How do you and your employees' commutes stack up against the rest of the country? As part of a series, we're analyzing commutes in various regions of the United States in addition to the programs available to help employers and their workforce manage. In this part of the series, we're looking at Northeast commuting expenses.
Commuting in the Northeast
The Northeast is the most densely populated region of the United States, which can be good and bad for your employees. The advantage is that the Northeast has the best public transportation of all regions. The disadvantage is that driving can take much longer than in smaller cities.
Driving typically takes less time than public transportation, but according to the Economist, the time difference is negligible in large Northeastern cities. This makes public transportation a much more appealing option. In fact, the Northeast has the highest share of workers who regularly take public transportation to work, according to the U.S. Census Bureau. As a result, average northeast commuting expenses tend to be lower because, as The Simple Dollar calculates, people who take public transportation typically pay less than those who drive to work. Your employees who drive to work, however, are more likely to have longer drives compared to other regions, so they end up paying more for gas and repairs.
The easiest way to help your employees with their commuting expenses is through the employer reimbursement tax program. As Forbes notes, in this program, your employees pay for eligible commuting expenses out of their pretax earnings by requesting a certain amount of commuter expenses to be deducted directly from their paychecks. It's a nice employee benefit and as the business owner your responsibilities are typically limited to simply setting up the program.
As of 2016, employees can deduct up to $255 a month for eligible expenses such as bus passes, subway passes and parking costs. These programs are especially popular in the Northeast because of the high use of public transportation. If you aren't offering this benefit, there's a good chance your competitors are.
Depending on where your business is located, you might be required to set up a commuter expense reimbursement program. New York City and Washington D.C. recently passed laws making it mandatory for some private employers to provide this option to their workforce.
In Washington D.C., employers with more than 20 employees (regardless of full-time or part-time status) are required to offer one of three commuter benefit options: an employee-paid pretax benefit, an employer-paid direct benefit, or employer-provided transportation at no cost to the covered employee.
In New York City, companies with 20 or more full-time, nonunion employees must offer full-time employees the opportunity to use pretax income to pay for their commute. If you are located in New York City and don't have a commuter benefits program, you risk being fined for noncompliance, although the law does provide employers with 90 days to correct a violation before the Department of Consumer Affairs is authorized to seek penalties.
Commuting in the Northeast is by far the toughest in the country, so make sure you do what you can to help your employees manage. If you're interested in seeing how your situation matches up against other parts of the country, be sure to check out the rest of our ongoing series on commuting expenses.
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