The bustling city of Chicago has always been a hub of activity, with its iconic skyline, diverse neighborhoods, and thriving business landscape. Signed into law on July 28, 2023, a new Illinois commuter ordinance, Transportation Benefits Program Act, has been put into effect, aiming to enhance commuter benefits and promote sustainable transportation options for employees. In this blog, we’ll delve into the key aspects of this ordinance and discuss what employers need to know to ensure compliance and support their workforce.
Understanding the Chicago Commuter Ordinance
The Chicago commuter ordinance is a forward-thinking policy that mandates certain employers to offer commuter benefits to their employees. The primary goal is to reduce traffic congestion, air pollution, and reliance on single-occupancy vehicles while also making commuting more affordable and convenient for workers. The ordinance emphasizes the use of public transportation, carpooling, etc., aligning with the city’s broader sustainability goals.
Who Does the Ordinance Apply To?
The ordinance applies to employers with 50 or more *covered employees within a covered geographic area. Thirty-five different Illinois municipalities are subject to it. Employer locations must be within 1 mile of a fixed-route transit service. These employers are required to provide commuter benefits to eligible employees.
When does the Transportation Benefits Program Act take effect?
This law goes into effect on January 1, 2024
Key Provisions of the Ordinance
- Commuter Benefit Programs: Covered employers must offer a commuter benefit program, which could include options such as pre-tax transit passes, employer-sponsored transit programs, or subsidies for qualified transportation expenses.
- Employee Eligibility: Employers are required to extend the new benefit to eligible employees. According to the legislation, an eligible employee is defined as someone who maintains an average workweek of 35 hours or more. This benefit should be offered within the employee’s first full pay period following 120 days of employment. Employers have the flexibility to provide this benefit earlier and also have the option to extend it to other staff members.
- Tax Advantages: Both employees and employers can benefit from tax savings through these commuter programs. Employees can save on their taxable income by using pre-tax dollars for commuting, while employers can enjoy reduced payroll taxes.
Benefits for Employers
- Tax Incentives: Employers can take advantage of tax benefits by offering commuter benefits. Reduced payroll taxes can contribute to cost savings.
- Employee Attraction and Retention: A comprehensive commuter benefits program can enhance an employer’s attractiveness to potential hires and boost employee retention. It demonstrates a commitment to employee well-being and work-life balance.
- Environmental Responsibility: By encouraging sustainable commuting options, employers can contribute to a cleaner environment and align their corporate values with responsible practices.
Compliance and Implementation
To ensure compliance with the ordinance, covered employers should:
- Review the ordinance thoroughly to understand their obligations.
- Establish a commuter benefit program that meets the specified requirements.
- Communicate the program effectively to all eligible employees.
- Maintain accurate records of employee participation and contributions.
- Regularly assess and adjust the program to cater to changing employee needs.
The new Chicago commuter ordinance reflects a proactive approach toward enhancing the quality of life for employees and the city. The ordinance contributes to a greener and more efficient Chicago area by fostering sustainable transportation options and reducing roadway strain. Employers play a pivotal role in this endeavor, and by embracing the ordinance’s provisions, they can not only comply with the law but also contribute to the well-being of their employees and the environment. As the Windy City paves the way for a commuter-friendly future, employers have a unique opportunity to drive positive change while reaping the benefits of a more engaged and satisfied workforce.
*Covered employee means any person who performs an average of at least 35 hours of work per week for compensation on a full-time basis.