BPHR’s Director Lisa Salcido, SPHR, SHRM-SCP provides answers to your pressing HR questions.
Question: What is New Jersey’s new Commuter Benefits Law and what are we required to offer?
Answer: In March 2019, New Jersey became the first state to require employers to offer a commuter benefit program to their employees. The law is effective now but “inoperative,” meaning it won’t be enforced until March 2020, at the latest. New Jersey regulators may issue the final rule sooner. Here’s what you need to know:
A transportation benefit is a tax-free fringe benefit that allows workers to pay for certain commuting costs using pre-tax money. New Jersey employers with 20 or more employees must offer all employees pre-tax transit benefits. Governmental entities and employees covered by a collective bargaining agreement are excluded.
Commuter benefits cover transit, parking, and ridesharing costs. Some examples are public transportation, metered parking, and qualifying shared Uber/Lyft fees.
Even if you believe none of your employees would use the benefit, you are required to offer a program! There are penalties for non-compliance (up to $250 for a 1st violation, increasing with each subsequent violation).
First, contact your benefits broker or a third party benefits program provider, to set up a transit program to comply with New Jersey’s mandate. The law does not require employers to pay for this benefit but the administrative obligations and tax liability is on the employer.
Next, commuter benefits should be structured as an employee-funded tax-free payroll deduction. Or employers may choose to fund the benefit. The costs can also be shared by employer and employee.
Finally, update your handbook’s benefit policies because employers are required to notify each employee in writing about the details of your commuter program. Employees must elect or waive the benefit in writing, and you must keep detailed records of employees’ elections whether they chose to participate or decline. This documentation will be crucial to demonstrate compliance.
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Have a question for Lisa? Email her directly.
DISCLAIMER: The material presented on this page is for informational purposes only and does not constitute legal advice or legal opinion.