Oberman Insurance Services

Small Employer Commuter Benefits, Good or Bad?

A.B. 2548 Commuter Benefit Policies?    I was about to fall asleep at the VICA Transportation Committee meeting this week wondering why I was there until this topic came up for discussion.   I had never really thought about it much before.  Hmm, employer sponsored commuter benefit programs.   I knew our larger clients offered employees a commuter benefit that allowed employees to use pre-tax dollars, up to $260 per month, excluded from gross income, to pay for transit commuting costs through a cafeteria plan.   Currently employers with over 250 full-time employees at a worksite are required to establish commuter programs to meet designated emission standards set by the South Coast Air Quality Management District.

A new ordinance,  AB 2548 Commute Benefits Policy,  would require employers with 50-250 employees at a work site in L.A. County to give employees the ability to set aside up to $260 per month of their paycheck pre-tax to cover the cost of ride sharing, van pools, and transit.   It sounded like an excellent idea at first.   Why shouldn’t smaller employers be able to offer employees the same tax-advantaged plans as larger employers?  And given we have the worst congestion in the world in Los Angeles and the amount of time spent in traffic jams driving to work and back,  giving employees a financial incentive to switch public transit sounds good until I understood that employers would be mandated to implement the program.    Plus, small businesses already find it difficult to run their business and stay profitable in Los Angeles.  Requiring them to increase costs by sponsoring commuter benefits and administration will only add to the difficulties of doing business in Los Angeles.    Then again, expanding commuter benefit programs in the world’s most congested metropolitan area is a great idea if only there was more public transportation available.  That’s another issue.

The bill is supported by the Los Angeles County Metropolitan Transportation Authority, Association for Commuter Transportation, Mayor Eric Garcetti, City of Los Angeles, Enterprise Holdings.  There are no opponents as of 4/25/2018.    It has passed thru the California State Assembly and is waiting to reach the Senate for vote.

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