San Francisco Bay Area Passes Regional Commuter Benefit Legislation

Achieving lower commuting costs and climate protection without raising taxes.

March 26, 2014- (Boston, MA) Today, the Metropolitan Transportation Commission approved Regulation 14 Rule 1 of the Bay Area Air Quality Management District, which requires a commuter benefit program to be in place for all employers that have 50 or more full-time employees in the nine-county Bay Area. This regulation is a result of SB 1339, which was signed into law by Governor Brown, requiring a pilot project to be in effect until January 2017. According to the text of the bill, SB 1339, the state believes that by requiring large employers to offer commuter benefit programs, it will encourage greater use of mass transit and vanpools. For those employees who already commute to work using mass transit, it will offer them significant tax savings. Participating employers will also reduce their tax burden. Employers will have until September 30, 2014, to comply with this regulation.

Bill Acevedo, a partner at the Oakland law firm Wendell Rossen asserts, “This win-win program allows employees to use pre-tax dollars for many of their transit costs and employers to lower their payroll taxes. Who doesn’t love that?”

Elizabeth Hughes of TDM Specialists, Inc., and commuter coordinator for a variety of large companies in the Bay Area adds, “SB 1339 is a good step that the state has taken to lower the cost of commuting and advance California’s climate protection goals, all without raising taxes or otherwise harming economic growth. This helps our clients reduce the demand for on-site parking and increases employee retention efforts.”

This bill is based on legislation passed seven years ago by the City and County of San Francisco, which mandates that companies with 20 or more employees offer transit and vanpool benefits to their employees. The most striking aspect of this legislation is that it actually had the support of the San Francisco business community. The San Francisco Chamber of Commerce, the Golden Gate Restaurant Association and the Building Owners and Managers Association (BOMA) all saw the inherent benefit for their members to participate in a program that saves payroll taxes, reduces income tax for their employees, alleviates traffic congestion and lessens air pollution.

Employers that do not currently have a commuter benefit program in place will be pleasantly surprised at how easy this benefit is to provide to employees. There are no required plan documents, no use-it-or-lose it clauses and no defined open enrollment periods. By offering commuter benefits, employers can save up to 7.65% on average in payroll taxes, and employees can save up to 40% on their commuting costs by using pre-tax money. Meltem Korkmazel, COO of Edenred Commuter Benefit Solutions, states: “Once every larger employer in the Bay Area offers a transit/vanpool benefit program, the results will be visible: Higher transit and vanpool participation, less roadway congestion and cleaner air.”

The income tax savings for employees could not be timelier in these tight economic times. The more employees that participate, the more employers save on payroll taxes.

Information on participation in transit/vanpool benefits can be found at www.mycommuterconnect.com, or by contacting us at 800-499-3539. Information on the compliance requirements for businesses can be found at www.511.org.