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Seattle Requires Certain Employers to Offer Commuter Benefits

12/01/18

Author: ADP Admin/Thursday, December 6, 2018/Categories: Washington

Overview: Seattle has enacted a law (Ordinance No. 125684) that will require employers with 20 or more employees to offer employees the opportunity to use pre-tax income to purchase qualified commuter benefits.

Effective Date: January 1, 2020

Details:

Background:
The ordinance is based on federal rules that authorize pre-tax commuter programs. Under these rules, employers are currently permitted to allow employees to allocate up to $260 per month in 2018 (adjusted annually) of pre-tax income for:
  • Rides in a commuter vanpool (seats six or more adults not including the driver) between the employee's home and workplace.
  • A mass transit pass (such as, bus, light rail, or ferry)
Some local jurisdictions have begun requiring certain employers to offer such programs.

Note: Federal rules also authorize pre-tax parking benefits, but the Seattle ordinance doesn’t require employers to offer parking benefits.

Covered Employees:
To be covered by the ordinance, employees must work an average of 10 hours or more per week in Seattle in the previous calendar month.

Covered Employers:
The ordinance covers employers with 20 or more employees. The number of employees is generally determined based on the average number of employees during the preceding calendar year. For purposes of determining whether an employer is covered, all employees who worked for compensation must be counted, including:
  • Full-time and part-time employees
  • Employees not covered by the ordinance
  • Employees who worked inside or outside the city
  • Employees who worked in joint employment, temporary employment, or through the services of a temporary services or staffing agency or similar entity.
Governmental entities and tax-exempt organizations are exempt from the ordinance.

Program Requirements:
Covered employers must:
  • Offer qualified commuter benefits to covered employees within 60 calendar days of their start date.
  • Allow employees to elect to exclude qualified commuter benefits (except for parking) incurred from their taxable compensation up to the maximum level allowed by federal tax law.
  • Begin payroll deductions within 30 calendar days of the employee selecting the benefit.
Notice:
Employers must display a poster notifying employees of their rights under the ordinance. If displaying the poster is not feasible, such as when the employee works remotely or does not have a regular workplace or job site, employers may provide the poster on an individual basis in physical or electronic format, as long as it is reasonably conspicuous and accessible. The city will create a poster for this purpose.

Recordkeeping:
Employers must retain records that document compliance with the ordinance for at least 3 years, including written documentation of the employer’s offer of such benefits.

Retaliation Prohibited: Employers are prohibited from taking adverse action against employees because they exercise in good faith their rights under the ordinance.

Action Required: Covered employers should ensure compliance with Ordinance No. 125684 by January 1, 2020.

As always, please be sure to contact your HR Business Partner for guidance and if you have any questions.

This content provides practical information concerning the subject matter covered and is provided with the understanding that ADP is not rendering legal advice.

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Tags: Compliance CornerState Update12/01/18

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