Washington DC’s New Parking Cash Out Law Impacts Commuter Benefits Funds

The Council of the District of Columbia has approved a new transportation benefit law (D.C. ACT 23-305) that requires employers who provide parking benefits to also offer ‘clean-air’ transportation benefits to their employees. The law also requires the employers to submit annual/bi-annual reporting and plans to the city. The new law applies to every employer that employs at least 20 persons located in Washington D.C. and offers its employees free or discounted parking. Note, the ordinance does not apply if the employer owns the parking lot.

Employers who continue to offer free or discounted parking will be subject to the ordinance and need to offer one of the following three options.

• A “Parking Cashout” - Offer a Clean-Air Transportation Fringe Benefit such as transit pass, bus, vanpool, or bicycling equal to or greater than the market value of their parking spot.
• Transportation demand management (TDM) plan – Develop a plan, subject to District Department of Transportation (DDOT) approval. The plan must list strategies and a timeline for reducing the number of commuter car trips made by employees by at least 10% from the previous year until 25% or less of employees’ commuter trips are made by car.  The TDM plan must include compliance data reporting to the DDOT by January 15, 2023, and every two years thereafter.  The report must include:
  • Total number of employees
  • Number of employees
    • Offered a parking benefit
    • Using a parking benefit
    • Offered a clean-air transportation fringe benefit
    • Using a clean-air transportation fringe benefit
    • For whom the covered employer is paying to DDOT the $100 clean-air compliance fee;
  • The market value of the clean-air transportation fringe benefit for the covered employer; and
  • Whether any exemptions apply to the covered employer
• Clean Air Compliance Fee – If not offering either of the first two options, pay a clean-air compliance fee of $100 per month for each employee who is offered a parking benefit.

An employee cannot accept the Clean Air Transportation Fringe Benefit unless they forfeit the parking benefit offered by the employer. If the amount of Clean Air Transportation Fringe Benefit used by the employee is less than the amount of the Clean Air Transportation Fringe Benefit offered by the employer (as required under the law), the employer shall provide the employee additional compensation and/or an increase in contribution to the employee’s health coverage to make up for the difference.

For more details regarding this new ordinance go to the employer guide published by www.goDCgo.com, a DDOT initiative that provides complimentary transit resources and consulting services to DC organizations and commuters.