On October 10, 2014, NYC Mayor De Blasio enacted Local Law 2014/053, more commonly known as the NYC Mass Transit Benefits Law. The law takes effect January 1, 2016, and requires employers of a certain size in NYC to offer full-time employees the opportunity to use pre-tax earnings to purchase transportation fringe benefits.
In an effort to reduce the costs of commuting, employees who use mass transit will have the option of deducting transportation expenses from their pre-tax earnings. Employers must use those deducted earnings to finance transportation for employees and offer at least the maximum deduction allowed by federal law, which is currently $130 per month. This ultimately saves commuters money by reducing the taxes paid on their income. Lower taxable income for employees may cause employers to experience a reduced tax burden as well, saving an estimated $100 or more annually per employee that opts for the transportation benefit.
Only private employers with at least 20 full-time employees working in NYC will be required to implement the new policies. Employees are excluded from this total if they work fewer than 30 hours per week, are entered into a collective bargaining agreement with the employer, or do not have a physical workplace within NYC. Employers may apply for a waiver from the City, showing that offering transportation benefits would be a financial hardship for the employer.
Employers subject to the new law must keep records for two years, listing employees who qualify for transportation benefits, showing that listed employees were actually offered transportation benefits, and indicating whether those employees accepted or rejected the offer. The benefits must be offered to any employee working full-time for four consecutive weeks.
Once the law is in effect, employers have a six-month grace period to implement compliant policies. The City will not penalize any violations of the law that occur prior to July 1, 2016. After this date, employers who are found in violation for the first time are to be given a 90-day cure period to become compliant. Failing to cure the violation will result in a civil penalty of $100 to $250. Continued non-compliance will result in an additional $250 penalty every 30 days until the violation is cured. Employers can opt to be in compliance with the law by offering transportation at the employers’ own expense.
Although no penalty will be imposed until July, it is important for employers to assess early whether they are subject to the new law, and which employees must be offered new benefits.