Commuter Benefits: Our Experience and How Small Businesses Can Implement
Decades ago when we lived in California, Elgin worked for Nikon as a repair technician in their Torrance, CA center. The center wasn’t too far from our home; 6.8 miles to be exact. We were a young couple with a toddler living life in the smoggy City of Angels. And like a lot of employees, we both drove to work. We didn’t necessarily have to drive. Public transportation in Los Angeles even back in the 90s was plentiful and reliable. We had options but were accustomed to getting in our cars and driving where we needed to be. Public transportation seemed inconvenient. The prevailing wisdom at the time was that traveling by car was faster than any bus making multiple stops along a route. And what if something happened to the baby? What if one of us needed to go pick her up for some emergency?
There was never an emergency by the way.
In 1993, the Internal Revenue Service authorized the federal tax benefit, Qualified Transportation Fringes. According to Wikipedia, the benefit is a tax-free commuter benefit, are employer-provided voluntary benefit programs that allow employees to reduce their monthly commuting expenses for transit, vanpooling, bicycling, and work-related parking costs. Monies used for these eligible expenses are excludable from gross income subject to federal taxes. Many states also exclude these monies from state and local taxes. The newly passed tax legislation did make some changes to the benefit and can be found here.
The State of California had enacted a benefit very similar the year before. The LA Times reported that in 1992 the state enacted a law requiring certain employers to pay a monthly stipend to employees who carpool, ride public transit, walk or bike to work.
Nikon took advantage of the benefit and offered employees cash if they used one of the smog-reducing methods to work.
Straight Shot Down Vermont Street
We were a young family; the extra cash every month was going to add to our bottom line.
So Elgin got a bike, a helmet, a light and horn for his bike and rode 6.8 miles to work every day.
This terrified me at first.
I didn’t trust Los Angeles drivers not to run him over.
He had a couple of near misses but always got to work and returned home safely every day.
The Los Angeles climate made this ideal and the exercise was good for him physically and mentally.
We were a young couple trying to find our way in the world and the bike rides to work were a great stress reducer.
And the extra 200 bucks or so every month certainly didn’t hurt!
Elgin was a loyal Nikon employee. He worked hard and did his best work for them. He worked there until we moved to Houston.
The incentive has lots of benefits:
- Tax break for employers
- Good for the environment
- Can increase employee engagement (Employee buy-in to your brand)
- Healthier less, stress employees (especially if they’re riding or walking to work, that’s good for your health insurance premiums)
- Great recruitment tool
Commuter Benefits and Small Businesses
Now while you may be thinking there’s no way your small business could offer a program like this, you do have some options. According to a blog post on Human Interest, there are a number of third-party services that help small businesses administer commuter benefits, such as WageWorks, Zenefits, Commuter Benefit Solutions, and Navia. They can help you set up the program and educate your employees.
Commuter benefits are a tax-advantaged way to save you and your employees money. And you get to help the environment. Add this perk as part of your employee engagement strategy and your balance sheet, employees bottom line and health all benefit.