Should Employers Pay For Transportation?

There is a question that is becoming increasingly prevalent in the wake of shifting attitudes to in-office attendance: Should employers be shouldering the burden of transportation costs for their employees? While employers in the US (as of the writing of this blog) are not legally obligated to cover the cost of employee transportation, more and more are choosing to do so as part of a wider strategy to attract and retain the best talent, boost morale and job satisfaction and address wider accessibility challenges.

What are 5 key things employers should consider when covering transportation costs?

1. Transport as a benefit -  Employers often provide commuting benefits like transit passes, subsidized parking or corporate shuttle services to make getting to work easier, more affordable and less stressful for their employees.
2. Leveraging the daily commute to attract and retain - Offering commuting assistance to employees can be a valuable tool to find and keep top talent, particularly where limited access to public transit might otherwise prohibit them from taking or keeping the job.
3. Tax advantages -  Commuter benefits can empower employers to offer pre-tax transportation, reducing payroll taxes and benefiting employees at the same time.
4. Employee wellbeing -  Employers covering transport costs can significantly impact and improve job satisfaction; reducing the stress associated with commuting costs like increased transit fares and rising cost of gas.
5. Remote and hybrid working - In the wake of the pandemic and in the hopes of  reigniting office attendance, employers are increasingly using transportation benefits as a way to entice reluctant employees back to the workplace.

What are some common transportation practices in the US?

Business travel

Work related travel expenses incurred by employees are typically covered by the employer with things like flights, hotels and last mile ground transportation paid for by the company.

Commuting assistance

As stated, whilst there is no legal requirement for companies to assist in the cost of employees’ commuting, some companies choose to support their workforce by shouldering the cost of getting to and from work.

Ridesharing

Employers may choose to subsidize or reimburse the cost of a vanpool or carpooling programs, where smaller groups of employees travel to work together.

Shuttle services

Businesses, particularly those in the manufacturing sector where site accessibility proves challenging are opting to deploy staff shuttle services to support employee commuting where access to public transit is unavailable or unreliable.

What are some benefits of employer-sponsored transportation?

Employers looking to support employee transportation could benefit from:

Increased accessibility - For employees living in areas underserved by public transit who may otherwise struggle to access the workplace, transportation benefits offer a lifeline for those who might be unable to accept a role due to its location.

Enhanced productivity - For many, the stress (both logistical and financial) of the daily commute can lead to low energy and sluggishness before the day’s work even begins. By removing the stress of traffic congestion, cost and parking, employees can arrive at work on time, focused and ready to work.

Reduced employee turnover - The provision of reliable, efficient and flexible transportation can support the retention of your workforce, particularly in areas of high attrition like shift work or warehouse environments where turnover is typically higher.

Cost savings - Another benefit of employer sponsored transportation is the reduction of costs otherwise spent on employee hiring and training costs to replace lost employees. 

Employee benefits go beyond traditional perks like retirement and healthcare packages. One of the most impactful (yet often overlooked) benefits an organization can implement these days is transportation. "Transportation as a benefit", or employer-sponsored transportation can be the difference between attracting key talent or struggling with staff turnover.

Including transportation as a core part of your EVP can provide employees with a tangible and recurring benefit that directly improves their quality of life. For shiftworkers and corporate teams alike, it becomes a strategic investment; a game-changer in your recruitment and retention strategies. Businesses that embed transportation in their EVP are setting themselves apart from competition in the labor market and positioning themselves as forward thinking employers investing in their workforce.

What are the challenges of employer-sponsored transportation?

Organizations looking at transportation benefits should be mindful of:

Tax compliance -  Programs such as commuter benefits are subject to strict IRS guidelines and regulations, including a limit on pre-tax contributions.

Cost management -  Deploying a transportation program may incur significant upfront investment in shuttles, subsidies or building infrastructure.

Equity concerns - Businesses must be sure that any transportation benefit or subsidy is distributed equitably across the workforce.

So, should employers pay for transportation?

While there remains no legal requirement for businesses in the US to cover the cost of transportation for their employees, we are seeing a growing number of businesses who see its value and potential. Whether by way of pre-tax commuter programs, direct reimbursement or deploying an employee shuttle service, providing a transport solution to aid your employees in their daily commute can be a win-win; supporting business growth and employee wellbeing.

Here at Zeelo, we understand that employee transportation is more than just convenience, its an investment towards stability and growth. Our fully managed shuttle solutions are tailored to the unique needs of businesses just like yours; supporting recruitment, retention, sustainability and (if you can believe it) cost savings!

So how much does a shuttle service cost? While the answer depends on a range of factors like occupancy, vehicle type and route length, we have broken down everything you need to know to make an informed decision.