Moskowitz & Book, LLP - New York Attorneys at Law

New York City Mandates That Employers Offer Transportation Benefits


January 29, 2016 / by Moskowitz & Book /

Under federal tax law, employers are permitted, but not required, to offer qualified transportation benefits to any of their employees. However, effective January 1, 2016, employers in New York City are subject to the Mass Transit Benefit Law, requiring most employers with at least 20 full-time employees to offer employees the opportunity to use pre-tax earnings, up to $130 per month, to pay for certain “qualified transportation fringe benefits”. New York City employers have two options to comply:

  1. Employers may offer their eligible full-time employees the benefits available under federal tax law by the later of January 1, 2016, or four weeks after the employee’s start date; or
  2. Per the rules issued by the New York City Department of Consumer Affairs, employers may directly pay for tickets or transit passes, or make other forms of payment to employees to be used for mass transit or commuter highway vehicle expenses. However, if the employer-paid transit benefit is less than the federal maximum qualified transportation fringe benefit ($130 per month), the employer must offer employees the opportunity to use pre-tax earnings to pay for the difference in the benefits, to purchase eligible transportation fringe benefits.

The Mass Transit Benefit Law applies to most for-profit and not-for-profit employers with 20 or more full-time employees in New York City. However, the law does not cover:

  • Governmental employers;
  • Employers not subject to federal, state, and city payroll taxes;
  • Employers operating with a collective bargaining agreement (except that if the employer has 20 or more full-time non-collectively bargained employees, then those employees must still be offered the transit benefit); and
  • Employers qualifying for a financial hardship exemption from the Department of Consumer Affairs.

To determine the number of full-time employees, employers must calculate the average number of full-time employees working during the most recent consecutive three-month period. Once an employee qualifies for benefits, the employer must continue to offer the eligible transit benefits to the employee as long as full-time employment continues, even if the employer’s number of full-time employees drops below 20.

If you have any questions regarding transportation benefits for employees, please contact rmelnick@mb-llp.com.