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NYC Commuter Benefits Law Takes Effect in the New Year

Beginning January 1, 2016, private New York City employers (including non-profits) with 20 or more full-time, non-union NYC-based employees will be required to offer such covered employees the opportunity to use pre-tax earnings to pay for certain methods of transit qualified by the Internal Revenue Service, including MTA subway and bus, Long Island Rail Road, New Jersey Transit, Metro-North, Amtrak, eligible ferry and water taxi services, eligible vanpool services, eligible commuter bus services, Access-A-Ride and other area paratransit providers, though excluding parking and bicycling expenses.

The law defines a full-time employee as one who works an average of 30 hours or more per week. Once a covered employee becomes eligible for these benefits, the employee remains eligible throughout his or her employment, even if the employer was to subsequently fall below the 20-employee threshold.

Employers must provide their covered employees with a written offer of the opportunity to use pre-tax income to purchase these qualified transportation benefits by January 1, 2016, or four weeks after an employee begins full-time employment, whichever is later, and must maintain records reflecting such offers and their employees’ responses for two years. Despite the new obligations imposed on employers, the law does provide employers with tax advantages for offering these benefits.

Violations of the law may result in an assessment of civil penalties by the NYC Department of Consumer Affairs (DCA). However, an employer in violation will have 90 days to cure a first violation before the penalty is actually imposed. Additionally, the City is giving employers a 6-month grace period – January 1, 2016 to July 1, 2016 – to establish a commuter benefits plan before subjecting employers to penalties.

Covered employers should begin examining the most cost effective way to implement compliant commuter benefits programs. Employers may visit: http://www1.nyc.gov/site/dca/about/commuter-benefits-FAQs.page#6, a Commuter Benefits Law FAQ published by the DCA, which contains a list of third-party providers that manage commuter benefits programs.


E-Alert is a quarterly newsletter that features the latest thinking from Tannenbaum Helpern's various departments.

12.15.2015  |  PUBLICATION: E-Alert  |  TOPICS: Employment

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