D.C. Commuter Benefits Final Regulations Issued

At a Glance

• The regulations are effective November 14, 2019.
• The new regulations clarify penalties and fines for noncompliance with Washington, D.C.’s commuter benefit law.
• They also describe certain notice and information requirements and minimum record-keeping requirements.

Introduction

 Washington, D.C.’s commuter benefit law, which became effective on January 1, 2016, requires employers with at least 20 employees in D.C. to offer commuter benefits to their covered employees. An employee is covered by the law if the employee:

• Spends at least 50 percent of his or her working time in D.C.; or
• Is based in the District of Columbia and performs a substantial amount of work in D.C. and less than 50 percent in any other state.

Under the law and final rules, covered employers must provide covered employees with at least one of the following three types of commuter benefits: a) an employee-paid pre-tax benefit; b) an employer-paid direct benefit; or c) an employer-provided transportation service at no cost to the employee, such as a shuttle, vanpool, or bus operated by or for the employer.

A D.C. employer that fails to offer at least one of the above options is subject to penalties and fines beginning on November 14, 2019. After that date, for each month that a covered employer is non-compliant, it may be fined $100 per covered employee for the first offense, $200 per covered employee for the second offense, $400 per covered employee for the third offense, and $800 per covered employee for any subsequent offenses.

The final rules also require:

• Employers to notify covered employees of the available commuter benefits, including providing a contact for obtaining additional information;
• Employers must explain how to apply for and receive commuter benefits and how to submit a complaint to the D.C. Department of Employment Services;
• Employers must provide covered employees with “commuter benefits documents” as part of the employee benefits package or with the Notice of Hire form required under D.C. law; and
• Finally, employers must keep records related to commuter benefits for a minimum of three years.

Next Steps

 Employers in DC already offering commuter benefits programs should review their programs to ensure compliance with the new requirements.

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 This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor.

Date Posted: October 14, 2019