Perhaps overlooked by the more substantive and ground-breaking Paid Leave for All Workers Act and the related Chicago and Cook County ordinances subsequently adopted, the Illinois Assembly also enacted the Transportation Benefits Program Act (“TBPA”) on July 28, 2023. Pursuant to the TBPA, employers will have to provide their full-time employees with a pre-tax public benefit beginning January 1, 2024.
The TBPA defines “covered employers” as any “individual, partnership, association, corporation, limited liability company, government, non-profit organization, or business trust” located in all of Cook County and in various (and seemingly more heavily populated) townships in Lake, Will, Kane, DuPage and McHenry Counties. The TBPA further defines employers as those having at least 50 full-time employees. Accordingly, municipalities and other public sector employers in the affected geographic areas are bound to extend such benefits to their qualifying employees.
The TBPA requires employers to provide commuter benefits to all full-time employees that have been employed for 120 days. A full-time employee is anyone working at least thirty-five hours per week and receiving compensation on a full-time basis.
Under its terms, employers have to implement a pre-tax commuter benefit that will allow employees to elect using pre-tax dollars to purchase a transit pass. Employees will be able to have the benefit deducted from their pay, which will be excluded from their taxable wages and compensation. The dollar amount to be so deducted will be up to levels approved by the federal tax law requirements under 26 U.S.C. §132(f) and related regulations. The maximum amount to be deducted is adjusted annually. Pursuant to the Publication 15-B (2023), Employer’s Tax Guide to Fringe Benefits, the Internal Revenue Service set the maximum amount in 2023 at $300. On November 27, 2023, the IRS announced in Internal Revenue Bulletin 23-48 that the 2024 maximum amount would be increased to $315. Of note, while federal regulations do provide for fringe transportation benefits associated with vanpooling, parking, and bicycle commuting reimbursement, these are not yet required under TBPA. Employers may, however, comply with the TBPA by participating in a program administered by the Chicago Transit Authority or the Regional Transportation Authority.
The TBPA also provides that any transportation benefits that have been collectively bargained as of January 1, 2024 will remain in force and effect. Similarly, employees through their union representatives will continue to be able to bargain for transportation benefits in excess of the minimum requirements in the TBPA. After January 1, 2024, the requirements of the TBPA may be waived in collective bargaining agreements, but such waiver must set forth “explicitly…in clear and unambiguous terms.”