Covered employer:

Any employer with an average of 50 or more full-time employees working at a worksite located within the jurisdiction covered by the ordinance (see below).

Covered employee:

Any employee who worked an average of at least 20 hours per week during the previous calendar month within the area covered by the ordinance (see below).

The ordinance “requires covered employers operating within the Los Angeles Metropolitan Transport Authority’s area to offer all covered employees a pretax option program, consistent with Section 132(f) of the Internal Revenue Code, allowing covered employees to elect to exclude from taxable wages employee commuting costs incurred for transit passes or vanpool charges, up to the maximum amount allowed by federal tax law.”

Financial penalties in Los Angeles are assessed on a case-by-case basis and can reach up to $2,000 in the first year. Repeat offenses come with even steeper fines, escalating to $800 per employee. For larger companies, these violations can quickly result in substantial financial penalties, making non-compliance an expensive and serious risk.

For the Los Angeles, the nationwide IRS tax-free limits for commuter benefits apply. For 2025, employees can allocate up to $325 per month for transit and $325 per month for parking, reducing taxable income.

• Pre-tax savings: Employees can lower their taxable income by setting aside funds for transit and vanpool expenses.
• Employer tax benefits: Businesses save an average of 7.65% per employee on payroll taxes.
• Direct transit subsidies: Employers can provide up to $325 per month per employee in tax-deductible transit benefits.
• Additional incentives: Some cities and states offer grants, tax credits, or subsidies for implementing commuter benefit programs.

The mandate applies across the entire Los Angeles metropolitan area.