What you need to know about Washington, D.C.’s Parking Cashout Law

Feb 8, 2022

Andy Keeton

VP Global Strategy

Washington, D.C. employers: This one’s for you!

A couple years ago, D.C. passed the Transportation Benefits Equity Amendment Act of 2020 aimed at reducing the amount of drive alone commutes. It has since come to be known as the parking cash-out law because it mandates most employers to offer incentives for sustainable commuting options that match or exceed the value of parking. And it is now (as of January 2022) officially being enforced.

So what does this all mean? Does it apply to my business? What are my options? And how can I easily meet compliance with the new law? Let’s start with the second question.

Does the DC Parking Cashout Law Impact my Company?

  1. Is your company located in Washington, D.C.?

  2. Do you employ 20 or more employees?

  3. Does your company lease - NOT own - parking?

  4. Do you offer free or subsidized parking as a perk for your employees?

If you answered “yes” to all of the above questions, you need to do something. Why? Because free or subsidized parking is a perk that only promotes a car-focused commute. So any employee who takes transit, bikes, or uses a shared ride doesn’t get the same incentive. This leads to more driving, and D.C. doesn’t want that.

What are my options to comply with the DC Parking Cashout Law?

The good news is you have options…four, in fact. Not all of the options will lead to the same outcomes for you and your bottom line, so we’ve sorted them in order of most to least beneficial.

1. Offer an incentive for sustainable commuting options to your employees

This is what the rule calls the “Clean-air Transportation Fringe Benefit,” and it’s really what this law is all about. Hint: This is the option we think you should use - more on that later.

The rule itself is pretty simple:

  1. Offer a parking benefit to all employees (you already do this if you got this far)

  2. Allow employees to opt out of the parking benefit (i.e. not accept the free parking)

  3. Provide a sustainable transportation benefit for any employee who has opted out of the parking benefit

The complexity here is in step 3. (If you have any questions, schedule a call with us or talk to your local TMA, goDCgo - both are great options!)

To meet all the requirements for this option, you need to make sure you have a few things figured out when it comes to the Clean-air Transportation Fringe Benefit:

  1. You must provide a benefit equal in value to the market rate of parking in your area (to be precise, that means the monthly cost of parking at a private lot within a half-mile of your office).

  2. This benefit can be used to pay for public transit, biking, or “transportation in a commuter highway vehicle” (think a shared ride in a large vehicle, like a vanpool).

  3. Employees must tell you how much they expect to pay for these modes of commuting.

  4. If it is less than your monthly benefit requirement, you must make up the difference with additional pay or benefits.

While this may seem overly complicated and not worth your time, the benefits will vastly outweigh the costs. Offering incentives for non-driving commutes increases employee satisfaction and retention, reduces your carbon footprint, and can even lead to saved costs. Plus, we’re going to tell you how to streamline and automate this whole process with our Mobility Card in the last section.

2. Implement a transportation demand management plan to reduce your drive alone commute rate

If you’re not inclined or able to offer a sustainable transportation benefit, but you still want to meet the requirements of the law without having to pay the fee (see option 4 below), a transportation demand management (TDM) plan is a great option.

Just put together a plan that proves you will reduce the rate of employees commuting alone by car by 10% from last year. How do you do that?

  1. Create a TDM plan that you think will help your organization reduce its drive-alone commute rate by 10%

  2. Submit the plan to the District Department of Transportation for review (they may tell you to improve the plan if they don’t think it’s robust enough)

  3. Submit an annual data report proving you’ve reduced drive-alone commute rate by at least 10%

While this isn’t the option we’d recommend (because it leads to more administrative work and ultimately doesn’t have the same positive impact on employee satisfaction as option 1), we still think this is a great choice.

We have tools to help you automate a lot of this process, so schedule a call to talk with us if you want to explore this option a bit more.

3. Stop offering free or subsidized parking altogether

This is technically an option, though it’s not stated explicitly in the rule. As we wrote above, your company is only subject to this law if you offer free or subsidized parking benefits. So an easy fix is to simply stop offering parking benefits altogether.

If this is a realistic option for you, it’s a great choice. It’s by far the most cost-effective solution, and it can help you achieve your sustainability goals since making people pay for parking reduces drive alone commutes dramatically. But be careful because it could lead to some employee backlash, especially if a large number of commuters have been relying on your parking benefits for a long time.

Before deciding this is the best path for your company, ask yourself: How much do our employees rely on our parking benefits? If you don’t know that answer, you’ll want to do a quick dive into the data. Commutifi was built for this, so give us a shout if you want to take the “easy” way out.

4. Pay a $1,200 annual fee per employee to the District Department of Transportation

This option is the most straightforward. If you don’t want to do any of the other options, you can meet compliance by simply paying the District Department of Transportation $100 per month for every employee who’s offered the parking benefit.

While this may seem like the easy way out, it’s definitely not the best in most cases. Think about it:

  1. You’re paying $100 per month for every employee offered the parking benefit, not just those who opt out.

  2. The money is going to the Department of Transportation, not your employees. So nobody at your company is getting anything - it’s just a wasted expenditure.

You can technically lower this fee by reducing the number of employees who are offered a parking benefit (see option 3 above), but then you risk decreasing employee satisfaction and increasing turnover. The number 3 reason employees leave their job is the commute.

Streamline Compliance with Commutifi’s Mobility Card

By now you know who the D.C. parking cashout law impacts and the four options available to you to ensure compliance. And if you’re still reading, it means you want to learn a bit more about option 1: Offer an incentive for sustainable commuting options to your employees.

Lucky for all of us, our team at Commutifi created a technology-powered solution that can help you comply without any of the administrative headache. It’s called the Mobility Card, and it’s a flexible use-it-or-lose-it spending card. Commuters are given virtual (or physical) cards pre-loaded with funds from their employer and eligible on options required by the Clean-air Transportation Fringe Benefit rules. It’s easy to activate and even easier to use, both for employees and administrators.

Our Mobility Card is being used by companies all over the world, but with a couple special features we’ve added just for D.C. companies, you can achieve compliance quickly and easily:

  1. Deposit funds into your account based on the number of employees at your company and the cost of parking in your area (we’ll help with that)

  2. Activate your new “Clean-air Transportation Fringe Benefit bucket” to cover all public transit, biking, and highway vehicle expenses, as required by the law

  3. Designate an “overflow bucket” where employees can use any excess funds if their commute costs less than the minimum parking rate (this is up to you - allow spending anywhere, just at a local coffee shop, or anything in between)

  4. Give employees access to their own commuter dashboard where they can opt out of parking and take advantage of your new Clean-air Transportation Fringe Benefit

  5. Let employees indicate how much money they need for the new benefit and Commutifi automatically issues them a Mobility Card with the right amount of money in each “bucket”

  6. Receive automated reporting on spending and usage to better understand how your money is being used

Achieving compliance with the D.C. parking cashout law is easy with the Mobility Card. Schedule a call with our team to get started.

Better commuting starts here.

Better commuting starts here.

Better commuting starts here.