Every employer in the state of New Jersey that employs at least 20 people is required to offer pre-tax commuter benefits to employees (who are not subject to a collective bargaining agreement). The definition of “employee” mirrors the definition used in the unemployment compensation law: that is, anyone hired or employed by the employer who reports to the employer’s work location. This law mandates providing a pre-tax transportation fringe benefit as defined by Section 132(f) of the Internal Revenue Code. The benefit must enable employees to set aside wages on a pre-tax basis so that employees can purchase eligible transportation services including transit passes and commuter highway vehicle travel.
While the Ordinance is effective immediately, employers are not yet obligated to provide this benefit. The law becomes effective on the earlier of 365 days following the date of enactment (March 1, 2019) or the effective date of rules and regulations that the Commission of Labor and Workforce Development is to adopt. It remains to be determined when those rules and regulations will be adopted. Once the law is in effect, employers are subject to a penalty of between $100 to $250 for the first violation. Before the penalty is imposed, employers have 90 days from the date of the violation to offer the pre-tax transportation fringe benefit program. If the 90-day cure period passes and an employer fails to cure, it will be subject to a $250 penalty for each additional 30-day period in which the employer fails to offer the benefit.
Employers are advised to be on the lookout for guidance from the Commissioner of Labor and Workforce Development on the steps necessary to provide this benefit.
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