In 2012, Governor Brown signed Senate Bill 1339 into law which authorized the implementation of a pilot program in the San Francisco Bay Area on commuter benefits. Senate Bill 1339 authorizes the Bay Area Air Quality Management District (“Air District”) and the Metropolitan Transportation Commission (“MTC”) to adopt a joint “commuter benefit ordinance” that requires certain employers operating within their jurisdictions to offer employee commuter benefits.

The Air District and MTC have now solicited feedback on the subject by conducting workshops and holding public hearings. The end result was the establishment of the Bay Area Commuter Benefits Program. Employers of 50 or more full-time employees within the nine county Bay Area are required to comply with the Program by this coming September 30. The Program’s primary purpose is to reduce emissions of greenhouse gases and air pollutants, improve air quality, protect public health, and reduce traffic congestion. By requiring larger employers to provide commuter benefits to employees to help reduce motor vehicle traffic, employees are encouraged to use alternative commute methods such as bicycling, ridesharing or public transit.

The Program applies to public, private and non-profit entities in the Bay Area that employ an average of 50 or more full-time employees per week, excluding seasonal/temporary employees. A full-time employee is defined as an employee who performed an average of at least 30 hours of work per week within the previous calendar month unless the employee is seasonal or temporary. A seasonal/temporary employee is anyone who works 120 days or less within the calendar year. The average is to be determined on an ongoing basis by calculating the average number of employees per week carried on the employer’s payroll over the course of the most recent three month period.

The Program requires that, by September 16, 2014, each covered employer must offer one of four approved commuter benefit options to its full-time employees. While covered employers are required to offer at least one commuter benefit, the employee is not required to participate in the Program. The first option is the pre-tax benefit. That is, employees are allowed to exclude from their taxable wages costs incurred for transit passes or vanpool charges, up to the maximum amount allowed by federal tax law. The second option is the employer-provided subsidy. Under this second option, the employer offers employees a subsidy to offset the monthly cost of commuting via transit or vanpool. The third option is employer-provided transit. That is, the transportation is furnished by the employer at little or no cost to employees in the form of a vanpool, bus, or similar multi-passenger vehicle operated by or for the employer. Finally, as an alternative to these three options, employers may offer a more generous commuter benefit, provided it is consistent with the requirements of the law and is submitted in writing and approved in advance of being implemented.

Covered employers are required to register for the Program by September 30, 2014, by going to 511.org and clicking on the “Bay Area Commuter Benefits Program” and following the instructions from there. Prior to beginning the registration process each employer should designate a Commuter Benefits Coordinator who will complete the online registration form and report to the Air District/MTC. Covered employers will have to update their registration and verify their information once a year.

Also by September 30, 2014, employees must be given notice about how to take advantage of the available commuter benefits option, and the commuter benefit must be made available by that same date. Notice must be provided at the time a new employee is hired. For existing employees, notice must be given at the time the benefit is made available and at least once a year thereafter. Electronic notice is sufficient. The employer must keep records to document implementation of its commuter benefits program, and must make the records available for review upon request by the Air District and/or MTC for a minimum of three years. A covered employer that violates these requirements will be subject to civil penalties for the enforcement of air pollution control laws pursuant to the California Health and Safety Code. Proven violations can results in penalties of up to $1,000 per day.