District of Columbia Makes Transportation Fringe Benefit Mandatory

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Starting next year, many employers in the District of Columbia will be required to provide employees with a ride to work. The District’s Sustainable DC Omnibus Amendment Act of 2014 (“Act”)(D.C. Law 20-142), Section 302, requires employers with 20 or more employees to offer one of several transportation fringe benefits to employees beginning January 1, 2016.

The law identifies three qualifying transportation benefit programs that employers can provide to employees:   

    1. A pre-tax payroll withholding election that provides commuter highway vehicle, transit, or bicycling benefits
    2. An employer-paid benefit program where the employer supplies, at the election of the employee, a public transit pass or reimbursement of vanpool or bicycling costs equal to the purchase price of a transit pass for an equivalent trip on a public transportation system, or
    3. Employer-provided transportation at no cost to the covered employee in a vanpool or bus operated by or for the employer.

 

The Act authorizes the Mayor to issue rules to implement the provisions of the law. The Act also gives the Mayor authority to expand the definition of “covered employer” to include employers with fewer than 20 employees as of January 1, 2017.

Although DC employers should prepare to offer commuter benefits, currently there are no formal rules or guidance detailing how the law will be administered. The rules, when released, should provide welcome guidance to employers that currently do not offer transportation benefits and those that already have a transportation benefit program in place. Key questions include:

      • which employees are entitled to the benefit?
      • what are the spending limits?
      • is parking included?
      • what if an employer has offsite employees?
      • what if an employer has multiple locations?
      • what are an employer’s reporting and recordkeeping obligations?
      • can an employer offer more than one transportation benefit?
      • what if an employer already offers a commuter benefit?
      • what are the penalties if an employer does not offer a transportation benefit?
      • is Uber covered?

 

San Francisco and Bay Area employers are already required to provide commuter benefits. On January 1, 2016, New York City employers will also be required to offer transportation benefits.