Beginning January 1, 2016, unless otherwise exempted, NYC employers with 20 or more full-time employees must offer full-time employees the opportunity to use pre-tax income to pay for their commute. The Department of Consumer Affairs (DCA), the same agency responsible for enforcing the NYC Earned Sick Time Act (Paid Sick Leave Law), has responsibility for enforcing NYC’s Commuter Benefits Law.
Under the new law, a full-time employee is any employee who works an average of 30 or more hours per week in the most recent four weeks, any portion of which was in NYC.
The new law does not apply:
- To federal, state or local governmental agencies/employers;
- Where a collective bargaining agreement (CBA) exists between an employer and employees, except if the employer has 20 or more full-time employees who are not covered by the CBA, in which case the employer must offer these employees commuter benefits; or
- Where the employer is not required by law to pay federal, state or city payroll taxes.
In addition to the exemptions noted above, the DCA also has authority to waive the requirements of the Commuter Benefits Law if an employer presents compelling evidence that complying with the new law would significantly harm the business’s finances.
Employers must give their full-time employees a written offer of the opportunity to use pre-tax income to purchase qualified transportation fringe benefits and maintain a record of the offer and employees’ responses. Employers may use the sample form available on the DCA website at http://www1.nyc.gov/assets/dca/downloads/pdf/about/CommuterBenefits-EmployerComplianceForm.pdf to document compliance. Records must be kept for two years.
The new law gives employers a six-month grace period (from January 1 to July 1) to begin offering a commuter benefits program. Employers will not be subject to penalties for violations that take place before July 1. The law also gives employers 90 days to correct a violation before the DCA is authorized to seek penalties.
Employers who do not yet offer commuter benefits programs to their employees should consult their tax advisors to review any tax implications for their businesses and their employees.