Mass Transit Benefits

Adopted Rules: Closed to Comments

Agency:
Effective Date: 
Friday, January 1, 2016
Download Copy of Adopted Rule (.pdf): 

Statement of Basis and Purpose of Rule

 

In October 2014, the City Council passed Local Law 53 of 2014, which requires employers with 20 or more full time employees working in New York City to offer the opportunity to purchase certain pre-tax transportation benefits to those employees. The law is expected to reduce transportation costs to employees, promote a cleaner environment by increasing the use of mass transit or transportation in an eligible commuter highway vehicle and lower payroll taxes for employers.

 

The adopted rules clarify provisions in the law, establish requirements to implement the law and meet its goals, and provide guidance to employers and employees. Specifically, the rule:

 

  • Clarifies the definition of full-time employee;
  • Requires that employees maintain certain documentation demonstrating compliance with the law;
  • Establishes how business size is calculated to determine whether a business is covered under the law; and
  • Clarifies how the law applies to temporary help firms;
  • Permits employers to offer certain transportation benefits at the employers’ expense in lieu of offering employees the opportunity to use pre-tax earnings to purchase qualified transportation fringe benefits.

 

New material is underlined.
[Deleted material is in brackets.]

 

“Shall” and “must” denote mandatory requirements and may be used interchangeably in the rules of this department, unless otherwise specified or unless the context clearly indicates otherwise.

 

 

 

Rule

 

Section 1. Title 6 of the Rules of the City of New York is amended by adding a new chapter 8 to read as follows:

 

 

CHAPTER 8 TRANSPORTATION BENEFITS

           

§8-01 Definitions.

 

As used in this chapter, the following terms have the following meanings:

 

“Chain business” means a group of establishments that share a common owner or principal who owns a majority of each establishment where such establishments (i) engage in the same business or (ii) operate pursuant to franchise agreements with the same franchisor as defined in general business law section 681.

 

“Commuter highway vehicle” means a “commuter highway vehicle” as such term is defined in Section 132(f)(5)(B) of the Internal Revenue Code.

 

“Department” means the Department of Consumer Affairs of the City of New York.

 

“Employee” means an “employee,” “manual worker,” “railroad worker,” “commission salesman,” or “clerical or other worker” as such terms are defined in § 190 of the New York State Labor Law. For the purposes of this chapter, “employee” does not include partners, sole proprietors, independent contractors, or two-percent shareholders of S-corporations.

 

 “Employer” means an “employer” as such term is defined in § 190 of the New York State Labor Law and that employs twenty or more full-time employees in New York City. For the purposes of this chapter, the common owner or principal of a chain business shall be considered the employer of the full-time employees of such chain business.

 

“Full-time employee” means an employee who has worked an average of 30 hours or more per week in the most recent four weeks as of any date of counting, any portion of which was in New York City, for a single employer.

 

“Earnings” shall have the same meaning as the term “gross income” as used in § 132 of the Internal Revenue Code.

 

“Month” means an employer’s regularly established fiscal month.

 

“Temporary help firm” means an employer that recruits, hires and supplies employees to perform work or services for another organization to: (i) support or supplement the other organization’s workforce; (ii) provide assistance in special work situations including, but not limited to, employee absences, skill shortages or seasonal workloads; or (iii) perform special assignments or projects.

 

“Transportation Benefits Law” means Chapter 9 of Title 20 of the Administrative Code of the City of New York.

 

“Transportation fringe benefits” means qualified transportation fringe benefits, other than qualified parking, that may be purchased using pre-tax earnings in accordance with § 132 of the Internal Revenue Code.

 

“Week” means an employer’s regularly established payroll week.

 

§8-02 Determination of Size of Employer.

 

(a)                An employer’s number of full-time employees is determined by calculating the average number of full-time employees for the most recent consecutive three- month period, provided that for an employer that has operated for less than three months, the number of full-time employees is determined by calculating the average number of full-time employees per week for the period of time in which the employer has been in operation.

(b)               Full-time employees at all of an employer’s or a chain business’s locations in New York City shall be counted in determining the number of full-time employees of the employer.

 

§8-03 Temporary Help Firms.

 

(a)                Where a temporary help firm supplies a full-time employee to another organization, the temporary help firm shall be the employer of the full-time employee for purposes of the Transportation Benefits Law and must comply with its provisions, regardless of the size of the other organization.

(b)               To determine the number of hours worked each week by an employee working for a temporary help firm, the employer must aggregate the number of hours worked by the employee in the most recent four weeks at all placements.

 

§8-04 Employee Eligibility.

 

(a)                An employer must offer its full-time employees the opportunity to use pre-tax earnings to purchase transportation fringe benefits by January 1, 2016, or four weeks after such employee’s commencement of employment as a full-time employee of the employer, whichever is later.

(b)               If an employer’s work force is reduced to fewer than 20 full-time employees, the employer must continue to offer the opportunity to use pre-tax earnings to purchase transportation fringe benefits to full-time employees who were employer’s full-time employees before the work force was reduced.

 

§8-05 Maximum Deductions.

 

Employers must offer full-time employees the opportunity to use the maximum amount of pre-tax earnings permitted under federal law for the purchase of transportation fringe benefits.

 

§8-06 Recordkeeping Requirements.

 

Employers must retain records for two years sufficient to demonstrate (i) that each full-time employee eligible for transportation fringe benefits pursuant to the Transportation Benefits Law and this chapter was offered the opportunity to use pre-tax earnings to purchase transportation fringe benefits in accordance with this chapter and (ii) whether the employee accepted or declined the offer. Employers may use the form provided by the department and available on the department’s website to document compliance.

 

§8-07 Employer-Funded Transportation Benefits.

 

(a)                As an alternative to offering the opportunity to use pre-tax earnings to purchase transportation fringe benefits, an employer may provide at the employer’s expense a transit pass or similar form of payment for transportation on public or privately-owned mass transit or in a commuter highway vehicle.

(b)               If the employer-provided transit pass or similar form of payment is less than the maximum transportation fringe benefit that may be excluded from pre-tax earnings  under federal law, then the employer must offer employees the opportunity to use pre-tax earnings to purchase transportation fringe benefits for an amount equal to the difference between the value of the employer-provided transit pass or similar form of payment and the maximum amount that may be excluded from gross earnings under federal law.

 

§8-08 Financial Hardship Exemption

 

(a)                The department may waive the requirements of the Transportation Benefits Law for an employer if such employer demonstrates to the department’s satisfaction that offering the opportunity to use pre-tax earnings to purchase transportation fringe benefits would be a financial hardship for such employer.

 

(b)               To qualify for a waiver, an employer must present compelling evidence that complying with the Transportation Benefits Law would be impracticable and create a severe financial hardship.

 

§ 2. This rule takes effect on January 1, 2016.