Getting to Work in a Pandemic: The Next Challenge

Allen Smith, J.D. By Allen Smith, J.D. May 7, 2020

​Employees who rely on mass transit are worried about contracting coronavirus on their commutes. To limit workers' exposure to lots of other commuters, employers could offer parking subsidies or shuttle buses or rent a suburban office. Each option has its costs, but some might be tax deductible.

Even before the pandemic, employers were interested in helping employees efficiently commute to work using a variety of ride-sharing services, said Christine Keller, an attorney with Groom Law Group in Washington, D.C.

Disaster Relief Payment

Employer payments for mass transit alternatives might qualify as a disaster relief payment under Section 139 of the Internal Revenue Code, said Rina Fujii, an attorney with Epstein Becker Green in New York City.

Code Section 139 lets employers reimburse or pay employees for qualified disaster relief payments, which are defined as "reasonable and necessary personal, family, living or funeral expenses incurred as a result of a qualified disaster." Such payments are tax-free to employees and tax-deductible for employers, Fujii explained. They also are uncapped and do not require substantiation.

"It appears that the IRS considers the pandemic to be a qualified disaster for purposes of Code Section 139," she said.

SHRM Resource Spotlight
Coronavirus and COVID-19

In Notice 2020-18, the IRS indicated that the March 13 presidential emergency declaration in response to the pandemic constituted a federally declared disaster. So employees who traditionally have relied on public transportation to commute to work but switch to a personal car for safety reasons could be reimbursed for mileage tax-free, said Mike Chittenden, an attorney with Covington & Burling LLP in Washington, D.C.

Similarly, employees who switch from public transportation to private car services, taxis or ride sharing could be reimbursed or paid directly for those costs if the reason the employees change their commuting method is the pandemic.

"However, the IRS has yet to provide guidance regarding what sort of payments constitute qualified disaster-relief payments," Fujii added. "Employers who wish to provide mass transit alternative payments should keep checking for new IRS guidance."

Fujii also recommended that employers draft a written plan outlining eligible participants and expenses and the manner and timing of payments.

'De Minimis' Fringe Benefit

Treasury regulations state that if local transportation is provided for commuting to or from work because unusual circumstances make other modes of transportation unsafe, only the first $1.50 of the value of each one-way commute is taxed to the employee. The remainder of the value is excluded as a "de minimis," or minimal, fringe benefit, Keller noted.

"Although the example provided in the regulation—i.e., employees passing through a high-crime area at night—does not squarely fit the pandemic scenario, a reasonable argument can be made that the facts and circumstances here constitute unusual circumstances that make it unsafe for employees to use other means of transportation—i.e., public transit," Keller said.

Assuming that employers were to contract with a vendor to provide shuttles or bus service, liability issues probably could be dealt with in the contract, noted Lindsay Burke, an attorney also with Covington & Burling LLP in Washington, D.C. "But at a minimum, employers would want to ensure that the shuttles or buses were cleaned between each use and that passengers could sit the recommended distance apart on the ride and wear face coverings," she said.

[SHRM Resource Spotlight: Coronavirus and COVID-19]

Renting Space

Another innovative way to improve the commute is to rent a temporary, additional office closer to where employees live.

"The employer must be able to afford renting the temporary office, which would be an added expense if it will be paying rent on its permanent office at the same time, although it is tax-deductible under Code Section 162 as a business expense," Fujii said.

The rented office must provide a working environment that complies with occupational safety and health requirements. And, she noted, it should be in a location that is convenient for employees and any business needs, such as near a shipping depot or major client.

"The employer should also keep in mind that the pandemic and the economy remain in flux—any rented office should offer terms that allow for flexible cancellations or extensions to the lease in case the employer's circumstances change unexpectedly or there is another wave of the pandemic," she said.

Fujii added that leasing offices in the suburbs may not work if employers have specific infrastructure needs and employees do not have a way to get to work other than mass transit.

Susan Eisenberg, an attorney with Cozen O'Connor in Miami, said renting extra office space is not a viable option for several reasons, including:

  • The expense, especially after mass layoffs and furloughs, would probably be cost prohibitive.
  • If the employer opens another office or many offices, it would need to ensure equipment and staff, such as receptionists, office services and an office manager, were available in each office.

Fujii noted, "If the employer does not staff the annex office, then there is not much difference between working in the annex office and working from home, which would be much less expensive."

To Eisenberg, "the best option seems to be an extension of the work-from-home program for those who can work from home and/or a staggering of schedules so that employees do not have to travel during peak times."



Hire the best HR talent or advance your own career.

Are you a department of one?

Expand your toolbox with the tools and techniques needed to fix your organization’s unique needs.

Expand your toolbox with the tools and techniques needed to fix your organization’s unique needs.



HR Daily Newsletter

News, trends and analysis, as well as breaking news alerts, to help HR professionals do their jobs better each business day.