Are you a commuter in Washington, DC? If so, there’s a good chance you’re eligible for commuter benefits. DC has a commuter benefits program that includes protections for commuters who are not getting benefits but should. Companies that are not in compliance are subject to relatively stiff fines.
The DC commuter benefits law
Companies with 20 or more employees need to offer commuter benefits to employees, according to the DC law. In DC, nonprofits are included under the law along with for-profit companies. A separate transit benefit program is available for employees of the federal government.
The law says an employee is someone who spends at least half their time working in DC. They can also be based in DC and do most of their work there. But they can’t work in another state more than 49 percent of the time.
DC passed the law because leaders wanted to reduce carbon emissions and improve the air quality in the area. It encouraged commuters to take public transit like the Metro or ride a bike to work rather than driving a car.
DC non-compliance fines
The fines increase for each offense that businesses are not in compliance. The first offense costs the company $100 for each employee that was not offered commuter benefits. On the second offense, the fine increases to $200 per employee. It increases to $400 on the third offense. If a business still hasn’t complied, each subsequent violation will cost $800 per employee.
How companies can comply
If you’re a DC employer, there are three different ways to comply with the law.
The first is to offer an employee-paid, pre-tax benefit program. Employees can spend up to $280 per month from their paychecks tax-free. They can use the money to pay for mass transit, rideshares, or commuter bicycling costs (starting in 2026).
The second is to have an employer-paid direct benefit. Employees can have the employer provide transit passes or vanpool reimbursements. The employer can offer these subsidies of up to $280 per month for passes, vouchers, SmarTrip cards from the Washington Metropolitan Area Transportation Authority, or employee reimbursements. All subsidies are tax-free.
The final method is for the employer to provide shuttle service or vanpool service to their employees at no charge.
Companies also have the option of combining the employee-paid benefit along with the subsidy from the employer. However, it must be no more than $280 combined.
Rules for employers
Employers must adhere to several important rules as part of the DC commuter law. Employers must notify their employees that commuter benefits are available. They must also have a contact person so employees can get additional information about the benefits.
Employers must walk employees through how to apply for commuter benefits. They are also responsible for showing them how the benefits are received. If employees want to submit a complaint to the Department of Employment Services in DC, employers will instruct them on how to do that. While employers can hold meetings to go over the commuter benefits law with employees, they can also do it through email or other forms of communication.
Similar commuter benefits programs
DC is by far the only municipality or government to offer commuter benefits. There are state, local, and regional laws. Even the airports have one too.
Here is a list of the laws:
- San Francisco (Businesses with 20 or more employees)
- Berkeley, CA (10 or more employees working 10 hours per week)
- Richmond, CA (10 or more employees working 10 hours per week)
- Seattle (20 or more employees working 10 hours per week)
- New York City (20 or more full-time employees)
- New Jersey (statewide; 20 or more employees working 10 hours per week)
- San Francisco Airport (Employees working 20 or more hours per week)
- Federal Government (Capitol Region federal employee commuters; not to be confused with the DC law)
- Bay Area Air Quality Management District (9 counties; offers four options to employees)
- San Francisco Bay Region (50 or more employees; work-from-home employees added in 2022)
Why add commuter benefits?
Commuter benefits are a great addition to any benefits plan. They help employees save on their taxes while employers save on payroll taxes.
Commuter benefits also help attract the best candidates and retain your employees. It is a meaningful benefit that helps drive employee engagement.
Are you a DC employer and need to provide commuter benefits to your employees to comply with the law? Check out our DC toolkit which has all the information you need.