Many employers provide qualified and nonqualified transportation fringe benefits to attract and retain employees, to help employees handle difficult commutes and to help reduce economic losses an employer can suffer because of the late arrivals and/or early departures commuting can cause. The costs to an employer of providing transportation benefits are outweighed by the tax advantages of offering them and the positive effect such benefits can have on employee retention and productivity. Code Section 132(f) governs how employers may provide qualified transportation fringe.
A growing number of employers are turning to third party providers and partnerships for assistance in providing transportation benefits, which gives employers a wider range of options. It also reflects the growth of the service sector of the economy, which offers an ever-increasing array of functions employers and employees used to manage themselves.
Following is a look at selected third-party transportation benefit providers and partnerships across the country.
Commuter Checks
Commuter Check Services Corporation (CCSC) was founded in 1990 to operate transit fare discount programs. CCSC makes employer-provided transit fare subsidies available to employees by coordinating with employers, transportation providers, local public agencies and metropolitan planning agencies. CCSC operates across the United States - employers in the Boston, Buffalo, N.Y., Denver, Louisville, Ken., Norfolk, Va., Philadelphia, San Francisco and Wilmington, Del., metropolitan areas, as well as in the states of Minnesota and Rhode Island can use their services.
CCSC provides vouchers that transit operators accept for the purchase of tickets, tokens and transit passes. The checks constitute a qualified fringe benefit, since the Transportation Equity Act for the 21st Century, enacted in 1998, amended the Tax Code to allow employees to choose to have pre-tax deductions made from their pay to buy transit passes.
Employers can use commuter checks to provide transportation benefits at regular intervals, to offer an incentive for good performance or high productivity or to provide performance-related or year-end bonuses. Employers can also use the checks for employee relocations or as prizes at special events.
Employers can offer commuter checks in several ways:
(1) as a benefit employees receive in addition to other benefits the employer offers and for which the employer pays;
(2) through pre-tax payroll deductions; and
(3) by reducing employees'' salaries by up to $65 per month (the maximum amount that may be excluded from an employee''s income for employer-provided transit passes under Section 132(f)) and providing commuter checks of a value equal to the amount removed from the salaries.
Of course, there are costs to employers in providing the commuter checks, since employers purchase the vouchers for their employees. While the amount an employer spends on a commuter check for an employee adds to that employee''s income, the employee is not taxed on that figure as long as it does not exceed $65.
Employers can find ways to offset the expense of purchasing the commuter checks. Employers could consider sharing the cost of the checks with employees. Another way would be to reduce the amount an employer spends on other transportation-related benefits. For example, an employer that provides free parking and chooses to also provide commuter checks may offset the cost of the new program by charging a fee for parking.
Employees use commuter checks by redeeming them with public or private transportation providers at token booths, pass sales offices, retail sales locations or other sites for passes, tickets or tokens. Some van pool operators will accept commuter checks as fare payment. Employees cannot redeem the checks for cash or use them to purchase anything other than transportation services.
New Jersey Transit
New Jersey Transit (NJT) works with employers to promote the use of public transportation. In addition to forming partnerships with the business sector, NJT serves as a third-party provider of qualified and nonqualified transportation benefits.
In 1987, NJT formed the Business Transit Alliance (BTA), a statewide program that serves as a link with the business community and seeks to encourage employers to promote the use of public transportation by their employees. More than 1,000 businesses belong to the alliance. Through the BTA, NJT offers employers a variety of services including transportation benefits, commuting information for employees, and help in moving office operations.
NJT also organizes and administers Transportation Management Associations (TMAs), nonprofit organizations composed of employers and government representatives who identify and help resolve local transportation problems. TMAs cover specific regions, such as adjacent counties. More than 260 businesses statewide are members of a TMA.
Employers that participate in TMAs and offer their employees alternatives to commuting by car both qualified and nonqualified alternatives) are eligible for state tax credits, funding grants and financial assistance in establishing traffic control programs.
NJT provides information in several ways:
NJT will train employees on how to serve as liaisons with New Jersey Transit and how to function as employee transportation coordinators for their employers.
