Gov. Phil Murphy recently signed S.1567 into law, making New Jersey the first state to mandate a commuter benefit, though New York City and San Francisco have similar laws.
In short, New Jersey\'s law requires employers in the state to offer pre-tax commuter benefits to employees. While the law is currently in effect, it is not operative until the earlier of: 365 days following the date of enactment (March 1, 2019), or the effective date of rules and regulations that the law directs the Commission of Labor and Workforce Development to adopt.
The state\'s new commuter benefits law requires employers that employ at least 20 workers to offer a pre-tax transportation fringe benefit to all employees who are not subject to a collective bargaining agreement.
For purposes of this law, an \"employee\" means anyone hired or employed by the employer and who reports to the employer\'s work location (this follows the definition under the state\'s unemployment compensation law).
A pre-tax transportation fringe benefit is a benefit that allows an employee to set aside wages on a pre-tax basis, which is then only made available to the employee for the purchase of certain eligible transportation services, including transit passes and commuter highway vehicle travel.
Employers can expect the Commissioner of Labor and Workforce Development to adopt rules and regulations, in consultation with transportation management associations, transit agencies in New Jersey and third-party transit benefit providers concerning the administration and enforcement of the law\'s requirements in a manner that is \"most compatible with current practices for providing pre-tax transportation fringe benefits.\"
Employers that fail to comply with the law are subject to a penalty of between $100 to $250 for the first violation. Before a penalty is imposed, however, employers will have 90 days from the date of the violation to offer the pre-tax transportation fringe benefit program.
If the employer does not adopt a pre-tax transportation fringe benefit, it will be subject to a $250 penalty for each additional 30-day period in which an employer fails to offer the benefit.
New Jersey employers should begin thinking about the steps they will need to take to provide this benefit. Areas for consideration include the specific features of the pre-tax transportation fringe benefit program, developing a document to communicate the program to employees and coordinating the administration of the requirements.
Stay Tuned. For questions please call Tom Kohler at Walsh Benefits 732-559-1156.