A new ordinance has been signed into law by New York City Mayor Bill de Blasio – The Affordable Transit Act.
Employers in New York City with 20 or more full-time employees (employees who work an average of 30 hours or more per week) will be required by the Affordable Transit Act to offer pre-tax transit benefits to their employees. Based on the current IRS limit, it allows employees to use up to $130 in tax free money towards their transit costs.
The Act goes into effect on January, 1 2016 but employers will not be subject to penalties prior to July 1, 2016 allowing businesses sufficient time to make adjustments for the new law.
First time violation penalties of the Act are $100-$250 and repeat violation penalties are $250. Prior to any civil penalties being imposed, employers have 90 days to cure the first violation and an employer will not have a penalty imposed on them more than once in any 30-day period.
If an employer is not required to pay federal, state and city payroll taxes or if a collective bargaining agreement covers the relevant employees, the employer is exempt. Additionally, if an employer demonstrates that offering the benefit is a financial hardship, the requirements may be waived by the Department of Consumer Affairs.
Employers are expected to save more than $100 per year per employee in tax liability and employees should average a savings of over $400 a year on Metro Card expenses with the new legislation. The Act, based on predictions, will extend transit benefits to more than 450,000 employees in NYC who are currently not offered them.
If you are an employer who does not already offer pretax transit benefits then you should use next year to make any changes necessary to payroll and benefits systems and prepare communications to employees to ensure compliance with the new law.
If you are a current Paypro client and need assistance or have any questions about how to properly perform Transit Deduction adjustments, please reach out to your Paypro Payroll Specialist or your Paypro Benefits Specialist. If you are not a current client, please contact us to find out how Paypro can assist your organization in providing transit benefits.