Gov. Jerry Brown vetoed a California Chamber of Commerce-opposed bill that would have increased costs for employers and opened them to potential liability by mandating them to offer commuter benefit programs to employees.

SB 582 (Yee; D-San Francisco) would have authorized metropolitan planning organizations to mandate employers in their jurisdiction to offer one of three options to employees for commuting purposes:

• A pre-tax option where employees can exclude from their taxable wages commuting costs incurred for public transit, as allowed under federal law;


• The employer would directly pay for public transit costs; or


• The employer would offer a vanpool service.

The CalChamber expressed several concerns with the bill:

• Federal law already allows employers to take advantage of the payroll deduction. Some employers already do this on their own accord. Considering this is allowed under federal law and that some companies already use it because it fits their business, there is no need to mandate it on the state or local levels. This is more of a public outreach issue where employers may not be aware they can offer this benefit to their employees.


• There could be employer liability issues. If an employer opts to provide a vanpool (Option 3) and there is a car accident or other incident on board where employees get injured, there could be employer liability issues, including workers’ compensation issues. Under Option 2, because the employer is directly subsidizing the costs, it can be argued that it is employer-controlled and therefore the employer can be held liable. Although very large employers may be able to absorb such costs, small business owners will not be able to do the same.


• The mandate’s impact on small business would be much greater than for large employers. Small businesses are already hurt by the weak economy, and do not need more mandates to further restrict them. There is a cost to implement the program that must be borne by employers large and small. Small employers will find it difficult to absorb the costs.? Although there may be cost savings down the road, this is a business decision and should not be mandated.

Governor Brown stated in his veto message: “While I support the goal of reducing vehicle trips, this bill would impose a new mandate on small businesses at a time of economic uncertainty.”

By: Thomas Vu