Should employers cover commuting costs?

One state believes it's up to HR to cough up for the employee commute

Should employers cover commuting costs?

Employers across Philadelphia may soon start covering their employees' commuting expenses thanks to a new bill that was recently passed by its city council.

The Commuter Benefits legislation, introduced by Democratic Councilmember At-large Helen Gym, seeks to require employers with 50 or more employees to establish a commuter transit benefit programme.

Lee Moylan and Stephanie Grey from the Philadelphia-based Klehr Harrison Harvey Branzburg LLP law firm explained that employers would be required to offer at least one of the following under the initiative:

  • Employee elected pre-tax, payroll deduction for mass transit expense, which includes fare for mass transit or transportation in a commuter highway vehicle
  • An employer-paid benefit, which covers the fare for mass transit or transportation in a commuter highway vehicle

For employees using bicycle for commuting, employers will also be required to offer them a tax-free reimbursement for the purchase, maintenance, repair, and storage expenses incurred by the worker, the law firm explained in its website.

The amount in the benefit shall not go over $20 per month, according to Moylan and Grey, and eligible employees include those who have been working for the same employer for 12 months with at least 30 hours per week.

The bill will be sent to the office of Mayor Jim Kenney for signing before it becomes official. Once signed, it will be implemented starting December 31, 2022.

Gym in a statement on Twitter said the passing of the legislation is an "important step toward a more sustainable, more equitable future," adding that it will:

  • Save Philadelphians' money
  • Boost transit ridership
  • Increase transit equity
  • Reduce traffic congestion
  • Decrease emissions

Read more: Do you have to pay for employee commutes?

"With the passage of my Commuter Benefits legislation, we will help working families save money and bolster our transit networks, all while reducing congestion on our roads," said the councilmember.

"By allowing workers to take advantage of this tax relief, they'll save money on public transit costs — and hopefully soon, bicycle costs — and we can get more folks out of cars and onto our buses, trains, and trolleys," she added. "That means safer streets, less emissions, and cleaner air."

How should employers prepare for this?

Moylan ang Grey noted down several steps for employers ahead of the passing of the legislation to ensure their compliance to it. These steps include:

  • Reviewing the company policies related to any commuter transit benefit programme to ensure it complies with the legislation
  • If the company does not have an existing programme in place, start deciding which of the required benefits will they offer
  • Ensure that the programme is consistent with the relevant sections of the Internal Revenue Code
  • Update company policies to include any new commuter transit benefit programme
  • Notify employees of the new benefits once the programme is implemented

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