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Navigating Commuter Benefit Ordinances

Anthony Maggio

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Thanks to ADP^® Marketplace partner, BRI, for this article.

Understanding commuter benefit ordinances

Commuter ordinances, also known as commuter benefit ordinances, are local regulations designed to encourage sustainable commuting options and reduce the environmental impact of daily travel. These ordinances aim to alleviate traffic congestion, improve air quality, and promote public transportation, bicycling, carpooling, and other eco-friendly commuting alternatives. Commuter ordinances can help create more sustainable and livable cities by incentivizing employers and employees to adopt these practices.

Impact on pre-tax benefit programs

Commuter ordinances often intersect with pre-tax benefit programs, offering tax advantages to both employers and employees. These programs allow employees to use pre-tax dollars to cover eligible commuting expenses, such as transit passes, parking fees, and vanpool costs. This not only reduces the financial burden on employees but also provides a tax break for employers, fostering a collaborative approach to sustainable commuting.

Key commuter ordinances across the United States

Numerous major cities across the United States have implemented commuter ordinances to address urban transportation challenges. New York City, San Francisco, and Washington, D.C., are among the frontrunners, each with unique requirements and regulations. For example, New York City's Commuter Benefits Law, which took effect in 2016, mandates employers with 20 or more full-time, non-union employees to offer commuter benefits.

Similar legislative advancements stretch across the nation, with more arriving each year. Philadelphia implemented a commuter benefit law in 2022, requiring employers with 50 or more full-time employees to offer pre-tax transportation benefits. Similarly, Chicago's Transportation Benefits Program Act, which mandates that employers with 20 or more employees provide a commuter benefit program, went into effect on January 1.

While the overarching goal of commuter ordinances is consistent, the specific requirements and regulations can vary significantly from one city to another. Some ordinances apply to businesses of a certain size, while others may target particular industries or geographic locations. Navigating this regulatory landscape requires a nuanced understanding of local ordinances to ensure compliance.

The challenges of navigating multiple ordinances

For businesses with a national or multi-city presence, navigating multiple ordinances can be daunting. Each city's regulations may require a tailored approach, necessitating a comprehensive understanding of the nuances and intricacies of each jurisdiction. Proactive management and collaboration with legal and HR professionals become crucial to streamline compliance efforts.

Benefits of commuter ordinances

One of the primary advantages of commuter ordinances is the array of tax incentives available to employers and employees. Employers can enjoy tax savings through reduced payroll taxes, while employees benefit from lower taxable income. This financial relief not only promotes cost savings but also positions companies as socially responsible entities.

Enhanced employee satisfaction and retention

Commuter benefits can help improve the employee experience by enhancing satisfaction and retention rates. Offering pre-tax commuter benefits demonstrates a commitment to employees' well-being and work-life balance. This commitment, in turn, fosters a positive workplace culture and aids in attracting and retaining top talent.

Environmental and social responsibility

Beyond the financial benefits, commuter ordinances can align with corporate environmental and social responsibility goals. By promoting sustainable commuting options, businesses contribute to reducing carbon footprints and mitigating the environmental impact of daily commuting. This commitment resonates positively with environmentally conscious consumers and employees, enhancing a company's overall reputation.

Incorporating commuter benefits

Commuter ordinances play a pivotal role in shaping the landscape of employee benefits, taxation, and corporate responsibility. The tax incentives, cost savings associated with compliance, and the positive impact on employee satisfaction and environmental responsibility make commuter ordinances a key consideration for businesses.

As commuter ordinances continue to evolve, businesses must be proactive in managing their compliance efforts. Staying aware of legislative developments, understanding the specific requirements of each ordinance, and implementing effective commuter benefit programs are essential steps in navigating this complex landscape.

The evolution of commuter ordinances underscores the expanding role of pre-tax benefits for professionals in the modern workplace. As the focus on employee well-being, sustainability, and corporate responsibility intensifies, employers play a crucial role in aligning organizational practices with societal and environmental goals.

By embracing and adapting to these changes, businesses can meet regulatory requirements and contribute to a more sustainable and employee-friendly future. One way to get started is to explore solutions like Benefit Resource and other benefits providers available to ADP clients through ADP Marketplace. These solutions integrate with ADP payroll, making it easy to administer commuter benefits, as well as other pre-tax offerings like health savings accounts, flexible spending accounts, and more.

About ADP Marketplace

ADP Marketplace is a digital HR storefront that enables you to connect and share data across all your HR solutions. Simplify your HR processes, reduce data errors and drive your business forward with easy-to-use APIs and apps that integrate with your core ADP platform. Easily discover, try, buy and implement ADP and third-party solutions, all with the simplicity of single sign-on, single data input and single billing. Learn more at apps.adp.com.

About Benefit Resource

Benefit Resource offers administration of tax-free benefits programs including commuter benefits, flexible spending accounts (FSAs), health reimbursement accounts (HRAs), and health savings accounts (HSAs). It also provides administration of specialty (wellness) accounts, COBRA and direct billing services. Learn more about Benefit Resource on ADP Marketplace.