December 1, 2022
District of Columbia employers must offer employees clean-air transportation alternatives to parking benefits or a pay a compliance fee
Under District of Columbia law (D.C. Law 23-113; amending D.C. Law 20-142), and effective January 15, 2023, the District seeks to promote clean-air transportation by requiring that covered employers offer their employees clean-air transportation alternatives to their existing free or subsidized parking benefit, implement a transportation demand management plan (TDM) or pay a Clean-Air Compliance fee of $100 per month for each employee offered a parking benefit.
All covered employers, regardless of how they address the clean-air compliance requirements, are also required to submit a report every two years to the District Department of Transportation (DDOT) to assist the District with ongoing planning and enforcement efforts.
Providing alternatives to free or subsidized parking
A covered parking benefit is parking within the District of Columbia that is within 0.5 miles of the business premises and is given to employees in addition to compensation, either directly or through an employer subsidy; the employee pays nothing, or less than the fair market value for the benefit. A covered parking benefit does not include parking that is offered to employees who are required to use a personal motor vehicle in the regular performance of their work.
If an employer provides covered parking benefits to employees, it has three choices:
A clean-air transportation fringe benefit includes:
Employees may accept the clean-air transportation fringe benefit only if they have declined the parking benefit offered by the covered employer.
Employees who accept a clean-air transportation fringe benefit must, in a form determined by the DDOT, estimate the amount of the clean-air transportation fringe benefit that they will use each month.
If employees do not use the full amount of their clean-air transportation fringe benefit, the covered employer must provide payments to the employee for the difference. These payments may be in the form of increased compensation, a contribution toward the employee's health insurance premiums, or a combination of both.
Covered employers may adopt a TDM under which the covered employer develops a plan to reduce employee commutes by car by 10% annually, until 25% or less of the covered employer's employees commute to the city by car. Each TDM is subject to review and must be approved by the DDOT. Annual reporting metrics must also be provides as specified under D.C. Code Section 32-152.01 (d)(3)(A).
Reporting to the DDOT
Every two years, with the first report due January 15, 2023, all covered employees, regardless of which clean-air compliance option they choose, must submit a report to the DDOT that includes:
Employers that are exempt from these requirements must report the basis for their exemption.
Covered employers and exemptions
Under D.C. Law 20-142, a District of Columbia business with more than 20 employees is a covered employer.
D.C. Law 23-113 provides the following exemptions:
Ernst & Young LLP insights
The District of Columbia's clean-air transportation requirements are complex and will require employers to carefully plan how they will approach compliance. Businesses should consider reaching out to their labor law advisors for assistance.
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor
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