On June 9, 2022, the Philadelphia, PA City Council passed an ordinance requiring certain employers to make a commuter transit benefit program available to eligible employees.
The new ordinance, “Employee Commuter Transit Benefit Programs,” will apply to employers with 50 or more covered employees (excluding government employers). Covered employees working at least 30 hours a week in Philadelphia for the same employer for the previous 12-month period. However, unpaid interns, volunteers, and unpaid apprenticeships are not covered.
Enforcement for this commuter ordinance goes into effect on December 31, 2022. This is subject to change and is dependent upon the release of the final rules and regulations.
Let’s Start From the Beginning
Transit ordinances require employers to offer qualifying commuter benefits programs. They increase the use of mass transit by making transit benefits more widely available to employees. Significant fines for non-compliance typically vary by state and region. Ordinances generally impact employers in multiple cities and employers with 20 or more employees where ordinances apply.
HOW DO I MAKE SURE MY COMPANY IS COMPLIANT?
Compliance is typically possible through several means. Although, the easiest (and most universal) route to compliance is for employers to offer pre-tax commuter benefits to employees. Offering a subsidy up to the pre-tax limit is an acceptable option. The specific compliance requirements vary based on your region.
How Does This Affect Philadelphia Employers?
Covered employees must be offered one or both 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)
- An employer-paid benefit where the covered employer supplies a Fare Instrument for a covered employee under Internal Revenue Code §132(f)(2)
And
- A Qualified Bicycle Expense Account, as allowed under the Internal Revenue Code §132(f)(1)(D), and (f)(5)(F)
ARE THERE PENALTIES FOR NON-COMPLIANCE?
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.
HOW DO EMPLOYERS OFFER A QUALIFYING PRE-TAX BENEFIT?
When you partner with a third-party administrator, like Benefit Resource (BRI), employers can ensure they offer a compliant solution to employees per the ordinance guidelines. BRI provides flexible and on-demand purchasing. There is nothing to order and distribute, and employees can make purchases based on their needs. Visit the Commuter Resource Center to learn more about the transportation options and how the Beniversal® Prepaid Mastercard® can be used in Philadelphia.
