Should I pay some of my employees parking expense?


5

We just rented a new office in downtown Portland Maine. It will be a fun location for the employees and everyone is excited about the move. Unfortunately, there is little public parking near the new office and so most people would need to rent a spot for about $80 to $120/month.

I'm thinking about having the company cover all or some of this cost and was wondering if people had thought about this before and had suggestions about what was fair.

Thanks.
Jason

Benefits Office

asked Apr 7 '10 at 17:29
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Jason Cianchette
511 points

9 Answers


6

Jason,

Not sure whether I would use the term 'fair' - it's more about how you want to treat your employees and what you can afford as a company. It sounds like it could be an irritation to your staff to have to worry about the cost of parking, so removing that worry is probably a good thing. Some thoughts though:

  1. In the UK, this would be seen as a taxable perk - I can't speak for your state, but if it is, then you need to consider the tax implications for both your business and your employees.
  2. What about people who cycle or get public transport - what will you do for them to be equitable?
  3. You obviously need to consider the long-term - it might be okay when you have say 5 employees, but what about when you have 50. (In fact, this is just a regular scale question, but it's worth getting your head around the sums involved up-front).

Hope this helps.

answered Apr 7 '10 at 18:12
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Steve Wilkinson
2,744 points
  • excellent points - particularly on taxable aspects – Warren E. Hart 9 years ago
  • Great points Steve, especially #3. However, I do agree with Dane - In the US this will most likely be considered a deductible business expense. – Zuly Gonzalez 9 years ago

4

Great insights from Steve.

Paying for parking should be seen as a fringe benefit (just like an health insurance plan).

But you really need to consider the whole employee base, not just the ones that drive to work.

So, one thing you could do is create a "transportation shopping list" where employees can choose how they want to get that money (parking cards, bus tickets, bike maintenance... whatever makes sense for your employees).

Hope this idea helps. Good luck.

answered Apr 7 '10 at 19:20
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Mike
825 points

4

In this situation, I don't see helping out with parking as a perk. You've changed the terms of their employment (Unless they all knew ahead of time you were planning the move and they would have to pay for parking.) The bottom line is, some of your employee's take home pay, just got cut. I don't think you should have to eat the entire cost either. There may be some benefits for everyone in your new location.

You may want to see if you can take some of the hassle out of the situation. You could take the money out of their paycheck and make the parking payment (Optionally of course.). You may even be able to do this before taxes. This is done with public transportation expenses for commuting; I think parking qualifies as well.

The fact that you're making an effort to take your employee's needs into consideration says a lot.

answered Apr 8 '10 at 10:17
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Jeff O
6,169 points
  • +1 that *you* are incurring this cost on them, so subsidizing just keeps employees at par, and therefore you should just do it. – Jason 9 years ago
  • +1 on that. If you decide to mvoe the office to a location without good parking, I would as an employee look to move to an employer not making me walk half an hour when coming to work. So, pay or the parking as needed. If that is too expensive - basically - you made a bad rental decision, as parking space is ALWAYS part of the equation for a business. – Net Tecture 9 years ago

2

I think if the company rents the spots and assigns them to the employees then it's a business expense and would not be considered a taxable benefit to the employee. This way the company gets the deduction and the employee gets to part. This is not that different from having the parking being part of the rent.

If on the other hand you make employees pay for it themselves they need to pay for it with after-tax dollars and in the end you'll need to compensate for it in their salary which is more expensive to the company.

I don't really agree that you need to compensate the people who don't drive equally. If you were in a different building that included parking it would be built into your rent and be transparent to the employees and no one would think you need to compensate the people that don't drive.

answered Apr 8 '10 at 06:34
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Dane
1,866 points

2

One very big question to ask is: "Is this perk I am going to pay for something I may need to take away some day? "

If the answer is YES, think long and hard about how crucial it is to have it.

I have covered this subject in my article "5 Rules for Avoiding the Need to Cut Costs "
Giving something to your employees you can't be sure you can sustainably pay for long term is damaging to the operations of the business. Perks are one of the places one needs to be very conservative.

That all said, I would see, if you could negotiate something with the garage. I've done it before and sometimes you can negotiate a very good deal, if you give them a longer term commitment.

answered Apr 8 '10 at 08:02
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Apollo Sinkevicius
3,323 points
  • Since this cost was placed on employees after they were hired, I think you could offer to help with parking for 6-12 months. If things work out, there's no rule that says you can't extend it. – Jeff O 9 years ago
  • +1 on the problem of having to take it away. On the other hand, that kills some of the reason people are willing to be employee #2 at a company! – Jason 9 years ago

1

How will you cope with employees that don’t drive thinking it is unfair? Are you going to pay towards the cost of

  • Bikes
  • Bus passes
  • Etc

Paying for parking is a hard problem, as it may be cheaper for you to rent a office without “free parking” then pay for the parking costs. If parking is a pain, e.g. hard to find a space, then it is just as bad as not being free.
answered Jul 6 '10 at 19:53
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Ian Ringrose
406 points

0

First of all I think the idea of covering parking expenses is good - paying increased salary to existing employees who moved with you may be the fairest and simplest way to do it (depending on local tax laws - ask your accountant). For future employees it's part of the salary equation: if something is described salary rather than parking allowance it affects negotiations. If your salary includes a $1200 parking allowance you might expect it to increase every time local parking rates increase.

Two suggestions:

  • Can you negotiate a special parking rate for employees at a parking garage?
  • Can you negotiate for parking spaces with owners of a nearby building?

These are two things your employees cannot do on their own. In addition, a payment made to another company to reduce parking fees would probably classify as a business expense rather than an employee benefit. (But for the first of these try avoiding any payment if you can.)

answered Jul 8 '10 at 01:16
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Mike
946 points

0

RE: whole employee base - perhaps a shuttle would be an alternative. Strike a deal in a slightly further away parking garage & offer free transport from there and public transportation dropoffs.

answered Apr 7 '10 at 22:15
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Jim Galley
9,952 points

0

From my experience most downtown companies pay for their employees parking. Think of it as an employee perk and use it for recruiting purposes. There are some however that make their employees pay for their own parking. That can be expensive for some. The challenge of only covering parking for some and not for others is that some will feel like they are not getting the same perks as others

answered Jun 11 '10 at 12:43
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Nathan Smith
166 points

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