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New York City Amends Mass Transit Benefit Rules

New York City (NYC) enacted Local Law 2014/053 to require employers with 20 or more full-time employees in the city of New York to offer their employees the opportunity to purchase certain pre-tax transportation benefits. See our Compliance Alert New York City Transit Ordinance Guarantees Pre-Tax Transit Benefits.

Title 6 of the Rules of the City of New York was recently amended by the addition of a revised chapter 8, clarifying the following provisions of Local Law 2014/053.

  • Recordkeeping
  • Enforcement and Penalties

Recordkeeping Requirements

The amended rules clarified that the employer must retain records for two years sufficient to demonstrate that:

  1. Each eligible employee was offered the opportunity to purchase transit benefits on a pretax basis, OR
  2. The employer provided, at its own expense, a transit pass or similar form of payment for transportation on public or privately owned mass transit or in a commuter highway vehicle at the maximum pretax level permitted under federal law for pretax transit expenses.

Prior to this amendment, employers were also required to maintain records to demonstrate whether the employee accepted or declined the offer of the opportunity to purchase transit benefits on a pretax basis.  Although no longer required, it would be a best practice to also retain employee responses of either acceptance or refusal of the offered benefit.

To assist with the recordkeeping requirement and provide information about the plan, NYC also makes available an employer compliance form to gather records of employee offers to participate in the commuter benefits program.

Enforcement and Penalties
Local Law 2014/053 provided for civil penalties for a first violation of between $100 and $250. Employers were also given 90 days to cure the first violation before a civil penalty would be imposed. After that, a penalty of $250 could be assessed for each 30-day period of non-compliance.

The amended rules added a provision on enforcement and penalties clarifying the law.  Under the amended rules, employers will be assessed $250 for the first violation and another $250 for each subsequent violation and any recidivist violations. To avoid penalties for the first violation, employers must demonstrate within the cure period that they complied with the law based on the recordkeeping requirements. 

“First violation” means the first finding by the administrative tribunal that a particular employer has violated the Transportation Benefits Law since July 1, 2016.

“Subsequent violation” means each continuous thirty-day period after the expiration of the cure period, or after the finding of a recidivist violation by the administrative tribunal, in which the employer has not demonstrated to the department’s satisfaction that it is complying with the Transportation Benefits Law.

“Recidivist violation” means any new finding by the administrative tribunal that a particular employer has violated the Transportation Benefits Law, after the first finding by the administrative tribunal that the employer had violated the Transportation Benefits Law since July 1, 2016.

“Cure period” means the ninety-day period immediately following a finding of a first violation.

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