Clipper Direct FAQ for employers

How do employers use Clipper Direct?

Clipper Direct is a flexible employee transit benefit program that can be customized to any size of employer. Some employers may choose Clipper Direct to subsidize their employees' transit expenses or offer it solely as a way for employees to pay for transit on a pre-tax basis. Whatever your needs are, a member of our sales team would be happy to speak with you and design a program that will work for you.

Once your employer account is set up, you'll be able to do all the administration of Clipper Direct online, with customer service representatives standing by if you need assistance. Our website has a secure area for employers where you can add employees, delete employees, and retrieve invoices and payroll deduction information.

How do employees use Clipper℠ Direct?

Once your company is enrolled, we'll send your employees an email explaining the benefits of a flexible transit spending account and inviting them to sign up. Once they have signed up, your employees can link their existing Clipper card to their Clipper Direct account or place an order for a new Clipper card and then place an order for the following benefit month or even set up a recurring order.

How are cards delivered?

Clipper Direct will send a Clipper card to employees who don't have one with their first month's order.

What are the relevant tax laws?

Section 132(f) of the Internal Revenue Code permits an employer sponsored pre-tax commuter benefit. For 2018, the first $260 of monies spent on transit passes or cash each month is pre-tax. Section 132(f) requires employees to make a forward monthly election so Clipper Direct sets an order deadline for each month. The statute also requires employers to have a payroll deduction for the benefit. For questions regarding Section 132(f), please contact your legal advisor.

What records do I need to keep?

Monies spent on pre-tax transit will automatically reduce the earnings displayed in box 1 of the employee's W-2. A specific payroll deduction will have to be set up to process the deduction from employees' paychecks.

How much do employers and employees save?

Any monies spent on pre-tax transit purchases are monies employees do not pay federal or state or FICA and Medicare taxes on. This can be a savings of 40% or more on the first $260 of transit expenses per month in 2018. Annually, an employee could save up to $1,224 using Clipper Direct .

As an employer, you save because you do not have to pay matching FICA and Medicare on funds employees spend on pre-tax transit. For example, with FICA and Medicare currently at a combined rate of 7.65%, the employer saves $7.65 on every $100 in pre-tax transit purchases by employees.

Who can participate? Are any employers to big or too small to participate?

Employers of any size can enroll in Clipper Direct . For more information about whether your employees are legally able to receive the pre-tax benefits, please contact your tax professional. The Clipper Direct program make no representations regarding the tax consequences of participating in this program.

Where can Clipper be used?

Clipper is accepted on most Bay Area transit agencies. Please visit clippercard.com for information about current participants.

How does the Clipper card work?

The Clipper card is a reloadable card that can be used to pay transit fares in the Bay Area instead of using cash or paper passes. The card keeps track of the value loaded on it and automatically deducts the correct fare (including transfers and discounts).

Whatever your employees are using now to pay for their transit fare (e.g., a monthly pass or cash) can be loaded onto the Clipper card. With one card, employees can transfer between different transit systems with the correct discount applied and without having to carry a paper transfer. To use the card, simply "tag" the card by placing it flat against the logo on the card reader. The card reader will show the amount being charged or that a valid pass or transfer has been found. It will also show the card's remaining balance or the expiration date of the pass. For more specific information on Clipper, please visit clippercard.com.

Can employees who participate in Clipper Direct receive refunds?

No. Once an employee links a Clipper card to a transit benefit program, that card becomes ineligible for refunds.