Insights

Bay Area Commuter Benefits Program

April 15, 2014

Employee Benefits

Recently, the Metropolitan Transportation Commissions (MTC) and the Bay Area Air Quality Management District (BAAQMD) approved the Bay Area Commuter Benefits Program. The program requires Bay Area employers (private sector, public sector, and non-profit), with 50 or more full time employees, to offer one of four Commuter Benefits options. Counties that are subject to this requirement include Alameda, Contra Costa, Marin, Napa, San Francisco, Santa Clara, San Mateo, the southern portion of Sonoma and the western portion of Solano. The program must be implemented by September 30, 2014.

Some Short Answers

  • Who Must Comply? Covered employers operating in counties under the jurisdiction of the two Agencies (Covered Districts).
  • Who is a Covered Employer? Employers operating in the counties (Covered Districts) with an average of 50 or more full-time employees working in Covered Districts.
  • What Constitutes the Covered Districts?The Covered Districts includes the following California counties: Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano, and southern Sonoma counties (the Bay Area).
  • When Must the Program Be in Place. Employers must implement the Commuter Program (Program) no later than September 30, 2014.

Discussion

  • Counting Employees for Purposes of Determining Who is a Covered Employer.Unlike the Affordable Care Act’s (ACA’s) methodology, this new ordinance keeps it simple. Employers count only employees who work at least 30 hours per week over a three month period.
  • Covered Employees Defined. An employee is considered a Covered Employee if he or she works at least 20 hours per week, so long as the employee is not seasonal or temporary (working 120 or fewer days in the calendar year). Covered Employees must be offered benefits under the Program.
  • Program Options. The Program requires that a Covered Employer offer at least one of the following commuter benefit options to all Covered Employees:
  1. Pre-Tax Option. This option permits Covered Employees to participate in a program, under which they may elect to exclude costs for transit passes or vanpool charges, up to the maximum permitted under federal law. For 2014, this amount is $130.
  2. Employer-Paid Benefit. This option requires the employer to offer a subsidy amount to offset the monthly cost of commuting by transit or vanpool. For 2014, the amount payable will be the lesser of $75 or the actual cost incurred.
  3. Employer-Provided Transit. Under this option, the employer furnishes transportation by vanpool or bus, at low cost or no cost to employees.
  4. Alternative Program Option. The employer may offer an alternative benefit option upon approval in writing by the Executive Officer of the Bay Area Air Quality Management District. This alternative must provide at least the same reduction in single-occupant vehicle trips as the other permitted options.
  • Pilot Program. S.B. 1339 authorized the pilot Program during the period ending on December 31, 2016. The Agencies must submit a report to the legislature by July 1, 2016 describing the results of the Program. Among the purposes of the Program are reductions in Bay Area air pollution.
  • Coordination with Current Local Commuter Benefit Ordinances. The Agencies already are working with cities that have adopted commuter benefit ordinances to coordinate the implementation of the regional Program with the local ordinances in order to simplify reporting for Bay Area employers, especially those with worksites in multiple jurisdictions. The preferred concept can be summarized as follows: All employers that are subject to the regional Program by virtue of having 50 or more full-time employees in the Bay Area would report to the regional agencies. The regional agencies would share information with the local cities regarding the worksites within their respective jurisdictions. The cities would continue to implement their local ordinances for smaller employers that are not subject to the regional Program. The Agencies expect to reach agreement with the local cities to implement this concept prior to launching the regional Program.

 

Commuter Benefits Ordinances Adopted by Bay Area Cities
JurisdictionApplicability ThresholdEffective Date of Ordinance
City & County of San Francisco20 or more employees nationwideJanuary 19, 2009
San Francisco International Airport20 or more employees nationwideJuly 7, 2009
City of Berkeley10 or more employees nationwideDecember 2009
City of Richmond10 or more employees nationwideDecember 8, 2009
  • Enforcement. The Agencies will encourage compliance; however, in the event an employer refuses to implement a program, the Agencies have civil enforcement powers which can include signifcant fines at a minimum.

Action Plan

To meet the requirements of the Program, a Covered Employer will need to do the following:

  1. Designate a Commuter Benefits Coordinator to implement the employer’s commuter benefit program and comply with the requirements of the Program. It is anticipated that this role will typically be assigned to an employee already handling payroll and benefits.
  2. Select one of the commuter benefit options.
  3. Submit a registration form to the Agencies specifying which commuter benefit option the employer will provide.
  4. Notify employees of the commuter benefit option selected and make the benefit available to all eligible employees.
  5. Update registration information on an annual basis.
  6. Maintain records to document implementation of the commuter benefit.
  7. Provide information requested by the Agencies for Program evaluation purposes.

The Agencies will develop guidance shortly, particularly with regard to calculating the number of full-time employees, the definition of the term “low-cost” for purposes of Option 3, and establishing the process for an employer to follow under Option 4 (an alternative commuter benefit). Here is the initial Regulation dated March 19, 2014.


Content provided by Mike Fowler, Kutak Rock LLP

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