As of July 1, 2016, employers with 20 or more full-time non-union employees in New York City are in danger of incurring penalties if they do not offer commuter benefits. Pursuant to a law that went into effect January 1, 2016, employers covered under the law must allow their employees to use pre-tax earnings for the purpose of paying eligible commuter expenses. A six-month enforcement grace period was in effect until July 1, 2016, but now that that period has expired, the Department of Consumer Affairs is free to seek penalties from non-compliant employers.
An employer need not be located in New York City to be covered under the law. The location of the employees, not the employer, is the determining factor. Even if a company’s employees work in New York City only occasionally, they may still be entitled to commuter benefits. Any employee who has worked an average of 30 hours or more in the most recent four weeks, any portion of which was in NYC, is covered.
If an employer’s entire workforce is unionized, the employer is not covered under the law. But if only a portion of its employees are union, and 20 or more are non-union and working full-time (30 or more hours a week), then the employer is covered.
Participation in a commuter benefit program can reduce a company’s payroll taxes. However, if an employer believes that participation in the program would cause it significant financial harm, it can apply for a “financial hardship exemption” from the commuter benefits law.
A number of third-party vendors administer commuter benefits programs for employers. A list of these providers can be found at http://www1.nyc.gov/site/dca/about/commuter-benefits-FAQs.page.