New Jersey Mandates Pre-tax Transit Benefits for Businesses with 20 or More Employees

According to the U.S. Census, in 1990 the average commute time was less than 22 minutes. Today, Americans spend just over 26 minutes commuting to work each way.

These four extra minutes spent on commuting equates to eight minutes a day (4 x 2) round trip, 40 (8 x 5) additional minutes each week and 2,080 (40 x 52) extra minutes of commuting each year. This means that commuters now are spending 34.6 more hours in transit — a whole work week — than workers in the 1990s.

One study found that adding 20 minutes to your commute makes you as miserable as taking a 19 percent pay cut. Nobel laureate Daniel Kahneman and economist Alan Krueger once surveyed 900 people and found that commuting was their least favorite activity of all, behind work, child care, and home chores.

“Commutes can have a major impact on morale and, ultimately, an employee’s decision to stay with or leave a job,” Paul McDonald, senior executive director for the staffing agency, Robert Half said in a statement. “In today’s candidate-driven market, skilled workers can have multiple offers on the table. Professionals may not need to put up with a lengthy or stressful trip to the office if there are better options available.” To help ease commuting woes, companies can offer remote work options, flexible scheduling or transportation amenities such as pre-tax transportation benefit.

New Jersey Governor Phil Murphy signed S1567 into law, requiring employers of 20 or more employees to offer a pre-tax transportation fringe benefit to their employees, covering commuter highway vehicle (vanpools) and mass transit costs. This mandate does not include parking.

The pre-tax benefit would allow employees to set aside a certain amount of pre-tax income for transportation services to and from work.  New Jersey is the first state to mandate this benefit to employees.

Governor Murphy stated, “Providing this pre-tax benefit to commuters throughout our state will reduce the financial burden of fares and parking costs, resulting in significant savings.”

The new law will take effect on March 1, 2020, or the effective date the regulations are adopted by the New Jersey Department of Labor & Workforce Development – whichever is earlier.  Employees found noncompliant may be assessed a civil penalty of $100 to $250 for the first violation, and then an additional $250 penalty each additional 30-day period the employer is noncompliant.

The New Jersey Department of Labor and Workforce will adopt rules and regulations concerning the administration and enforcement of the pre-tax benefit.

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Avnish Gupta

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