Commuter Gains Ease employees' transportation troubles with commuter benefits.
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Bob Begle opened his business in downtown Atlanta becausethat's where his customers were. But the employees needed tostaff the 37-year-old entrepreneur's company mostly lived inthe suburbs. "Nobody lives in the downtown area because of thecost of housing," explains Begle, co-founder of design firmUrban CollageInc., which has $1.6 million in projected 2005 sales.
To make it easier to attract and retain employees, Begle offersa free monthly transit pass to workers. The company picks up the$52 monthly cost of each pass, which employees can also use onweekends and after hours on both buses and trains. Six of thecompany's 13 workers take advantage of the transit passes, andBegle reports that the benefit is highly valued by those whodo.
"The last two people we've hired indicated it was asignificant factor in their decision [to take the job]," Beglesays.
A 2000 survey by Mercer Human Resource Consulting found 27 percent ofcompanies financially support employees who use public transit tocommute, up from 13 percent in 1998. Eighteen percent subsidizedcommutes using nonpublic transportation, including privateautomobiles, up from 17 percent in 1998.
The trend has accelerated since the IRS changedcommuting-benefits rules in January 2004, says Lori Elder, whoadministers commuting reimbursement programs for Ceridian Corp., aMinneapolis HR administration firm. The IRS lets employers giveemployees up to $105 a month for transit passes and vanpoolexpenses, plus $200 for parking. The benefits are pretax, soneither employer nor employee has to pay income taxes on them."It not only saves the employee money, it saves the employermoney," Elder says. "It's a win-winsituation."
The arrangement works best in major metro areas with longcommutes, Elder says. "New York City, Chicago, Boston, LosAngeles, San Francisco--anywhere employees either have to pay topark their vehicles to get to work or while at work, [or] they haveto pay to commute back and forth." And it does have limits.Commuters who drive their own vehicles can't, for instance, getpretax benefits for auto expenses unless they use vanpools carryingsix people or more.
Costs add up for larger numbers of employees, too. Begle'scost, for instance, is more than $2 a day per commuting employee.To save money, some employers sell fare passes to employees at adiscount instead of giving them away for free. Those with sizablenumbers of employees commuting from a single geographical areasometimes set up their own mini-transit hubs to make vanpoolingeasier and cheaper.
One key to making commuting benefits popular is making them easyto use. Begle says his employees like being handed transit passeseach month rather than having to purchase them. Elder says servicesthat allow employees to purchase transit passes online, withouthaving to stand in lines, are also popular.
If you offer commuting benefits, take care to avoid charges ofdiscrimination by offering them to employees of all levels who livea certain distance from work. Make sure employees know about thebenefit by marketing it effectively. Study transit routes andschedules to see if existing public transportation can solvecommuting problems. And think ahead. You may be able to locate yourbusiness almost anywhere if you think through commuting issuesbefore signing a lease. "We chose this location becauseit's close to a Metropolitan Atlanta Rapid Transit Authorityrail line," says Begle. "That was part of thedecision-making process for putting our office here."
Mark Henricks writes on business and technology for leadingpublications and is author of Not Just a Living.