Two NJT programs are available for providing transportation passes to employees. Through one program, employers can offer their employees monthly train and bus passes through pre-tax salary deductions. NJT mails the passes to employers'' offices for distribution to employees. Through another program, employers may obtain one-way train or bus tickets for employees in advance.
NJT''s relocation services program helps employers move, reorganize or expand their business operations in New Jersey by investigating means of transportation that will make the business operation more efficient. NJT also will come to an employer''s work site to help employees determine how to use public transportation in commuting to and from the new site.
Utah Transit Authority
The Utah Transit Authority (UTA) also focuses on increasing the use of public transportation by employees. Through its rideshare initiative, UTA enters into partnerships with employers or offers benefits that employers can provide to employees. UTA notes that participating employers can reduce the amount of parking space they need to provide; reduce the costs of overtime, tardiness and absenteeism; and increase business hours.
UTA helps employers design schedules that incorporate compressed work weeks and flexible hours to allow for reduced traffic and parking congestion and to lengthen the hours of business.
Under a program that provides annual UTA bus passes, employers can either cover the entire cost of the passes or share the cost with employees. Employers that participate must designate an employee transportation coordinator who will serve as the administrator of the program and will act as liaison with UTA and employees.
UTA offers a "guaranteed ride home" program in conjunction with the transit pass and van leasing programs. The program provides employees with a ride in an emergency or if they have to do unexpected overtime work. Under the program, employees access this service by calling a specific phone number and providing the following information: their name, their employer''s name, their Social Security number, address information and an explanation of why they need a ride.
Additionally, UTA provides a means for employees to exchange information about sharing rides with other commuters. Employers may lease vans from UTA to provide a ride to and from work for groups of up to 15 employees. UTA provides insurance, back-up vehicles and 200 free miles for maintenance or personal use. UTA also offers employers, associations and employees interest-free loans through which they can purchase vans to encourage commuters to share rides.
Santa Cruz Transportation Management Association
The Santa Cruz, Calif. Transportation Management Association (SCTMA) is a non-profit coalition of employers and property owners that was established in 1990 by the Santa Cruz Area Chamber of Commerce and the Santa Cruz County Regional Transportation Commission in Santa Cruz, Calif. SCTMA allows its members to cooperate in promoting public transportation in Santa Cruz County and present a common position on transportation policy.
Employees whose employers belong to the SCTMA may obtain no-interest loans for up to $750 to buy a bicycle and accessories. SCTMA members'' employees are eligible through a commuter club program for discounts and other incentives if they pledge to commute at least one day a week by means other than an automobile. SCTMA will also provide a free cab ride to members'' employees who use an alternative means of commuting and have an emergency situation.
A Sampling of Regional Authorities
Following is a list of some regional transportation authorities with whom employers can cooperate in providing transportation benefits. This list does not provide information on all such bodies.
| City | Transportation Authority | Program | Contact |
| Atlanta | Metropolitan Atlanta Rapid Transit Authority | MARTA Partnership Program | (404) 848-5057 www.itsmarta.com/riding/partner.htm |
| Boston | Massachusetts Bay Transportation Authority | Corporate Pass Program | (617) 222-5218 www.mbta.com/Passfares/pass-programs/index.cfm |
| Chicago | Chicago Transit Authority | RTA/CTA Transit Benefit Program | (312) 396-8450 www.yourcta.com/welcome/transitb.html |
| Philadelphia | Delaware Valley Regional Planning Commission Program | Mobility Alternatives | (215) 592-1800 www.gvftma.com/htm |
| San Diego | Metropolitan Transit Development Board | Transit Subsidies | (619) 238-2707 www.sandag.cog.ca.us/sdmts/service.htm |
| Washington | Washington Metropolitan D.C. Area Transit Authority | Metrochek | (202) 962-1326 www.wmata.com/USINGMET/MTROPOOL.HTM |
From Employer''s Guide to Fringe Benefit Rules, ©Thompson Publishing Group, Inc.