Covered employee:

Any employee who worked an average of 10 or more hours per week in Seattle during the previous calendar month.

Covered employer:

1. Employers with 20 or more employees calculate the average number of employees per calendar week who worked for compensation during the previous calendar year. If the employer had no employees in the previous year, use the first 90 calendar days of the current year.
2. And count all employees, including:
   • Employees who are not “covered employees”;
   • Employees who worked inside the City;
   • Employees who worked outside the City; and
   • Employees who worked in full-time employment, part-time employment, joint employment, temporary employment, or through the services of a temporary services or staffing agency or similar entity.

Government entities and tax-exempt organizations are exempt from the commuter benefit requirement.

All covered employers must provide a pre-tax commuter benefit to covered employees. They must offer it within 60 days of the employee's start date. The benefit allows employees to exclude qualified transit or vanpool expenses (excluding parking) from taxable wages, up to the IRS limit under Section 132(f) (as of June 1, 2018). Payroll deductions must begin within 30 days of the employee’s election. Subsidized employer-provided transit passes also qualify.

Financial penalties in Seattle are assessed on a case-by-case basis and can reach up to $3,000 in the first year. Repeat offenses result in even higher fines, escalating to $500 every 30 days. For larger companies, these violations can quickly result in substantial financial penalties, making non-compliance an expensive and serious risk.

For Seattle, 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 to the entire city of Seattle.