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New For 2016: NYC Employee Transit Benefit Law Goes Into Effect

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.