Commuter benefits compliance in Los Angeles
The Los Angeles Commuter Benefits Ordinance took effect in 2024. It requires employers with 50 or more employees in the LA County Metropolitan Transportation Authority area to offer covered employees a pretax election under the federal commuter benefit rule (§132(f)).
A covered employee is one who averaged at least 20 hours per week in the prior calendar month within the covered area.
The pretax election
Eligible employees can exclude up to the IRS monthly limit ($340/month for transit and $340/month for parking in 2026) from taxable wages. The exclusion covers transit passes, vanpool charges, and qualified parking.
Eligible transit includes Metro, Metrolink, Big Blue Bus, LADOT DASH, Foothill Transit, and other public providers. Eligible parking includes garages, lots, meters, and parking apps near the workplace. For the full list, see what parking and transit expenses are eligible.
Penalties and enforcement
LA's financial penalties are assessed on a case-by-case basis. First-year aggregate penalties can reach $2,000, with escalating per-employee fines up to $800 for repeat offenses. Newly covered employers get at least six months to come into compliance after adoption.
Multi-site California considerations
In some Bay Area regions, LA's ordinance layers on top of California Government Code §65080.9. Large employers with locations in both LA and the Bay Area Air Quality Management District must register separately for the Bay Area Commuter Benefits Program.
Alice handles the §132(f) deduction in both jurisdictions. Registration with the air district is a separate step the employer files.
How Alice fits the LA workforce
LA's hourly workforce (drivers, hospitality, healthcare, logistics, retail) doesn't pre-fund commuter accounts well. Alice is designed for that.
Alice has no up-front employer cost and no 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, Toast, and others. Employees save on taxes on every eligible purchase.
Talk to sales
sales@thisisalice.com or (929) 552-4625.
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.