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NYC Mass Transit Benefit Act

By Ruth Kraft posted 11-21-2014 06:15 PM

  

First, sincere thanks to everyone who attended my presentation on independent contractor status at the Tax Symposium.  What a fantastic meeting.  I thoroughly enjoyed meeting many of you and having the opportunity to be intellectually stimulated at the 1031 exchange presentation this morning!


Mayor DiBlasio has just signed Intro 295-A, a bill passed unanimously by the City Council in October, 2014, which requires New York City companies with 20 or more employees to offer pre-tax transit benefits.  Federal tax law already allows businesses to offer workers $130 in pre-tax income for transportation purposes.

The motivation behind the law is simple: money!  The average employee who opts into the program may save about $100 per year in personal taxes.  Proponents of the law contended that  it would encourage more people to use mass transport by making it more affordable.  At less than 50 cents per work day, I find this proposition to be self-serving, unless and until that mass transit is more efficient and congruent with workers’ personal needs.

Already, misinformation has been spreading about the law.  One report stated that it would apply only to businesses with 20 or more full-time employees; the statute itself does not contain such a proviso. Technically, all NYC laws go into effect 180 days after signing. The statement that this law will not take effect until January 1, 2016 is, therefore, inaccurate.  What we do know already is that the law, which will be enforced by the Department of Consumer Affairs, will not be enforced until that date.  Thereafter, employers in violation of the law will face civil penalties of between $100-250 for the first infraction and $250 for all subsequent infractions.  However, if a company engages in subsequent good faith compliance, the penalties will supposedly be waived.

Here is the real killer:  if the employer does not get with the program within 90 days, a recurring $250 penalty will be imposed for every 30 days that it remains out of compliance.  At this time, we have been told that penalties will not be imposed prior to July 1, 2016 to allow employers adequate time to adapt. This delay was not written into the law and is, apparently, a political decision to delay the pain!

WHAT THIS MEANS FOR YOUR CLIENTS:  Employers that use payroll processing companies will have to insure that the paperwork is correctly handled and that workers are given the right to opt into the transit benefit.  If you have an internal payroll system, you will need to integrate with a transportation solutions company, remit the withheld funds and insure that workers receive their MetroCards or MTA bus and rail passes.  It’s yet another bookkeeping headache.  Finally, employee handbooks for NYC companies should be modified during 2015 and no later than January 1, 2016 to reflect the point at which you have entered into compliance.

As many of you are probably aware, the Department of Consumer Affairs is not terribly friendly to management.  I am certain that, during 2015, we will see the promulgation of regulations and clarification to the statute.

The Riders Alliance, which strongly supported the enactment of the law, estimated that it would add $85 million to the NYC economy and enable workers to pay their (un)Affordable Care Act insurance premiums.   True or false? I would love to hear from you!

I anticipate writing more about the mass transit benefits act as  soon as DCA issues guidelines and interpretations.

Judge Ruth Kraft chairs Kirschenbaum & Kirschenbaum’s Employment Law Group.  To revise your employee handbook to include mass transit benefits, contact her at (516) 747-6700 ext. 326 or email RKraft@Kirschenbaumesq.com. 

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