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San Francisco MANDATES EMPLOYEE COMMUTER BENEFITS

The City of San Francisco has added mandated commuter benefits to the list of required benefit offerings by companies with employees in San Francisco. The new ordinance (199-08) adds Section 421 to the San Francisco Environment Code by requiring employers with 20 or more employees to offer commuter benefits and encourage employees to use public transit or van pools.

The ordinance will take effect on September 22, 2008. Employers will have 120 days from that date to implement a transit program that complies with the ordinance (January 20, 2009).

Ordinance 199-08 was implemented to help the City achieve its goal to reduce carbon dioxide emissions to 20% below 1990 levels by the year 2012. The ordinance takes advantage of existing Federal tax law which allows employers to deduct employees’ qualified transportation costs as a business expense. The legislation, introduced in June by Supervisor Ross Mirarimi and approved by the Board of Supervisors on August 12, 2008, requires covered employers to offer one of the following three options:

1. A Pre-Tax Election that allows employees to exclude commuting costs incurred for transit passes or vanpools (but not for parking) from taxable wages and compensation. The maximum pre-tax contribution is the allowable Federal limit, which is currently $115 per month.

2. An Employer Paid Benefit where the employer supplies a transit pass for the public transit system or reimbursement for equivalent vanpool charges at least equal in value to the purchase price of an adult San Francisco MUNI Fast Pass (currently $45 for a month-long pass).

3. Employer Provided Transit furnished by the employer at no cost to the covered employee enrolled in a vanpool, bus or similar multi-passenger vehicle operated by or for the employer.

Covered Employees

All employees performing an average of at least 10 hours of work per week for compensation within the geographic boundaries of San Francisco are covered under this ordinance. The employee must have been employed by the employer within the previous calendar month. The employee must also qualify as an employee entitled to payment of a minimum wage under Section 1197 of the California Labor Code or be a participant in a Welfare to Work program.


Covered Employers

An employer is required to comply with the ordinance if the company has an average of 20 or more employees per week, counting all employees inside and outside the geographic boundaries of San Francisco. Although all full-time, part-time and temporary employees are included when determining whether an employer is subject to the ordinance, only employees working within San Francisco are subject to the requirement.


Emergency Ride Home Program

In tandem with the new ordinance, the San Francisco Department of the Environment is expanding an existing Emergency Ride Home Program that reimburses employees who commute to worksites in San Francisco using alternative commute modes, for transportation costs to return home or to a transit spot in the event of illness or emergency of the employee or immediate family. Reimbursement will be dependent on available funding from the Bay Area Air Quality Management District's Transportation Fund for Clean Air, the San Francisco Transportation Authority, or other sources.


Administration and Enforcement

The Department of the Environment is responsible for enforcement and will work with the San Francisco Office of Labor Standards Enforcement to ensure regulations are consistent with IRS regulations and the City's Paid Sick Leave and Health Care Security ordinances.

Any covered employer failing to offer at least one of the three transportation benefits to covered employees will be fined $100 for a first violation, $200 for a second violation within the same year and $500 for each additional violation within the same year.

The Department of the Environment will be maintaining an education and advice program to assist employers with meeting the requirements of the program.


What Employers Need to Do Before January 20, 2009

• Determine whether current commuter benefit program complies with the new law. Adopt or revise policies to conform to the new law.

• Update timekeeping, payroll and recordkeeping procedures as applicable.

• Develop a procedure and written form for employees to elect or opt out of the commuter benefit.

• Notify employees of the new program, or confirm to employees that the existing program is equivalent to or more generous than the City mandate.
  

This document is not intended to provide any legal advice or analysis. Please consult your own legal counsel for further information on the topics discussed in this issue of Insight.