As of January 1, 2016, employers (including chains and temporary agencies) with at least 20 full-time, non-union employees in New York City must offer all full time employees an opportunity to set aside pre-tax income to pay for commute costs.
This new law will be enforced by the New York City Department of Consumer Affairs (DCA). Federal tax law currently stipulates that employees can deduct up to $130.00 a month pre-tax for qualified transportation costs. Transit costs covered by the law include New York City region mass transit services (metropolitan subway and bus systems), Long Island Rail Road, Amtrak, New Jersey Transit, Metro-North eligible ferries and water taxis, eligible vanpool services, commuter bus services, and Access-A-Ride. Parking expenses and bicycling expenses are not covered by the commuter benefits.
New York City deems an employee as full-time if they have worked an average of at least 30 hours a week in the most recent four weeks and if any of that time was worked in New York City. “New York City” includes any of the five boroughs of Brooklyn, the Bronx, Manhattan, Queens, and Staten Island.
Employees working under a collective bargaining agreement are not covered by the new Commuter Benefits law. The new Commuter Benefits law also does not apply to federal, state and city government employees. The law does not apply to part-time, temporary or seasonal employees. It does not apply to residents of New York City who commute to jobs outside of the City. It does not apply to independent contractors.
DCA will allow a six month grace period before issuing notice of violations to employers that do not comply with the new mandate, but as of July 1, 2016 DCA can begin to notify violators. An employer then has 90 days to correct a violation before fines will be imposed. Initial fines will be from $100 to $250, and if left uncorrected, an additional fine of $250 may be imposed after every 30 days of noncompliance.
Employers will be required to keep records of commuter benefits for two years, in order to demonstrate that each full-time employee was given the chance to use his/her pre-tax monies for commuter expenses and whether the employee chose to participate or not. DCA has available an Employer Compliance Form – Offer of Commuter Benefits, or employers may create their own forms.
For more information on the Commuter Benefits Legislation effective 1/1/2016 and the model forms for your NYC employees, please visit the DCA website or call DCA at 212-639-9675.