4 Ways Employers Can Cut Commuting Expenses

Thankfully, gas prices are decelerating after years of zooming ahead.

Although Americans are enjoying a bit of a temporary reprieve, it's unlikely that rising energy costs -- and growing gas woes -- will go away permanently anytime soon.

Employers are becoming increasingly concerned about these higher costs, says Brigette Flood, marketing manager at UrbanTrans Consultants in Atlanta.

"Employees are feeling the pinch in their wallets and employers are trying to help alleviate the burden," she says. "They know times are tough."

Helping employees cut commuting costs boosts morale and motivation, Flood says. As consumers feel the pinch of an economic slowdown, every dime saved in commuting costs can be applied to other expenses. Worker productivity may even increase if employees are less stressed about their finances.

So creative employees and businesses are coming up with new solutions. Following are four ways employers are helping their workers slash commuting costs.

Telecommute arrangements

The MWW Group, a New Jersey-based public relations firm with offices in several states, helps employees cope with rising gas costs.

In June 2008, the MWW Group launched "No Drive Workdays," allowing employees to work from home two days per week.??

If employees absolutely cannot work from home, the company provides gas cards to help relieve price pressures.

Telecommuting is often a win-win for employers and employees.

Without office-related distractions, teleworkers may see productivity increases of anywhere from 10% to 20%, Flood says. And some teleworkers save hours per day by not commuting.

Telecommuting also helps employers improve their bottom line, according to Flood.

"Employers save on costs such as office space and equipment, employee parking and parking subsidies," Flood says.

Talented professionals flock to telecommuting organizations, primarily because of work-life flexibility, Flood says. Those employees also remain committed to their jobs, she says.??

"Studies show that employees who telework take two to four fewer sick days each year than other employees," Flood says.

Public transportation breaks

Tax-free commuter benefits are part of a trend that's been catching on over the past few years. The federal government allows employees to withhold up to $115 annually from pre-tax pay for the purchase of public bus, train or vanpool passes or ticket books.

The number of businesses offering tax-free commuter benefits grew 57% in 2007, according to the 2007 Commuter Impact Survey from TransitCenter, a nonprofit commuter benefits provider.

The percentage of employees using commuter benefits at workplaces that offer them increased from 28% in 2006 to 44% in 2007. Meanwhile, 17% of employers intend to start a pretax commuter benefits program, compared with just 5% in 2006.

Kimpton Hotel employees in Chicago are among those benefiting from this trend. Kimpton workers are eligible to purchase public-transport cards using a payroll deduction option.??

"Employees typically save about 35% (on cards) by purchasing them pretax," says Jennifer Navarro, public relations manager at Chicago Kimpton Hotels.

Bike-friendly environment

The storm clouds hovering over the U.S. financial system contain a silver lining for bicycle commuters.

As part of the recent $700 billion financial rescue package, businesses can now earn a $20 per month, per employee tax deduction "for the purchase of a bicycle and bicycle improvements, repair and storage, if such bicycle is regularly used for travel between the employee's residence and place of employment."

The government is still working out the details of this program with the Internal Revenue Service, according to a recent story in the New York Times.

Alice Hohl of Columbus, Ohio, saves at least a gallon of gas every time she hops on her bike for a 40-minute ride to and from work.

She rides twice a week, and finds she saves a minimum of $8 per week, or $32 per month.

And thanks her to employer -- the Salvation Army -- Hohl doesn't need to spend the day smelling like she just completed the Tour de France. The Salvation Army offers showers to employees for washing up after exercise.

Gas rebates and other incentives

Full-time employees at STS Telecom in Cooper City, Fla., received a letter this summer informing them of a new gasoline rebate plan rolling back gas prices to 2006 figures, and thanking them for their contributions and loyalty.

The company reimburses employees for the $2 difference per gallon, spent on the daily commute to work each day. The prorated amount goes into every paycheck.

"Our employees have come through for us and in these challenging financial times, so we needed to come through for them," says Mark Amarant, chief executive at STS Telecom.

Other companies also are taking steps to encourage employees to use less fuel.

Corgan Associates, a Dallas-based architectural firm, recently launched a green campaign that also rewards employees for conserving gas.

The firm provides a perk to employees who purchase a car that achieves an average of 31.9 miles per gallon. Corgan provides an additional 10% parking reimbursement for employees who can show their car makes the cut.

The program was generated within Corgan's Conservation Corps., an employee-led group that focuses on brainstorming "green" solutions in the workplace.

Offering financial incentives to employees who purchase fuel-efficient vehicles may be the next big thing. While still relatively uncommon, several employers nevertheless provide thousands of dollars in reimbursements when employees buy these gas sippers.

Some employers take an even more unconventional approach to cutting commuting costs.

HotBox Pizza, an Indianapolis pizza chain, has purchased an 8-foot-long Smart Fortwo car -- with four more on order -- so that drivers can use it for deliveries, reducing their fuel bill and wear and tear on personal cars.

Owner Gabe Connell felt obligated to explore ways to decrease dependence on gasoline.

And it's become a great marketing strategy too; Hoosiers take pictures, and request that the Smart Car deliver their pizza.

Convincing your boss

How can you convince the boss to help trim employee commuting costs?

Success depends on many factors, Flood says. These include the office location, the employee's job function and the corporate culture. Sometimes, outside events -- such as a sudden spike in gas prices -- will convince an employer to consider options ruled out in the past.

Before lobbying your boss, check with the human resource department to determine whether you might benefit from an existing incentive plan. Companies with "green" attitudes often implement fuel-saving programs even before employees ask for them.

If your corporate culture isn't there yet, try reaching out to transportation advocates or local "green groups." Either may be able to offer suggestions or contacts that can help you build a case for change.

Usually, you'll be more persuasive if you can show the employer how cutting commuting costs also can benefit the company. For example, make a point of emphasizing the tax benefits an employer may accrue by using certain programs.

And remember that not all cost-cutting is equally attractive to your boss. A May 2008 survey by the Society for Human Resource Management found that a large percentage of employers (42%) prefer one particular response to increasing gas prices: raising the mileage reimbursement to the 2008 IRS maximum of 50.5 cents per mile.

Other attractive options include offering a flexible work schedule (26% of employers), which allows employees to skip gasoline-sucking rush-hour traffic, telecommuting (18%), discounts on public transportation (14%) and rewarding employee performance with a gas card (14%).

Very few (only 2%) of surveyed employers offered a cost-of-living raise prompted by gas prices or stipends to employees with long commutes. However, in the end, some employers decide that a salary increase is the simplest way to combat higher fuel costs.

Cyndi Nieto, CEO of the Los Angeles recruitment firm Elite Placement Group, is one of those employers.

"For the first time in all my years in the staffing business, temporary employees are asking us to place them on assignments within 5 miles of their homes," Nieto says.

She tries to do so, "but my job is to match the very best candidate with my clients." So she raises their hourly pay to make up for out-of-pocket mileage when she can't find a 5-mile fit.

Copyright 2009, Bankrate Inc.