HF5123

Purpose

The bill would require certain employers near public transit in Minnesota to provide a pretax commuter benefit to eligible employees. The goal is to support employees who use transit or other commuting options, reduce their after-tax costs, and promote use of public transportation.

Key definitions and who is covered

• Covered employee: An employee who works an average of at least 35 hours per week on a full-time basis.
• Covered employer: An entity (such as a business, nonprofit, government entity, etc.) located in a city of the first class, employing 50 or more people, and within one mile of a regular route transit service. The employer directly or through an agent controls wages, hours, or working conditions.
• Public transit / regular route transit: As defined by existing Minnesota law.
• Transit pass: Any pass or similar item that lets a person ride public transit.
• Metropolitan Council: The regional planning authority that can run or oversee the required commuter benefit program or assist with implementation.

Main provisions

1) Commuter benefit program - Covered employers must provide a pretax commuter benefit to covered employees. - The pretax benefit allows employees to pay for a transit pass with pre-tax dollars through payroll deduction, reducing taxable wages up to the federal limit described in 26 U.S.C. section 132f. - Employers may comply by participating in a program run by the Metropolitan Council, a replacement service provider, or another transit authority or governing body in a city of the first class. - In addition to a transit pass, employers may offer other employer-sponsored subsidies for qualified transportation expenses, including walking, biking, carpooling, or vanpooling. - The benefit must be offered to all employees starting with the first full pay period after 120 days of employment.

2) Public information and access - Transit authorities and planning organizations must market the existence of this program and its requirements to riders and employers.

3) Public map of eligible locations - The Metropolitan Council and other relevant transit authorities must publish a publicly accessible searchable map showing addresses within one mile of regular route transit.

4) Interaction with labor agreements - The bill preserves employees’ rights to bargain collectively and does not change the terms of existing bona fide collective bargaining agreements (CBAs) in force when the section takes effect. - After the effective date, the requirements can be waived in a bona fide CBA only if the waiver is explicitly stated in clear and unambiguous terms.

Compliance considerations and what changes this would make

• Scope: Targets larger employers in cities of the first class that are near transit and have at least 50 employees, expanding the use of pretax transit benefits.
• Administration: Requires coordination with the Metropolitan Council or other transit authorities for implementation and marketing.
• Employee impact: Provides a tax-advantaged way for employees to use transit passes and other commuting options, potentially lowering commuting costs.
• Public information: Increases transparency by requiring a publicly accessible map of eligible transit-adjacent employers.
• Labor relations: Shields existing CBAs and allows targeted waivers only if explicitly agreed in the CBA.

Significance and potential impact

• Shifts some employer tax liability to enabling pretax transportation benefits for a defined, transit-adjacent workforce.
• Encourages transit use and other sustainable commuting options, possibly reducing traffic and emissions in key urban areas.
• Places new administration and compliance requirements on larger employers near transit in Minnesota.

Relevant Terms - commuter benefits - covered employee - covered employer - pretax commuter benefit - transit pass - regular route transit - public transit - Metropolitan Council - 26 U.S.C. § 132f (federal tax limit) - payroll deduction - walking, biking, carpooling, vanpooling - first class city - within one mile - 120 days of employment - collective bargaining agreement (CBA) - bona fide - waiver - marketing the program - accessible map of addresses near transit