Washington, D.C.’s (D.C.) Transportation Benefits Equity Amendment Act of 2020 (“Parking Cashout Law” or “law”) will go into effect as early as January 15, 2023. The Parking Cashout Law requires employers with 20 or more D.C. employees that offer parking benefits to provide a “Clean Air Transportation Benefit” to employees who decline the parking benefit, pay a Clean Air Compliance fee, or implement a transportation management plan.
Importantly, all employers with 20 or more D.C. covered employees, regardless of whether they offer a parking benefit, must report to the D.C. Department of Transportation (DDOT) with details how they comply or their basis for being exempt from the requirements by January 15, 2023.
Parking Cash Out Law Requirements
When does the Parking Cashout Law take effect?
The law takes effect on January 15, 2023. However, employers who have a current parking lease that began before October 1, 2020 are exempt until the end of their current lease term (if it ends after January 15, 2023).
Which employers are subject to the Parking Cashout Law?
Employers who have 20 or more covered D.C. employees that offer a “parking benefit” are subject to the Parking Cash Out Law. A “parking benefit” is free or subsidized parking within a ½ mile of an employer’s workplace that is located within D.C. A parking benefit does not include parking that is offered to an employee who is required to use their personal car in the regular performance of their work.
The following employers are exempt:
- Employers that owned the parking spaces used by employees prior to October 1, 2020, and who still own the parking spaces; and
- Hospitals and universities with pre-existing Campus Plans (for the existing campus plan and for a specified period of time).
Which employees are considered “covered employees”?
A covered employee is a part-time or full-time employee that works at least 50% of their working time in a D.C. office. Employees who telework over 50% of the time outside of D.C. are not covered under the law.
What are covered employers’ obligations?
Covered employers that offer a “parking benefit” must do one of the following:
- Offer a “Clean-air Transportation Fringe Benefit,” in an amount equal to or greater than the monthly market value of the parking benefit, to employees who decline the parking benefit (referred to as the parking cashout option);
- Pay the Department of Clean Air Compliance a fee of $100 per month per employee who is offered a parking benefit; OR
- Implement a transportation demand management plan.
These options are discussed in more detail below.
What is a “Clean-Air Transportation Fringe Benefit”?
Covered employers can comply by providing a “Clean-Air Transportation Fringe Benefit” to employees who decline an employer-provided parking benefit. The “Clean-Air Transportation Fringe Benefit” can be used by employees for public transit or vanpool costs. If an employee anticipates they will not use the entire benefit amount toward transportation costs (based on the employee’s estimate provided to their employer), their employer must provide the shortfall amount in the form of additional compensation, an increase contribution to the employee’s health coverage, or both.
Employers must determine the amount of the “Clean-Air Transportation Fringe Benefit,” which must be equal to or greater than the monthly market value of a parking benefit. The monthly market value is (1) the median of publicly advertised monthly parking rates at private facilities available within ¼ mile of the employer’s workplace; or (2) if no such information is available, such rates within ½ mile; or (3) if no such information is available for (1) or (2), $175 per month.
To implement this option, employers must send the notification email template and Employee Clean-Air Transportation Fringe Benefit Worksheet to employees who are offered a parking benefit. If an employee declines the parking benefit and opts for the Clean-Air Transportation Fringe Benefit, the employee must complete the worksheet and provide an estimated amount they will use towards transportation (employees cannot change their estimate more than once every 12 months). The employer must then set up a process to administer the benefit and provide any shortfalls via additional compensation and/or contribution to health coverage.
What is a Transportation Demand Management Plan?
Covered employers can comply by submitting and obtaining approval for a Transportation Demand Management Plan. Covered employers must submit a plan that would reduce the number of commuter trips their employees make by car by at least 10% from the prior year. This reduction must occur until 25% or less of employees’ commuter trips are made by car. If the plan is approved, the covered employer must submit annual data reports that will be used by the DDOT to determine whether the employer is complying with their plan. If the DDOT determines compliance is not met, the employer must take additional steps outlined by DDOT.
What is the Clean Air Compliance Fee?
Covered employers can comply by paying a $100 per employee per month Clean Air Compliance Fee to the DDOT instead of offering a Clean-Air Transportation Fringe Benefit or Transportation Management Plan. The fee is submitted via mail and employers must submit proof of payment via DDOT’s reporting platform every other year.
What are the reporting requirements?
Employers with 20 or more covered employees, regardless of whether they offer a parking benefit, must submit a report to the DDOT which details how they are complying or if an exemption applies. The report is due by January 15, 2023, and every 2 years thereafter.
The information that employers must provide will depend on whether they are reporting an exemption, and if not, which compliance option they use. The information employers will need to submit is outlined here.
Employers report through the DDOT’s reporting dashboard.
Are there potential penalties for non-compliance with the law?
The Mayor may impose civil fines or penalties for violations of the law.
Employers that have 20 or more employees working in D.C. should:
- Determine whether they are subject to the Parking Cashout Law (i.e., offer free or subsidized parking within ½ mile of their office located in D.C.) or fall into an exemption;
- If an employer is subject to the law, determine which option they will use to comply and take steps to implement this option by the applicable deadline; and
- Complete reporting by January 15, 2023, and every 2 years thereafter.
- Transportation Benefits Equity Amendment Act of 2020
- DC Parking Cashout Law Guide for Employers
- DDOT’s reporting dashboard
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