Alerts

New York City’s New Commuter Benefits Law

Synopsis

 On October 20, 2014, New York City Mayor Bill de Blasio signed the Affordable Transit Act into law.  The law, which takes effect in 2016, requires employers in the city to offer pretax transit benefits to their full-time employees.

 

The Affordable Transit Act

 The New York Transit Ordinance is a new law that mandates employers allow full-time employees the opportunity to use pre-tax earnings to purchase qualified transportation fringe benefits.

 

Who Will be Affected?

 Employers, both non-profit and for-profit, with 20 or more full-time employees in New York City will be required to offer their full-time employees the opportunity to use their pre-tax income to pay for their commute.  For these purposes, “full-time employees” are employees who work an average of 30 hours or more per week.

 

Effective Dates

 The new law takes effect January 1, 2016, provided that qualified transportation benefits are still excludible from an employee’s gross income for federal income tax purposes and from an employer’s wages for federal payroll tax purposes. To give businesses adequate time to adjust to the new ordinance, the Department of Consumer Affairs will not impose penalties for noncompliance until July 1, 2016. The new law also gives employers 90 days to correct a violation before penalties will be applied. Penalties for initial violations will range between $100 and $250.

 

Exemptions

 Certain employers are exempt from the new law, including:

  • The federal government
  • The state of New York
  • The city of New York
  • An employer that has a collective bargaining agreement in existence between any group of employees.
  • An employer that is not required to pay federal, state and city payroll taxes.
  • An employer that can demonstrate to the satisfaction of the Department of Consumer Affairs that the offering of this benefit would pose a financial hardship to the employer.