Transit Benefits for Restaurants: 6 Tips to Enroll Tipped Employees

Offering pre-tax transit benefits is a great way to help your employees save, but some aspects of the restaurant industry present special challenges for owners and managers.

Christian Guidi of Clyde’s Restaurant Group explains how changing the payroll stacking order made pre-tax benefits easy at Clyde’s.

A recent session with the Restaurant Association of Metropolitan Washington provided some great insight into ensuring a smooth rollout for restaurants complying with the DC Commuter Benefits Law.

Commuter benefits area great way to help your employees save, but some aspects of the restaurant industry present special challenges for owners and managers. A recent session with the Restaurant Association of Metropolitan Washington provided some great insights into pre-tax withholding from tipped employees, communicating with staff, and ensuring a smooth benefit rollout.

Here are 6 tips for providing transit benefits to your restaurant’s employees:

1. Change the payroll stacking order: A little-known option allows employers to set up transit benefits and other pre-tax benefits to pull from employees’ paychecks first – even before taxes. The biggest challenge with transit benefits in the restaurant industry is making pre-tax deductions work with tipped employees, whose formal paycheck may be insufficient to cover transit benefits as the bulk of it goes entirely toward taxes. By changing the payroll stacking order, pre-tax deductions can be made first. A word of caution: employees may owe a greater percentage of their tax bill out-of-pocket at the end of the year, but for $1,000 in pre-tax savings on their everyday transit fares, it’s worth it! Ask your payroll administrator about this option.
2. Set your deadlines internally: Inform employees that they should sign up or make changes by a certain day each month in order for payroll deductions to be made and benefits to become available promptly. With Metro’s free SmartBenefits® program, all additions and changes must be finalized on the 15th of the month for benefits to be auto-loaded onto employee SmarTrip® cards the 1st of the following month. Take a look at your payroll schedule and adapt your internal policies accordingly.
3. Use sample forms and notices: Use sample notices from goDCgo to lighten your roll-out workload. Notices are available in English and Spanish and goDCgo can help you create  customized materials or present to your employees at a staff meeting.
4. Mirror everything: When an employee requests a change or leaves the company, make sure the changes are reflected 1) in your payroll and 2) in SmartBenefits® or with your benefits provider.
5. One card does it all: Employees can use an existing SmarTrip® card. All funds that go into the SmartBenefits® program are IRS-compliant, so you do not need to collect receipts or documentation of your employees’ transit expenses.
6. Save on payroll taxes: For each pre-tax dollar contributed by your employees, your company will save on payroll taxes. Those savings usually cover the cost of hiring a benefits vendor instead of administering SmartBenefits® in-house, although it still requires some coordination from you as the on-site contact.

goDCgo’s award-winning Employer Services program is here to support your restaurant in setting up commuter benefits every step of the way.

Want goDCgo to create industry-specific resources for your association or professional group? Let us know: info@godcgo.com.