Blog

Many companies are also feeling the sting of the housing market boom. Securing appropriate local housing for new hires, transferees or those on temporary assignments can be a costly uphill battle causing delays, stretching budgets and resulting in undue frustration on behalf of employees and those helping to manage the move. So some companies are getting creative, introducing Long-Distance Commuter Programs to accommodate employees who will be working remotely far from the office but will be required to periodically commute and maintain an in-person presence as part of their role.

In some cases, the employee may be commuting until pursuing a permanent relocation, or the commute may only be required for a temporary project. But as with all policies, consistency is key! It’s essential to consider which benefits are the most appropriate and cost-effective to provide (and to whom) so that your commuter program can be administered seamlessly with minimal exceptions.

Our Advisory Services team is sharing some of the critical questions and considerations to help you assess whether a Long-Distance Commuter Policy makes sense for your current or future talent, and what it should look like.

There are four critical questions when developing a consistent approach:

1. Does the company require commuter assignments and who is eligible?
2. How long will benefits/assistance be provided?
3. What is the appropriate level of assistance and benefits covered by the company?
4. What is the delivery method of benefits and assistance?

1. Defining Eligibility

Does the level of employee and critical nature of move and role require commuter arrangements?

Seek feedback from the key stakeholders within your organization – such as leadership, Talent Development, and HR – to determine whether the employee’s role is critical to the short-term objectives of the business. Can the move be delayed or filled by another colleague? What are your long-term talent objectives?

Suppose the outcome of your evaluation is that commuter arrangements are required and unavoidable (or risk losing the employee and not meeting company goals). In that case, the following areas – duration, benefits, and delivery – will reflect the employee’s role within the organization and business goals.

2. Duration

Is the company’s expectation for the employee to eventually relocate?

In our experience, most companies document the approved timeframe in the guidelines (e.g., six months, nine months, or one year). This encourages the employee and employer to discuss long-term arrangements and whether the company will offer permanent relocation assistance upon the end of the policy term.

Your long-term commuter program’s duration and intent will ultimately impact the tax treatment of benefits. Sometimes an employer temporarily assigns an employee to work in a location that is far from the employee’s regular workplace, with the expectation that the employee will return to their regular workplace at the end of the assignment. In this event, the critical question is whether the employee’s tax home will move to the temporary workplace or remain in their home office.

3. Level of Assistance / Benefits

Below are some of the most common benefits evaluated when developing a long-distance commuter program:

Travel

• Consider the frequency of travel.
• If a defined number of trips are covered, you may want to allow for a family member to use travel in lieu of trips home (employee is more productive when not traveling back and forth).

Accommodations

• Hotel, Corporate Housing, or Extended Stay
• Scheduling hotel stays by the employee ensures they are closely managing their budget.
• If the overall duration is limited (e.g., six months), consider corporate accommodations or extended stay housing.

Rental Car 

• Or other transportation allowance.

Meals & Incidentals

• Your provision for meals should be in line with the accommodations provided.
• If the employee is staying in facilities with a kitchen, it’s reasonable to exclude meals from your calculation of benefits.

4. Method of Benefit Delivery: Direct Coverage/Reimbursement or Lump Sum

Once the level of benefits and duration of the commuter arrangements are determined, companies will look at providing either an allowance or direct coverage of benefits through their provider. Both offer advantages and disadvantages, and the best option will generally depend on the choice of accommodations.

Regardless of your chosen method to calculate the allowance, be prepared for unforeseen rises in costs. This is expected to become a challenge as we witness steady increases in fuel prices, limited inventory of hotels, and seasonal fluctuations.

As remote and hybrid work arrangements become a new corporate norm around the world, there is certainly a lot less collective griping about the pain of highway gridlock and the very real struggle of securing prime real estate in the office parking garage. And as daily commuters morph into passionate work-from-home advocates, this creates a space for new policies and approaches.

For more insight and best practices on ensuring your Long-Term Commuter Policy is fit for purpose, give our Advisory Team a shout!