How To Implement A Commuter Benefits Program For Your Employees

Daniel Spielberger

One of the greatest benefits of having your office in a major city is access to talent. But there’s a drawback of living and working in a big city: the commute.

According to Haven Life, nearly 9% of American workers traveled an hour or more each way on their commute. Another study found that one in four Americans workers have quit their job because of their commute.  

Evidently, commute time plays a significant role in the happiness and retention of employees. While you likely won’t be able to shorten the commute time for your employees, one thing you can do to lessen the inconvenience for them is to offer a community benefits policy.

Here’s a guide to the pros of having a commuter benefits policy, how you can implement one, and what the recent tax reform law means for this program:

How Commuter Benefits Work

With commuter benefits, employees can choose to have a portion of their monthly pre-taxed income to go to their commute expenses. According to federal law, $265 could be used for commuting and $265 can be reserved for parking.

Here are a few things you should know:

1. Some Cities Mandate Them

Since 2016, New York City requires companies with more than 20 full-time employees to have commuter benefits as an option. There are similar laws for companies with more than 50 employees in nine Bay Area counties and for companies with more than 20 employees in Washington D.C.   

2. The Latest Tax Law Changes

In 2017, with the passage of a new tax policy, commuter benefits changed. Beforehand, employers didn't have to pay taxes on the segment of the employee's wages that were used for commuter benefits and employees also didn't have to pay taxes on this amount because it was deducted from their salary before tax. Now, business don’t get the tax reductions in exchange for an overall lower tax rate. However, employees still don’t have to pay taxes on those expenses.

Why You Should Have Commuter Benefits

With the new tax law, things are a bit more complex in regards to commuter benefits because they are no longer considered business expenses. But that shouldn’t stop you from implementing them.

Here are a few reasons why you should have a commuter benefits program:

1. Financial Benefits Still Exist

According to BenefitsResource, “employers continue to save approximately 7.65% in FICA on each dollar elected through a pre-tax transit benefit program.” On the other hand, employees still get these benefits tax-free. While it might no longer be as financially beneficial for companies as before, there is still a financial incentive.

2. Commuter Benefits Can Increase Employee Happiness

In 2018, Gallup reported that half of American employees are seeking new opportunities. Here are some other crucial statistics:

  • Almost 80% of employees surveyed by BusinessSolver claimed that they “consider leaving their current organization if it started being less empathetic.”
  • WorkPlaceTrends.Com found that 29% of people would leave their jobs “for matters of convenience” like “if their commute was too long or they didn’t like the area where the company was located.”
  • The American Institute of CPA found that 80% would stay at a job that has benefits instead of going to a job that pays more but lacks benefits.

Though a commuter benefit program won’t solve all workplace happiness issues, it could help alleviate stress for employees who have long commutes and demonstrate that your workplace values them.

3. Keeps You Competitive With Other Companies

In this job market, people have greater freedom to choose the companies that prioritize perks and their well-being. If your company isn’t in San Francisco, New York City, or Washington D.C. you will potentially be competing with those companies that legally have to provide commuter benefits. Why not boost your benefits program?

4. Commuter Benefits Are Great For The Environment

Public transportation reduces carbon emissions through minimizing the number of gas-guzzling cars. And increasing number of Americans are becoming concerned about climate change and want to be part of the solution. With commuter benefits, employees could be more open to using ride sharing services or public transportation, especially if it’s part of the package provided by your workplace.

How To Implement A Commuter Benefits Policy

Once you have decided to implement a commuter benefits policy, you will have to take careful steps to ensure that your program is orderly and easily comprehensible. Check out this guide:

1. Research The Needs of Your Colleagues

Your commuter benefit should be tailored to your employees’ needs. While some might drive to work, others will be taking public transit. Before you create your program, send out a survey to your colleagues asking how they get work and then synthesize the data.

Commuter benefits apply to these forms of transport:

What’s not covered:

  • Gas mileage
  • Tolls
  • Car insurance
  • Automobile-related expenses
  • Taxi cabs
  • Business trip costs

2. Setting Up Your Commuter Benefits Program

Though some office managers may choose to distribute the public transport passes themselves and take this up as one of their numerous tasks, this could easily get pretty complicated. If this sounds overwhelming, look into contracting a third-party administrator that will instruct your employees on how to access their benefits and oversee their needs.

Here are companies that provide third party platforms for commuter benefits:

3. Gather Feedback From Your Employees

Whether you administer the benefits yourself or choose a third party program, you should frequently check up with your employees to see if they are satisfied with the program. This could be part of a general survey about benefits.

Be Part of Positive Change

With the recent tax reform law, there’s confusion about what this means for businesses’ benefits programs. Even though this transition may be tough, commuter benefit programs are fantastic for employee happiness, retention, and even the environment. If your company doesn’t have a commuter benefit program, we encourage you to make the first step towards setting one up for your workplace.

Are you interested in making your workplace more efficient? Check out what Eden’s Workplace Management Platform can do for your office.

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