San Francisco: New Commuter Benefit Mandate
The City of San Francisco is at it again:
- In July, 2006, the City of San Francisco passed a Health Care Security Ordinance (“HCSO”) requiring employers to contribute to their employees’ health care costs either through private plans, or through the Healthy San Francisco program.
- In July, 2007, another Ordinance became effective that requires employers to provide paid sick leave to employees who work in San Francisco.
This time, the City’s efforts relate to the environment. In its effort to improve air quality by reducing carbon emissions, the City passed an Ordinance on August 26, 2008, that requires employers to provide transportation benefits to their employees.
Who is subject to the law?
An employer is subject to the law if it employs 20 or more full or part-time employees, including temporary employees. In determining whether an employer is subject to the law, all employees are counted, without regard to whether they work in the geographic boundaries of the City and County of San Francisco. The employer is only required to offer the benefit to employees working within the geographic boundaries of the City and County of San Francisco, and only to employees who work at least 10 hours per week within the previous calendar month.
Types of Commuter Benefits
An employer can satisfy its obligation in one of three ways:
- Offer an IRC §132(f) qualified transportation program. This type of program allows employees to purchase transit passes or pay for van pooling on a pre-tax basis. Qualified parking is not included in the benefits that will satisfy this Ordinance.
- Provide employer-paid public transit passes or reimburse equivalent van pooling charges to employees.
- Provide employer-paid transportation in a van pool or bus at no cost to employees.
Emergency Ride Share Program
In addition to employer-provided transportation, the Department of Environment is authorized to design an ‘emergency ride home program’ in the event that an employee working in San Francisco experiences an ‘emergency need’ that cannot be accommodated by the transportation program in which he/she is participating. Examples of emergency needs include:
- Reimbursement for transportation costs to return home, or to a transit spot, or to a remotely parked car;
- Transportation costs arising from an illness or emergency of the employee or his/her immediate family; or
- Other unexpected events outside the commuter’s control.
Failure to offer a transit benefit can result in the imposition of monetary penalties.
The Ordinance is expected to take effect on December 24, 2008.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.
As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.