Vapooling Benefits and the 80/50 Rule
Question: Some of our employees have organized carpools to commute to work, and we provide those carpools with parking benefits under our qualified transportation plan. Could our transportation plan also reimburse those employees for all or a portion of their other commuting costs as a vanpooling benefit? All of the carpools use employee-owned vehicles and some of those vehicles are quite large (ex: minivans and SUVs).
Answer: It is possible, but under very certain circumstances. To start, “vanpooling” means transportation between the employee’s residence and their place of employment in a commuter highway vehicle, which must have a seating capacity for six or more adults (not including the driver), and at least 80% of the vehicle’s annual mileage must be used for said vanpooling means. To make things sound more difficult, commuting miles count toward the 80% only if the number of employees transported to or from work is at least half of the vehicle’s adult seating capacity (not including the driver). This is referred to as the “80/50 rule.” For example, if the vehicle is carrying six passengers (not including the driver), at least three of them have to be employees in addition to the driver for the commuting miles to count toward the 80% requirement.
While many family-owned vehicles have the capacity capabilities needed to qualify it as a vanpooling vehicle, it is generally unable to satisfy the 80% usage requirement. So many employers don’t offer vanpooling benefits to employee-owned vehicles as it is difficult to determine if they meet the requirements. Instead, some employers provide high-seating capacity vehicles specifically for vanpooling which makes it more likely that the requirements are met.
Another way that vanpooling benefits can be used is if employees use private or public transit-operated vanpools, which are not subject to the 80/50 rule. Private or public transit-operated vehicles are either owned and operated by public transit authorities or by any person which is in the business of transporting people for hire.
For more information contact firstname.lastname@example.org. The information contained in this post, and any attachments, is not intended and should not be misconstrued as legal advice. You should contact your employment, benefits or ERISA attorney for legal direction.