The City of Philadelphia has enacted an ordinance requiring commuter benefits for employees, effective December 31, 2022 (the Ordinance). The Ordinance applies to employers who employ 50 or more “covered employees” in Philadelphia (excluding government employers). A covered employee for purposes of the Ordinance is any person working an average of 30 hours or more per week in Philadelphia for the same employer within the past 12 months.
The Ordinance requires that a covered employer provide at least one of the following commuter transit benefits to its covered employees:
- Election of a pre-tax, payroll deduction for (1) a fare instrument (e.g., fare card, pass, or token) or transportation in a commuter highway vehicle, as defined under the Code Section 132(f)(5)(B) (i.e., a vehicle that sits at least six passengers and is used primarily for purposes of commuting), or (2) a “qualified bicycle expense,” each consistent with the deduction allowed under Code Section 132(f);
- An employer-paid benefit whereby the employer supplies a fare instrument for a covered employee’s mass transit expense; or
- Any combination of the two.
Employers in Philadelphia will want to review their existing commuter benefit program for compliance with the Ordinance or, if no commuter benefit has been provided before, design and implement a benefit program to meet the new requirements. This may mean that covered employers would need to establish a program that would allow pre-tax contributions, if applicable, starting in December so that employees have the ability to buy transit passes starting in January 2023.
For those employers without any existing commuter benefit program, consideration should be given to taking steps to establish a new benefit program, such as documenting the adoption of the program, coordinating with payroll and/or third-party vendors to administer the program, and preparing and distributing employee communication materials.
If you have any questions or would like more information on setting up a compliant commuter benefit program, please contact any of the following Morgan Lewis lawyers: Robert L. Abramowitz, Claire E. Bouffard, Yongo Ding, John G. Ferreira, Matthew H. Hawes, Emily M. Rickard, R. Randall Tracht, and Gena Yoo.