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Overtime Primer: Highlights from the New Regulations
The federal DOL overtime regulations go into effect this year. Are you ready?
This report includes a summary of key changes, including the salary level test and salary basis test.
As a bonus, we've included a handy flowchart to help you determine exemption status under the FLSA.
March 12, 2002
A Commuting Benefit - From the IRS
The amount can range up to $100 a month for public transportation and $185 for parking.
The set-up is similar in many ways to pre-tax deductions for dependent care and medical costs.
Transit benefits are used to purchase public transportation, such as train tickets or commuter cards for buses and elevated trains, or to pay for van pooling.
As for parking fees, Kleiman writes, they also can be included in an employer's pretax savings.
"Employee taxable income goes down slightly because $100 a month is not subject to taxes - and you would have had to pay for transportation anyway," Kleiman observes. "And, unlike dependent care, you're not locked into it for an entire year: It's a monthly benefit."
Kleiman gives the example of Ernst & Young. The professional services firm now provides its employees transportation and parking options, a benefit expected to reduce by 40 percent its workers' commuting costs - and also to lower the firm's payroll taxes.
At Kirkland & Ellis, a Chicago-based lawfirm, 800 of the 2,000 employees worldwide use the transit benefit, with an average savings of $200 a year each. HR Director Alders Cartland only has figures for parking for Chicago, where 200 employees participate, with an average annual savings of $300 each.
"The beauty of it is that it encourages people to use public transportation," said Cartland, who has worked in human resources for almost two decades. "It's for everyone, whether you're single or married, male or female, young or old, have children or live in the city or suburbs. And I find when I'm interviewing job applicants that it's a benefit they recognize and appreciate, so it also helps me in hiring and retaining. It's terrific!"
Cartland herself saves with the benefit, according to Kleiman. When she lived in the suburbs, parking at the train station cost her $80 a month, so she saved $10 a month in pretax savings. And she saved $20 a month off her train ticket.
Now that she lives in the city and uses the bus, she saves $7.50 a month.
"I save money because my transit costs are taken out of my paycheck before state or federal taxes are deducted, so that reduces the amount of taxes I pay," Cartland told Kleiman. "And it's a no-brainer to acquire my transit pass. I don't even have to stand in line: I pick it up at the reception desk at the office once a month. How can you argue with that?"
Kleiman also reports that in a 2001 survey by Xylo Inc., a provider of Web-based work/life solutions, 86 percent of 600 U.S. workers say transit assistance benefits are "beneficial and useful."
But only 17 percent of those surveyed work for employers who provide them.
To read the Chicago Tribune article, click here.
Participate in this week's HR.BLR.com poll and discussion!
cago Tribune workplace columnist Carol Kleiman notes that the Internal Revenue Code allows employers to provide work-related transportation benefits to employees on a pretax basis.