DC commuter benefits law: employer compliance guide
Washington, DC requires employers with 20 or more employees to offer commuter benefits to anyone who spends at least half their working time in the District. The Commuter Benefits Law gives employers three compliance paths:
- A pretax payroll deduction up to the IRS monthly cap.
- An employer-paid transit or vanpool subsidy.
- Employer-provided transportation, such as a shuttle.
Who is covered
The 20-employee threshold counts the total workforce, not just DC-based staff. A covered employee is anyone who does more than 50% of their work in DC. It also includes anyone based in DC who does not work in another state more than 49% of the time.
Nonprofits are included alongside for-profit companies.
What employers must offer
For the 2026 plan year, the pretax option lets employees set aside up to $340 per month for transit or vanpool. Employers can also offer a tax-free subsidy up to the same monthly cap or run an employer-provided shuttle service.
Recordkeeping is required for at least three years. Records must be produced to the DC Department of Employment Services on request.
Penalties for non-compliance
DC fines escalate quickly. First offense: $100 per covered employee per month of non-compliance. Second: $200 per employee. Third: $400 per employee. Subsequent offenses: $800 per employee.
For a 50-person DC office, a single year of non-compliance at the first-offense rate works out to roughly $60,000.
How Alice handles DC compliance
Alice is built for hourly and frontline workers, which is most of the DC restaurant, hospitality, retail, and healthcare workforce. Alice has no up-front employer cost and no manual open enrollment to manage. Employees don't pre-fund. The employer keeps a reserve amount in its Alice plan account; it belongs to the employer and is not a fee. Setup starts with one call.
Alice connects to 30+ payroll providers, including ADP, UKG, Paylocity, Paycom, Paychex, and Toast, so DC payroll deductions land correctly. Employees who enroll can save on taxes on every eligible transit and parking purchase.
Talk to sales
sales@thisisalice.com or (929) 552-4625.
For the full list of eligible commuter expenses, see what parking and transit expenses are eligible. Eligibility is set by the federal commuter benefit rule (ยง132(f)).
Figures shown are for the 2026 plan year and are set by the IRS. Limits are indexed annually by the IRS.
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Alice does not provide tax, legal, or financial advice. Consult your own tax preparer, lawyer, or financial advisor for guidance specific to your situation.