Commuter Benefits: New Jersey

This Commuter Benefits policy applies to employees in New Jersey under New Jersey's transportation fringe benefit law (N.J. Stat. § 27:26A-16) and related state rules, and explains how your organization can offer eligible employees the option to pay for certain commuting expenses through pre-tax payroll deductions, consistent with federal tax definitions for transit, qualifying commuter transportation, and qualified parking.

The History Behind Commuter Benefits Policies in New Jersey

This Commuter Benefits policy sits in Benefits & Perks, but its origin story is really about taxes and traffic. Long before New Jersey got involved, the federal government created a tax-advantaged "transportation fringe benefit" under the Internal Revenue Code, letting employees pay for certain transit and parking costs with pre-tax dollars. It was a clean idea on paper: make commuting a little less expensive without raising wages, and do it through payroll instead of a reimbursement free-for-all.

New Jersey later took that federal tool and turned it into a state requirement for many employers. The Legislature added a transportation fringe benefit law (N.J.S.A. 27:26A-16), and the state followed with detailed rules through the Department of Labor and Workforce Development (N.J.A.C. 12:55-3.1 and related sections). The practical goal was pretty blunt: get more people onto mass transit and into carpools, reduce congestion and emissions, and do it in a way that doesn't require employers to fund the benefit. Employers that meet the coverage thresholds generally have to offer the chance to set aside pre-tax pay for eligible expenses, even if the employer doesn't chip in.

That mix of federal definitions and state enforcement is why the policy reads the way it does. The eligible expenses track federal tax law (transit passes, qualifying commuter highway vehicles, and qualified parking), while the "request it in writing" and payroll-deduction setup reflects how New Jersey expects the benefit to work in real life: employees opt in, HR turns it into a pre-tax deduction, and the organization can show it offered the program if the state ever asks. It isn't glamorous, but it is one of those rare compliance items that employees can feel in their paycheck.

Which Law is the Commuter Benefits Policy Meant to Comply With?

If you create and distribute a Commuter Benefits Policy for your New Jersey-based employees, it is in an effort to comply with New Jersey's Commuter Transportation Benefits Law (N.J. Stat. § 27:26A-16) and the New Jersey Department of Labor and Workforce Development's implementing regulations at N.J.A.C. 12:55-3.1, N.J.A.C. 12:55-3.2, N.J.A.C. 12:55-3.3, N.J.A.C. 12:55-3.4, and N.J.A.C. 12:55-3.5.

How to Write a New Jersey-Specific Commuter Benefits Policy

• Start with "why" and introduce the concept of a New Jersey pre-tax commuter benefit that helps employees save on eligible transportation costs.
• Define the types of commuting and parking expenses your policy covers under the benefit.
• Explain how employees request the benefit and that enrollment is handled through a payroll pre-tax deduction setup.

When to Include this Policy in Your Employee Handbook

The law does not require you to publish a policy or issue a specific notice. That said, you still have to comply with the requirements that apply to you as an employer. 

You can comply without putting this in your handbook or otherwise publishing it to employees, but including it usually pays off. A short policy helps employees find answers without a ticket to HR, and it helps supervisors handle situations the same way across teams. If you're intentionally keeping your handbook lean, this can live in another easy-to-find policy hub, but make sure employees can actually access it and managers know where to point people. 

Other Considerations

The law applies to New Jersey employers who have at least 20 employees working in the US.

Exceptions

None.