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New York City Transit Ordinance Guarantees Pre-Tax Transit Benefits

A new law in New York City, known as Local Law 2014/053, amends the administrative code of the city by requiring covered employers to offer certain qualified transportation fringe benefits to full-time employees in the City of New York.  The Legislation was signed into law October 20, 2014 and becomes effective January 1, 2016.


In general, qualified transportation fringe benefits consist of:

  • transit passes;
  • vanpooling (i.e., transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee's residence and place of employment);
  • qualified parking; and
  • any qualified bicycle commuting reimbursement.

Monthly IRS limit for qualified transportation fringe benefits is $130 in 2015 for transit passes and vanpooling expenses, combined, or $20 for qualified bicycle expenses. The limits are indexed and may increase in 2016. Monthly IRS limit for qualified parking expenses is $250 in 2015, and is also an indexed amount, which may increase in 2016. Qualified parking may be used in addition to the other benefits.

New York City Transit Ordinance
Employers with 20 or more full-time (works an average of 30 hours or more per week) employees in the city of New York are required to offer full-time employees the opportunity to use pre-tax earnings to purchase qualified transportation fringe benefits, other than qualified parking, in accordance with the federal law.
If employee counts drop below 20 full-time employees, the transit benefit will continue to be provided for the duration of employment of any remaining employees.

The New York City transit ordinance does not apply:

  1. to the United States government, the state of New York, including any office, department, independent agency, authority, institution, association, society or other body of the state including the legislature and the judiciary, or the city of New York or any local government, municipality or county or any entity governed by general municipal law section 92 or county law section 207;
  2. where a collective bargaining agreement exists between any group of employees and an employer, except where the number of full-time employees not covered by any such agreement is twenty or more, in which case those full-time employees not covered by any such agreement shall be eligible for such benefit; or
  3. where such employer is not required by law to pay federal, state and city payroll taxes. In addition, the requirements of the ordinance may be waived for an employer if such employer has satisfactorily demonstrated that the offering of such benefit would be a financial hardship for such employer.

The Commissioner of Department of Consumer Affairs is tasked will promulgating rules to define further and clarify the ordinance.

Civil Penalties
Covered employers that do not comply with the ordinance will be liable for civil penalties, payable to the city, of not less than $100, nor more than $250 for the first violation. Employers will receive notices of violation and have 90 days to cure the first violation before any penalties are imposed. If the violation continues to be outstanding and is not cured, every 30-day period employers fail to offer the benefit will constitute a subsequent violation, and civil penalties of $250 will be imposed for each such subsequent violation.

Although the ordinance is effective January 1, 2016, covered employers will not be subject to civil penalties for violations that occur before July 1, 2016.

WageWorks Commuter Benefits Program, which enables participants to use pre-tax earnings to purchase qualified transportation fringe benefits, complies with the law.

Contact WageWorks at 1-888-896-CHEK (2435) to learn about pre-tax transit benefits plans for your company.

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