Los Angeles has several initiatives aimed at reducing single-occupancy vehicle use. Employers with 250 or more employees are required to register a plan with the South Coast Air Quality Management District to reduce emissions. Additionally, an ordinance is being implemented that requires employers with 50 to 249 employees to offer a qualified pre-tax transportation benefit.

• Employers with 250 or more employees can learn more about the forms, rules, and guidelines they must follow from the South Coast Air Quality Management District website.
• Employers with 50 to 249 employees are required to offer a qualified pre-tax transportation benefit to employees to ensure employees have the opportunity to use pre-tax earnings to purchase eligible transportation fringe benefits such as transit passes, qualified transit expenses, and vanpool expenses.

Penalties will vary based on the employer’s size when filed and even the progress made toward reducing emissions. Employers with 250 or more must file with the South Coast Air Quality Management District. The Los Angeles County Metropolitan Authority oversees the ordinance affecting employers with 50 to 249 employees.

The San Francisco ordinance affects any business located in the City of San Francisco with 20 or more employees nationwide. The Bay Area ordinance affects every employer with 50 or more employees across the nine-county San Francisco Bay Area. Employers meeting the above criteria must provide one of the following:

• Pre-tax election transportation benefits
• Employer-paid transportation benefit or vanpool subsidy (or transit pass)
• Employer-provided transportation at low or no cost
• (Bay Area option only) Offer an Alternative Commuter Benefit as effective as the other options in reducing single-occupant vehicle trips and/or vehicle emissions.

San Fransisco

Within San Francisco, those who fail to comply are subject to the disciplinary steps outlined below until compliance is achieved:

• Warning – A written notice of violation is issued.
• First violation – $100 fine levied 90 days after the initial written notice.
• Second Violation – A $200 fine was levied for the second violation.
• Third violation – $500 for the third violation, up to a maximum of $800.

Additional information on compliance in San Francisco can be found within the Commuter Benefits Ordinance Rules and Regulations.  

Bay Area

Employers that fail to comply within the Bay Area are also subject to corrective action, including financial penalties. The specifics are in the Commuter Benefits Program (Regulation 14, Rule 1).

Any business with employees in Seattle that employs at least 20 employees worldwide must do one of the following:

• Allow employees to make a pre-tax deduction for transit or vanpool expenses up to the total amount allowed by federal law or,
• Subsidize all or part of the purchase price of a transit pass.

Employees working at least 10 hours a week must be offered the benefit. The ordinance does not apply to government entities and tax-exempt organizations.

The city modeled enforcement after existing ordinances, offering a 90-day grace period and then beginning punitive action if necessary. Details will be forthcoming, and updates can be found on Seattle.gov within the Commuter Benefits Ordinance section.

Effective December 31, 2022, the Employee Commuter Transit Benefit Programs will apply to any business with employees in Philadelphia that employs at least 50 covered employees (covered employee = any employee working at least 30 hours a week, excluding government entities, unpaid positions, or volunteers). Covered employees must be offered one of the following commuter benefits:

• An election of a pre-tax payroll deduction for Mass Transit Expenses or Qualified Bicycle Expenses, as allowed under the Internal Revenue Code §132(f)(1)(D), and (f)(5)(F); or
• An employer-paid benefit where the covered employer supplies a Fare Instrument for a covered employee under Internal Revenue Code §132(f)(2); or
• Any combination of the two

Employers violating the ordinance will have 30 days to comply, followed by a written warning. Following the written warning, additional failure to comply will result in a penalty fine between $150 to $300 per day.

Employers with 20 or more full-time employees working in the City of New York (including the five boroughs) must offer all full-time employees a qualified pre-tax transportation benefit. A full-time employee is defined by this ordinance as an employee working at least 30 hours per week.

The program must support all of the following transportation options:

• Eligible ferry and water taxi services
• Eligible vanpools/commuter bus services
• Access-A-Ride
• NYC Regional Mass Transit (MTA, LIRR, Amtrak, New Jersey Transit, Metro-North)

Any employers violating the ordinance will be subject to an initial penalty fine of $100 to $250. After the initial penalty, employers have 90 days to become compliant. Failure to do so will result in a second penalty fine of $250. If a company is still found non-compliant after this, an additional $250 penalty fine will be administered every 30 days until compliance is achieved.

Every employer in the State of New Jersey that employs at least 20 people must offer all employees the opportunity to utilize a pre-tax transportation fringe benefit. An employee is identified as anyone hired or employed by the employer and reports to the employer’s work location. This mirrors the definition used in unemployment compensation law.

Employers meeting the above criteria must provide one of the following:

• Pre-tax election transportation benefits
• Employer-paid transportation benefits
• Employer-provided transportation at no cost

Employers violating the ordinance must pay an initial penalty between $100 and $250. After the initial penalty, employers have 90 days to become compliant. Failure to do so will result in a second penalty fine of $250. If a company is still found to be non-compliant, an additional $250 penalty fine will be administered every 30 days until compliance is achieved.

Two ordinances affect employers in DC: the Commuter Benefits Law and the Parking Cashout Law.

COMMUTER BENEFITS LAW (FORMALLY KNOWN AS THE SUSTAINABLE DC OMNIBUS AMENDMENT ACT)

Every covered employer with 20 or more employees (all individuals employed by the employer; includes both full-time and part-time employees as well as non-profits) must offer one of the following:

• Pre-tax election transportation benefits
• Employer-paid transportation benefits or
• Employer-provided transportation at no cost.

Employers that fail to comply with this ordinance will be subject to an initial penalty. Employers are subject to a fine of $100 for the first violation, $200 for the second, and $500 for the third, up to a maximum of $800. This is pursuant to the Civil Infractions Act, DC Official Code § 2-1801.01 et seq.

PARKING CASHOUT LAW (FORMALLY KNOWN AS THE TRANSPORTATION BENEFITS EQUITY AMENDMENT ACT)

Every covered employer with 20 or more employees who leases or offers parking to its employees at a free or subsidized rate must do one of the following:

• Offer a Parking Cashout: Employers must offer employees the opportunity to opt out of the parking benefit and receive a benefit equal to or greater than the fair market cost of the parking benefit. This can be offered as mass transit benefits, a bicycle commute benefit, a credit to health benefits, or other taxable compensation.
• Develop a Transportation Demand Management (TDM Plan): Employers must develop a plan (subject to approval by the District Department of Transportation) to reduce single occupancy vehicle commuting by 10% from the previous year until 25% or less of employees’ commute by car.
• Pay a Clean Air Compliance Fee: Employers can elect to pay a compliance fee of $100 per month per employee offered parking benefits.

Employers that choose to take no action will be subject to a $100 per month Clean Air Compliance Fee per employee offered parking benefits. All covered employers must file reports with the District Department of Transportation. The specific reporting and frequency varies based on the options employers choose to comply with.

The Transportation Benefits Program Act was signed into law on July 28, 2023, and goes into effect on January 1, 2024. Covered employers must comply with this Act by offering a pre-tax commuter benefit program for transit within the first 120 days of employment to all employees working an average of 35 or more hours per week.

Employers with 50 or more covered employees within a covered geographic area must comply. There are ~35 different municipalities that are subject to it. Employer locations must be within 1 mile of a fixed-route transit service. RTA must provide a searchable map of addresses to determine who must comply. All transit agencies will be required to market the existence of this program and this Act to their riders to inform affected employees and their employers.