A new bill Gov. Phil Murphy signed into law Friday requiring employers to provide commuting benefits could enter legally testy grounds because the legislation imposes the requirement on federal employers, which the state has no authority to do, Murphy said.
Senate Bill 1567 requires employers with at least 20 workers to provide pre-tax benefits for commuting expenses, which advocates say will encourage workers to take public transit and save riders money.
The employee will be able to set aside a certain amount of their paycheck to pay for commuting expenses before federal taxes that they and the employer owe are taken out — similar to a health savings account. Employers that do not comply could be fined.
“Many residents of New Jersey use mass transit or other forms of transportation to commute daily to and from work,” Murphy said Friday in a statement. “Providing this pre-tax benefit to commuters throughout our state will reduce the financial burden of fares and parking costs, resulting in significant savings.
Federal employers would be exempt from the requirement of the bill if they offer at least an equal level of benefits, according to the legislation.
“This implies that in the absence of such a benefit, the federal government would be subject to the bill’s requirements with respect to its New Jersey employees,” Murphy wrote. “I am further advised that the State does not have the legal authority to apply the bill’s requirements to the federal government. In light of that conclusion, I wanted to signify my understanding that the bill does not apply to the federal government, in the hope of avoiding unnecessary confusion.”
The law takes effect immediately but will remain “inoperative” for a year while the Department of Labor and Workforce Development hashes out the rules and regulations for the new benefit, and undertakes a promotional campaign along with New Jersey Transit.
Many lawmakers, transportation officials and public advocates still praised Murphy’s approval of the bill.
Senate Majority Leader Loretta Weinberg, D-37th District, said that because many workers can already predict their monthly commuting costs, they would be able to quickly and accurately assess how much they should put towards this new benefit.
“This bill will allow workers across the state to set aside money to go towards their transportation expenses, like park and ride parking or transit passes, pre-tax,” Weinberg said in a statement. “This would offer valuable savings to many New Jerseyans struggling to make ends meet.”