New York City's Commuter Benefits Law went into effect on January 1,
2016. The law requires employers with 20 or more employees working in
New York City to offer full-time (30 hours or more per week) employees
the option to use pre-tax income to pay for qualified transportation.
The New York City Department of Consumer Affairs may fine employers between
$100 and $250 for an initial violation. If the violation is not cured,
an additional $250 penalty may be imposed for each 30-day period of noncompliance.
The law also requires employers to keep records showing that each eligible
employee was offered pre-tax transit benefits and whether the employee
accepted or declined.
Although the law is effective January 1st , employers have a grace period
until June 30, 2016 before penalties may be assessed. Even after the grace
period ends, employers will have 90 days to correct any violation before
the penalty may be collected. Employers covered by the new law should
use this time to set up the required benefits program as well as a system
to comply with the record-keeping requirements.
While this new law adds yet another obligation on employers, they also
can potentially save money in payroll taxes if employees accept the benefit,
because it effectively will reduce the employer's payroll. This savings
to employers, however, may by included in the fees charged to employers
by third-party administrators (which cannot be passed on to employees).
Attached is additional information from the New York City Department of Consumer Affairs, which includes
a list of third-party providers that manage commuter benefits programs.