Last week, Philadelphia’s City Council passed a new ordinance requiring employers to provide employees with the opportunity for pre-tax commuter benefits. The bill is now awaiting Mayor Kenney’s signature and once signed, shall go into effect on December 31, 2022.

Who is Covered?

Covered Employers are defined as individuals, partnerships, corporations, or other entities that employ fifty (50) or more Covered Employees, excluding government employees. Covered Employees are those individuals performing an average of thirty (30) hours of work per week within the geographic boundaries of Philadelphia. Note this is unlike many of the Philadelphia ordinances, which do not specify that the number of employees to meet the threshold have to be “Covered Employees.” Meaning, if a business does not have 50+ employees who mainly work within Philadelphia, it is not covered.

What is Required?

Every covered employer must make available to its Covered Employees at least one of the following employee commuter transit benefit programs:

  • Election of pre-tax payroll deduction for Mass Transit Expenses or Qualified Bicycle Expense, consistent with the maximum amount that may be deducted under the Internal Revenue Code.
  • An employer-paid benefit whereby the employer supplied a Fare Instrument (i.e., a pass, token, SEPTA card, etc.) for the Covered Employees’ Mass Transit Expense, consistent with the maximum amount that may be deducted under the Internal Revenue Code; or
  • Any combination of the above programs.

A Mass Transit expense is one incurred for a public transportation token, pass, fare card, or the like, or vehicle-related expenses due to travel between an employee’s work and residence. A Qualified Bicycle Expense is reasonable expenses incurred for using a bicycle for commuting a bicycle to and from work.

Essentially, covered employers will be required to provide their Philadelphia employees with either employer-funded transportation costs, or pre-tax deductions from employee wages for the same.

When Does the Ordinance Become Effective?

December 31, 2022.

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