Commuter Benefit Coming to Philadelphia in 2023

The Philadelphia City Council adopted a new transit benefit ordinance requiring that employers with 50 or more eligible employees offer qualified workers a commuter benefit to help offset both mass transit and commuting-by-bicycle expenses. The ordinance takes effect on December 31, 2022.

Who is a covered employer?

The commuter benefit applies to private individuals, co-partnerships, associations, corporations, and other entities that employ 50 or more covered employees.

Who is a covered employee?

A covered employee is “any person who performed an average of at least thirty (30) hours of work per week, for compensation, within the geographic boundaries of Philadelphia for the same employer within the previous twelve months”.

What benefits do covered employers have to offer?

Covered employers will need to make at least one of the following benefits available to qualified employees:

1. Provide covered employees with a tax-free payroll deduction to pay for qualified mass transit expenses such as a public transportation fare card or transportation in a commuter highway vehicle in connection with travel between an employee's residence and workplace. Employees must be able to payroll deduct the maximum annual allowable amount specified by the IRS annually for a mass transit benefit. The 2023 limit has not been released.
2. Provide covered employees with a monthly mass transit fare card, pass, or tokens valued at the maximum monthly amount the IRS allows. The 2023 limit has not been released.
3. Provide a combination of these two options.

In addition, employers need to offer an alternative benefit to covered employees who regularly use a bicycle for commuting to and from work. These employees must have access to a tax-free reimbursement of qualified bicycle expenses of up to $20 per month, subject to potential annual IRS adjustments.

If you have questions about this ordinance and whether or not you need to comply, contact your OneDigital consultant. Looking to stay on top of the latest compliance developments impacting employers? Review the recent blog: Departments Release Latest Round of Final Rule Related to Surprise Billing.