The New York City Transit Act (the “Transit Act”) will go into effect on January 1, 2016. The Transit Act requires that employers with 20 or more full-time employees (those who work on average 30 or more hours a week) in New York City provide those employees with certain pre-tax transit benefits. Specifically, the Transit Act requires that employers subject to the Act provide pre-tax “qualified transportation fringe benefits[.]” Such benefits include transportation benefit plans covering mass transit passes, parking, and bicycle commuting. While employers may provide benefits for parking under the Transit Act, they are not required to do so.
The Transit Act contains limited exceptions for federal, state, and New York City governmental entities, employees subject to collective bargaining agreements, and employers that are not required to pay federal, state, and city payroll taxes. Also, employers who demonstrate a financial hardship in complying with the Transit Act may obtain a waiver from compliance with the Act. Failure to comply with the Transit Act could expose an employer to civil penalties.
The upcoming open enrollment periods for most employee benefit plans present the opportunity for employers with employees in New York City to review their benefit plans to ensure that they will be in compliance with the Transit Act starting in 2016.