Covered employee:

All individuals employed by a “Covered employer”, with the following exceptions:

• Individuals who volunteer for educational, charitable, religious, or nonprofit organizations without pay or expectation of compensation
• Lay members of religious organizations serving in religious roles
• Casual babysitters working in or around a private residence
• Independent contractors

Covered employer:

Any employer with 20 or more employees. The Mayor may issue rules to potentially expand this definition to include employers with fewer than 20 employees.

Every covered employer must provide all covered employees with access to at least one of the following commuter transit benefit options:

1. Pre-tax benefit program: A pre-tax transportation fringe benefit program that covers commuter highway vehicle, transit, or bicycle expenses, in accordance with sections 132(f)(1)(A), (B), and (D) of the Internal Revenue Code. Benefits must be offered at levels at least equal to the maximum allowable deduction from an employee’s gross income under section 132(f)(2).‍
2. Employer-paid benefit program: A program in which the employer provides, at the employee’s election, either: a transit pass for the public transportation system requested by the employee, or reimbursement for vanpool or bicycle commuting expenses, in an amount equal to the cost of a comparable transit pass for the same trip.‍
3. Employer-provided transportation: Free employer-operated or employer-sponsored transportation for employees via a vanpool or bus service.

Financial penalties in D.C., are determined on a case-by-case basis and can reach up to $6,000 in the first year. Repeat offenses come with even steeper fines, escalating to $800 per employee. For larger companies, these violations can add up fast, turning non-compliance into a significant financial burden.

For D.C, 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.

This mandate is in effect throughout Washington, D.C.