Before the pandemic, most people either worked in the office or at home—with very few going back and forth. But that isn’t the case today. According to a Georgia Commute Options survey, employees work from home three days a week on average. The all-or-nothing approach to where work happens is gone.
Unfortunately, many aspects of that old approach remain. One key example can be seen in how commuter benefits are typically structured. Most workplaces still have benefits that cover parking or riding transit every day for an entire month. For the many employees who only come into the office a few days a week, these benefits feel out of sync with their commuting needs.
Hybrid employees want benefits just as flexible as they are. Organizations should rethink how to offer commuter benefits to meet these expectations.
“Commuter benefits” could refer to one of two things: the Qualified Transportation Fringe Benefits allowed by the IRS, or a broader range of benefits that companies can provide independently. Both types need to be reevaluated to offer the ideal mix to flexible commuters.
Qualified Transportation Fringe Benefits
This type of commuter benefit is a tax benefit that allows employees to set aside a specific amount of pre-tax dollars a month (to a maximum of $280) for commuting. This money is deducted from an employee’s taxable income, which has tax benefits for both the employee and the employer.
These tax savings make this type of benefit broadly popular. The downside, however, is that the funds can only be used for specific forms of commuting. Additionally, if an employee commutes less than expected, accrued money is forfeited to the employer.
In addition to pre-tax savings, there are a number of additional ways employers can support employees’ commutes, from facilitating carpools, to offering fuel credits, to providing shuttle services.
With gas prices soaring, employees will appreciate anything employers can do to make commuting more affordable. The right benefits may also encourage hybrid employees to come into the office more often. Commute support can improve retention, too—23% of U.S. workers have quit a job due to a difficult commute.
According to a survey by Care.com, 31% of employers plan to introduce or expand commuter benefits in the near future. However, 40% plan to dial them back. Ultimately, the question isn’t whether it’s better to expand or shrink benefits, but how your company can introduce the most useful benefits for your flexible workforce.
When creating more flexible commuter benefits, there are a few approaches you can take.
1. Provide Flexible Monthly Benefits
The traditional approach to commuter benefits usually requires employees to commit to one commute method every day for a whole month. More flexibility can be achieved by offering a monthly benefit that covers any eligible commuting costs.
For example, employers could determine the average amount that employees come into the office and provide a pre-tax plan that is sized for that amount instead of for daily commuting. They can also give employees a debit card that they can use to make qualified purchases from a pre-tax commuting account. While employees would still have to set aside money each month, a debit card would allow more flexibility in how they used those funds.
2. Offer a Daily Cash Stipend
Another way to respect employee flexibility is to simply offer a cash stipend to offset the cost of commuting.
This type of stipend would be considered extra income and therefore would be taxed. However, employees would be free to use it for any commute mode, not just what the IRS fringe benefit allows.
Stipends can be limited to days the employee is in the office, saving employees money. Many organizations also use stipends to encourage more sustainable commute modes, such as transit, carpooling, or biking.
3. Bundle in a Backup Benefit
A final option is to offer a commuter benefit “bundle” that includes money for multiple commuting modes. For example, you could provide a pre-tax benefit that covers the cost of parking as well as a couple days of transit, or vice versa.
This type of bundle lets employees choose how they commute, giving them the option to balance affordability and convenience.
Now that employees have more flexibility in how and where they work, they expect the same of how they get to work. Supporting that flexibility with tailored commuter benefits can help make your organization an employer of choice.
If you need more support implementing commuter benefits for a hybrid workforce, Georgia Commute Options is here to help. Employers in the Atlanta region can get a free commute consultation from our team of experts. Find of how.