3 Reasons Why You’re Seeing More Commuter Benefits Mandates

August 6, 2020

In March, the deadline arrived for New Jersey employers with at least 20 employees to offer Commuter Benefits, making the Garden State the first in the country to mandate these pre-tax benefits be offered by certain employers. And a number of major U.S. cities have already issued Commuter Benefits mandates.

The reasons for these mandates vary, depending on the place. But it’s important to understand the “why” behind the legislation, because even employers not in places with Commuter Benefits mandates can reap the benefits of offering these plans.

Save commuters money

Your employees can save 40 percent or more on their commuting costs by participating in a Commuter Benefits plan, which makes a big difference in their lives when you consider that transportation costs are their second-biggest household expense. Saving their constituents money was a common reason cited by legislators when introducing Commuter Benefits mandates.

“Many residents of New Jersey use mass transit or other forms of transportation to commute daily to and from work,” New Jersey Gov. Phil Murphy said in a statement in 2019 after signing his state’s Commuter Benefits bill into law. “Providing this pre-tax benefit to commuters throughout our state will reduce the financial burden of fares and parking costs, resulting in significant savings.”

Commuter mandates list

Decrease congestion

Congestion is a growing problem for many cities, and it takes a toll on busy streets and your employees’ mental health. The average American’s work commute is 27.1 minutes. And one study has shown that the more time an employee spends driving to work, the unhappier they are. That’s why providing an incentive such as Commuter Benefits makes sense for city leaders and employers.

Ian S. Kopelman, who is the chair of DLA Piper’s employee benefits and executive compensation practice group, told SHRM that the increase in Commuter Benefits mandates nationwide isn’t surprising. “The city wins by having fewer cars on the streets, the employee wins because it’s funded with pre-tax dollars and the employer wins by providing a tax-effective or no-cost benefit,” he said.

Reduce pollution

The quality of the air we breathe is earning heightened attention for many cities, particularly those on the West Coast. More than 141 million Americans lived in areas with unhealthy air pollution from 2015 to 2017, which was an increase of 13 percent from two years earlier. As a result, cities are turning to Commuter Benefits mandates to encourage employees to find other means of getting to work besides relying on their cars, which send nitrogen oxides, carbon monoxide and other pollutants into the atmosphere.

When the Seattle City Council approved legislation in 2018 that required employers of a certain size to offer Commuter Benefits to their employees, a councilmember told the Seattle Times that it would save money for workers and businesses while also cutting down on traffic and pollution.

Would you like to learn more about designing a Commuter Benefits program that meets the needs of you and your employees? Complete the form below to get your free white paper.

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