Most NYC Employers Required to Provide Transit Benefits in 2016

The New York City Transit Act (the “Transit Act”) will go into effect on January 1, 2016. The Transit Act requires that employers with 20 or more full-time employees (those who work on average 30 or more hours a week) in New York City provide those employees with certain pre-tax transit benefits. Specifically, the Transit Act requires that employers subject to the Act provide pre-tax “qualified transportation fringe benefits[.]” Such benefits include transportation benefit plans covering mass transit passes, parking, and bicycle commuting. While employers may provide benefits for parking under the Transit Act, they are not required to do so.

The Transit Act contains limited exceptions for federal, state, and New York City governmental entities, employees subject to collective bargaining agreements, and employers that are not required to pay federal, state, and city payroll taxes. Also, employers who demonstrate a financial hardship in complying with the Transit Act may obtain a waiver from compliance with the Act. Failure to comply with the Transit Act could expose an employer to civil penalties.

The upcoming open enrollment periods for most employee benefit plans present the opportunity for employers with employees in New York City to review their benefit plans to ensure that they will be in compliance with the Transit Act starting in 2016.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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