What is the Transportation Benefits Equity Amendment Act of 2020?

To curb vehicular emissions, encourage active or mass transportation, and promote commuter benefit equity in the workplace, the District of Columbia enacted a law requiring DC employers with 20 or more employees to compensate employees who do not utilize or who give up free or subsidized parking benefits. The deadline for DC employers to comply with this law was January 15, 2023. What is the Transportation Benefits Equity Amendment Act of 2020?

The law requires certain DC employers that offer free or subsidized parking to employees to choose one of three options to ensure compliance—offer a Clean Air Transportation Fringe Benefit, develop and implement a Transportation Demand Management (TDM) plan, or pay a Clean Air Compliance Fee. Employers who own parking spaces used by employees, however, are exempt. The law also does not apply to employers who do not offer free or subsidized parking. The law also includes a reporting requirement.

The law amended the Sustainable DC Omnibus Amendment Act of 2014, which required DC employers with 20 or more employees to offer qualified transportation benefits in general.

What are qualified transportation benefits?

Qualified transportation benefits are employer-provided benefits related to employees’ commutes to work that are exempt from the employee’s gross income. Such benefits, as defined by §132(f) of the IRS Code, include employer-sponsored transportation in commuter highway vehicles (i.e., those that can transport six or more people at once), transit passes, qualified parking, and qualified bicycle commuting reimbursement.

DC’s Sustainable DC Omnibus Amendment Act of 2014 and the Transportation Benefits Equity Amendment Act of 2020 adopts the definitions for various terms as used in IRS Code §132. “Commuter highway vehicle,” “transit pass,” and “qualified bicycle commuting reimbursement” are defined the same in DC”s law as defined in the US tax code.

What is the DC commuter benefit rule?

The Sustainable DC Omnibus Amendment Act of 2014 requires DC employers with 20 or more employees to provide qualified transportation benefits to employees. There are three ways DC employers can comply with this law:

• Offer an employee-paid, pre-tax benefit program, whereby employees can spend up to $300 per month from paychecks tax-free to pay for mass transit, rideshares, and commuter bicycle costs;
• Offer an employer-paid direct benefit program, whereby employers reimburse employees up to $300 per month (tax-free) for transit passes or vanpools; or
• Provide a shuttle or vanpool service to employees at no charge.

The Transportation Benefits Equity Amendment Act of 2020 amended the Sustainable DC Omnibus Amendment Act of 2014, requiring employers to either compensate or offer alternative transportation benefits in exchange for an employee’s forgoing their parking benefit.

What is the pretax commuter benefit limit?

DC follows the IRS’s qualified transportation fringe benefit monthly limitation. In 2023, the qualified transportation fringe benefit monthly limitation is $300.

Are pre tax commuter benefits worth it?

There are several advantages to employers offering transportation fringe benefits. Both employers and employees reduce their tax liabilities. Employers also attract and retain employees with qualified transportation benefits because it reduces commute-related stress and expense. Additionally, an employer’s engagement in and commitment to sustainability and social responsibilities advances public image.

What is a Clean Air Transportation Fringe Benefit?

Employers who offer free or subsidized parking benefits to employees may choose to offer a Clean Air Transportation Fringe Benefit to comply with the Transportation Benefits Equity Amendment Act of 2020. Employees are eligible to receive this benefit when they do not utilize or decline free or subsidized parking offered by the employer. In exchange, the employer must provide the Clean Air Transportation Fringe Benefit at least equal to the market value of parking spaces a quarter-mile from the employer’s physical location.

Employees may use the Clean Air Transportation Fringe Benefit to cover expenses of employer-provided transportation in a vehicle with at least six seats, SmartTrip or other ticket for public transit, or costs and expenses associated with commuting by bicycle. When employees do not use the full amount of the Clean Air Transportation Fringe Benefit for transportation expenses, employers are required to make up the difference through an increased contribution to health coverage, additional compensation, or a combination thereof.

To implement the Clean Air Transportation Fringe Benefits, employers should first survey employees to determine who would receive the benefit. Then the employer must calculate the market value of the parking benefit to determine the minimum amount that may be offered as the Clean Air Transportation Benefit. Employers must then notify employees of the benefit and determine what is owed to each employee who opts for receipt of the Clean Air Transportation Fringe Benefit.

All employers must submit a report to DC’s mayor every two years that includes:

• The total number of DC employees;
• The number of DC employees offered a parking benefit;
• The number of DC employees using a parking benefit;
• The number of DC employees offered a clean-air transportation fringe benefit; and
• The number of employees using a clean-air transportation fringe benefit.

What is an employer Transportation Demand Management (TDM) plan?

An employer may opt to comply with the Transportation Benefits Equity Amendment Act of 2020 by developing and implementing Transportation Demand Management (TDM) Plan. A TDM must achieve a decrease in the total amount of employees’ vehicle-based commutes by at least 10-percent per year until at least only 25-percent of employees commute to work by private vehicle. An employer is required to submit this plan to the DC Department of Transportation (DDOT). DDOT then approves the plan and engage in compliance check-ups.

What is the clean air compliance fee?

An employer may opt not to offer the Clean Air Transportation Fringe Benefit or create a TDM plan, but instead choose to pay a Clean Air Compliance Fee, which is $100.00 per month for each DC employee offered a parking benefit.

Get help from The Lipp Law Firm

DC employment laws can be complicated. If you need help choosing the best compliance option or meeting reporting requirements for the DC Clean Air Transportation Fringe Benefit, or assistance with other DC employment laws, the DC employment attorneys at The Lipp Law Firm, PC, can help.

Our attorneys are experienced in employment law and will help you choose the best option for your company. Contact us today for compliance advice to protect your company and ensure you are up to date with all DC employment laws.