Is a Commuter Benefits Program Right for Your Company?

Commuting to work has always been a problem for a large percentage of employees. Now with fuel prices at record levels, it’s an expensive problem as well.

And it’s not just employees who are suffering. The increasing pressures of commuting have a significant effect on the attitudes and loyalties of employees toward their employers, according to a survey conducted by Business Week.

The survey suggests that commuting pressures are prompting many respondents to consider a change of employment. In fact, 26 percent of all respondents said they are considering another job in a different location due to their commute. Among respondents who say their commute is “getting worse,” 63 percent say they are considering finding work closer to home.

There are other commuter-related problems. Getting to work late usually results in increased stress for employees and the possibility of a shortened and less productive workday. The study revealed that nearly one-quarter of respondents arrive to work late (15 minutes or more) three or more days a month due to their commute. Among respondents who say their commute is getting worse, 35 percent arrive late.

In trying to find solutions to cope with commuting pressures, most employees look to their employers for relief. Nearly two-thirds of respondents feel their employers should take the lead in helping to ease the difficulties of their commutes. This percentage is even higher for those most affected by these pressures.

Still, many employers have been slow in providing solutions, even low-cost or no-cost solutions. Even though a commuter benefits program would allow employees to pay for their commuting expenses (using mass transit - bus or rail) tax-free, up to monthly limits set by the IRS, companies have been slow to adopt such programs.

Starting a Commuter Benefits Program

To start a successful program, ask a few key questions:

• What commute options are our employees likely to use?
• How many employees will be able to participate in the program, and which employees?
• What is the budget for the commuter benefit program?
• How much administrative time is our company willing to commit to the program?
• What does our company hope to accomplish with a commuter benefit program?

Commuter benefits programs can cost little to implement and will often pay for themselves in the long run. For example, the cost of providing subsidized commuter benefits or tax-free transit benefits can be deducted as a normal business expense. Even better, unlike ordinary wage payments, employers do not have to pay their share of federal payroll taxes on subsidized commuter benefits. This payroll tax savings alone is usually more than enough to cover any cost of administering the program.

Here are some examples of how your company can combine various commute program elements to meet specific needs:

• If your company wants to decrease the cost of passes to employees who commute by bus or rail, consider allowing employees to use pre-tax income to purchase their pass, and matching the employee contribution with a small subsidy.
• If your company wants to increase the number of employees who commute by bus or rail – to manage tight parking, for example – consider:
  • providing a subsidy for all or a portion of your employees' passes
  • allowing employees to use pre-tax income to purchase the remaining portion of their bus pass, and
  • posting a commute options board with schedule information
• If your company wants to offer an equitable but varied program of commute options to employees, consider:
  • providing a subsidized voucher for employees to purchase bus, rail, ferry and vanpool passes,
  • providing safe bike storage area and lockers for those who walk or bike to work,
  • posting a commute options board with information on bus, rail, ridesharing, walking and bicycling, and
  • providing telecommute or alternative work hours

  A commuting benefits program can help you increase employee loyalty, reduce attrition and employee stress, increase productivity, and provide an advantage when competing for talent.

  Commute Worries Growing

  The problems of commuting have clearly moved front and center in the lives of today's workforce. In a recent survey:

  • 80 percent of respondents expressed some degree of concern over the cost of commuting to work
  • 92 percent expressed some degree of concern over the high cost of fuel
  • 52 percent of solo drivers said the frequency and duration of traffic jams were getting worse
  • 92 percent of respondents had some degree of concern about the effects of global warming on the environment

  Source: Society for Human Resource Management