxable income to the maximum amount allowed by federal law (currently $130 per month).
  • Option 2 (“Employer-paid benefit”) — Employer-provided transit subsidy (or transit pass) or vanpool subsidy up to $75 per month.
  • Option 3 (“Employer-provided transit”) — Employer-provided free or low cost bus, shuttle or vanpool service.
  • Option 4 (“Alternative commuter benefit”) — An alternative benefit that is as effective in reducing single occupant vehicles as Options 1-3, such as supporting carpooling, bicycling, telecommuting, and compressed workweek schedules.

Covered employers must provide notice to covered employees when the commuter benefit is first made available or when the employee is hired, and at least once per year thereafter as follows:

  • That the employer is subject to the requirements of the CBP;
  • Which benefit options are offered;
  • How to apply for and receive the benefit; and
  • A person within the organization to contact for more information.

Registration and enforcement
In addition to adopting one or more benefits and notifying employees, by Sept. 30, 2014, covered employers must register their choices with the Air District at Registration is to be updated thereafter on an annual basis. Records documenting implementation of, and compliance with, the CPB must be created and maintained for at least three years, and must be provided on request to the Air District or the Metropolitan Transportation Commission. The CBP is a pilot program that, unless extended, will expire at the end of 2016.

Employers who fail to comply with the CBP can be fined from $1,000 per day to $10,000 per day, although “voluntary compliance” is said to be the goal.

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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