Bob Begle opened his business in downtown Atlanta because
that's where his customers were. But the employees needed to
staff the 37-year-old entrepreneur's company mostly lived in
the suburbs. "Nobody lives in the downtown area because of the
cost of housing," explains Begle, co-founder of design firm
Urban Collage
Inc., which has $1.6 million in projected 2005 sales.
To make it easier to attract and retain employees, Begle offers
a free monthly transit pass to workers. The company picks up the
$52 monthly cost of each pass, which employees can also use on
weekends and after hours on both buses and trains. Six of the
company's 13 workers take advantage of the transit passes, and
Begle reports that the benefit is highly valued by those who
do.
"The last two people we've hired indicated it was a
significant factor in their decision [to take the job]," Begle
says.
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A 2000 survey by Mercer Human Resource Consulting found 27 percent of
companies financially support employees who use public transit to
commute, up from 13 percent in 1998. Eighteen percent subsidized
commutes using nonpublic transportation, including private
automobiles, up from 17 percent in 1998.
The trend has accelerated since the IRS changed
commuting-benefits rules in January 2004, says Lori Elder, who
administers commuting reimbursement programs for Ceridian Corp., a
Minneapolis HR administration firm. The IRS lets employers give
employees up to $105 a month for transit passes and vanpool
expenses, plus $200 for parking. The benefits are pretax, so
neither employer nor employee has to pay income taxes on them.
"It not only saves the employee money, it saves the employer
money," Elder says. "It's a win-win
situation."
The arrangement works best in major metro areas with long
commutes, Elder says. "New York City, Chicago, Boston, Los
Angeles, San Francisco--anywhere employees either have to pay to
park their vehicles to get to work or while at work, [or] they have
to pay to commute back and forth." And it does have limits.
Commuters who drive their own vehicles can't, for instance, get
pretax benefits for auto expenses unless they use vanpools carrying
six people or more.
Costs add up for larger numbers of employees, too. Begle's
cost, for instance, is more than $2 a day per commuting employee.
To save money, some employers sell fare passes to employees at a
discount instead of giving them away for free. Those with sizable
numbers of employees commuting from a single geographical area
sometimes set up their own mini-transit hubs to make vanpooling
easier and cheaper.
One key to making commuting benefits popular is making them easy
to use. Begle says his employees like being handed transit passes
each month rather than having to purchase them. Elder says services
that allow employees to purchase transit passes online, without
having to stand in lines, are also popular.
If you offer commuting benefits, take care to avoid charges of
discrimination by offering them to employees of all levels who live
a certain distance from work. Make sure employees know about the
benefit by marketing it effectively. Study transit routes and
schedules to see if existing public transportation can solve
commuting problems. And think ahead. You may be able to locate your
business almost anywhere if you think through commuting issues
before signing a lease. "We chose this location because
it's close to a Metropolitan Atlanta Rapid Transit Authority
rail line," says Begle. "That was part of the
decision-making process for putting our office here."
Mark Henricks writes on business and technology for leading
publications and is author of Not Just a Living.