Article 12 — Commuter benefits compliance in Seattle

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Draft body

Commuter benefits compliance in Seattle

Seattle's Commuter Benefits Ordinance took effect January 1, 2020. Employers with 20 or more employees worldwide who have any employees working in Seattle must offer covered employees a pretax payroll deduction for transit or vanpool expenses, up to the federal IRS limit ($340 per month in 2026).

Who is covered

A covered employer has 20 or more employees worldwide. A covered employee is an employee who has worked an average of 10 or more hours per week in Seattle for the previous month. Tax-exempt organizations and government agencies are exempt.

What you must offer

You must offer one of two compliance paths:

1. Pretax payroll deduction for the employee, up to the federal monthly limit ($340 per month for transit and vanpool in 2026), or
2. An employer-paid subsidy of up to $340 per month per employee for transit or vanpool use.

How this relates to the Washington Commute Trip Reduction (CTR) Law

The CTR Law is a Washington state law from 1991. Seattle adopted a local CTR ordinance that sets guidelines for affected employers (generally those with 100+ full-time employees at a single worksite who report to work between 6 a.m. and 9 a.m. on weekdays). Affected employers must distribute CTR program information at least twice a year and to each new employee, and must select at least two strategies from each CTR strategy category.

CTR compliance and the Seattle Commuter Benefits Ordinance are separate obligations. Many employers need to satisfy both.

How to comply (CBO)

1. Identify covered employees (10+ hours per week in Seattle).
2. Notify them in writing of the pretax option.
3. Set up payroll for pretax transit deductions.
4. Keep records of the offer and any elections.

Penalties

Seattle's Office of Labor Standards enforces the CBO. The first violation typically results in a notice of violation and a remediation period. Continued noncompliance can result in monetary penalties.

What Alice does in Seattle

Alice covers both the CBO pretax obligation and the qualified parking option (up to $340 per month in 2026) for employers who want to offer both. Alice has connections to ADP, UKG, Paylocity, Paycom, Paychex, Toast, Workday, and 25+ others. There is no up-front employer cost. There is no manual open enrollment to manage.

Sources

• Seattle Municipal Code Chapter 14.30 (Commuter Benefits)
• RCW 70A.15.4000 (Washington Commute Trip Reduction Law)
• IRS Rev. Proc. 2025-32 (2026 inflation adjustments)