The skyrocketing price of gas is bad news for employers that are looking to get workers back into the office. A gallon of regular gas now costs $5 on average nationwide, and energy experts estimate that every penny increase in the price of gasoline costs Americans an extra $4 million a day. With inflation driving up the costs of food and housing, Americans are already feeling strapped for cash.
That's where companies can turn high-cost gas into an advantage: Covering commuting costs will not only help get workers back to the office, it may also be an incentive to help them stay around during a tight labor market. That's what Dr. Lior Lewensztain, founder and CEO of healthy snack company That's It, discovered when he required all employees to come back into the office at the start of 2021. The company is in downtown Los Angeles, a city infamous for its long commutes and high gas prices. Which is why the company is offering $100 gas gift cards each month this summer: June, July, and August 2022. Nondriving employees will be given a monthly $100 transportation credit to help cover rideshares or public transportation.
"While we're all feeling the pain of gas prices right now, we're a collaborative team that places high value on being together in person, and credit a lot of our recent growth to that face-to-face collaboration," says Lewensztain. "Our employees show up in the office Monday through Friday and we can't turn a blind eye to the fact that it comes at a higher price than it used to."
When it comes to helping front the bill, the options range from cash and gift cards to salary raises and reimbursements. Choosing the right payment will depend largely on the number of employees you have and how far they need to commute. Here are your best options:
Cash and Gift Cards
For businesses like That's It, offering gas gift cards or credits as sign-on or productivity bonuses is an outside-of-the-box solution, says Jill Chapman, senior performance consultant for Insperity, a PEO. When a portion of gas expenses is covered by employers, workers are less hesitant about commutes. Gas gift cards can also be a big bonus for job seekers because this uncommon practice can assist with their monthly budgets. According to the IRS, gift cards for employees are considered cash equivalent items. Like cash, you must include gift cards in an employee's taxable income, regardless of how little the gift card value is.
Employers can also encourage employees to register for gas savings programs or reward programs at stations, which can generally save people 5¢ to 10¢ per gallon of gas. There are also dozens of apps on the web to help people find the best prices. For instance, GasBuddy uses GPS to locate the cheapest gas nearby.
Forming a Rideshare Program
Creating ridesharing programs and carpools can save time, money, and stress for workers as well. Employers can provide the service with company-issued vans or contract with companies that offer these services, adds Chapman. Commuter benefit packages are also helpful for companies to offer employees in cities with good mass transportation systems where rider expenses have increased with fuel prices.
Reimbursing Driving Costs
Perhaps the most cost-effective way to reimburse employees for gas is through expensing their travel. By calculating the mileage your employees drive each day for work and reimbursing that as a business expense, you are both eliminating a financial hurdle for them and lowering your own taxable income, says Anthony Martin, founder and CEO of Choice Mutual, an insurance agency. As of July 1, the IRS is increasing its business mileage allowance to 62.5¢ per mile, up 4¢ from the effective rate at the start of the year, to help combat rising gas prices.
This does involve doing the necessary paperwork as employees are required to maintain an accurate record of all business-related travel and provide a mileage report regularly that includes initial and final odometer readings and a description of the objective and destination, says Jake Hill, CEO of DebtHammer, a personal finance publication. Creating a regular schedule for reimbursement--monthly is typical--prevents any uneasiness or confusion for your employees, he adds.
"You'll need receipts for all expenses, and the process will take some time for employees to get used to, but once the system is in place it will work like a well-oiled machine," says Hill.
Alternative Schedules and Flexible Time
If you haven't already started offering your employees flexible work schedules, now might be the time. Alternative work schedules, such as staggered hours and flextime, can help workers cut commute times, notes Chapman.
That's exactly what Amanda Royle, co-founder of Clover City, California-based A.I. image processing company Imgkits, had done. Since some of her employees work onsite while others remotely, she implemented flexible schedules to allow for commute-friendly work hours. Employees can start their workday as early as 7 a.m. and leave the office at 3 p.m. to help commuters avoid delays and reduce gas expenses.
"As a business owner, I believe that I have a responsibility to help my employees with their financial problems," says Royle.
It's important when announcing these policies that the information be clearly communicated through several channels, says Chapman. This can be in person from the CEO and management, but also via employee emails, team meetings, and the company's intranet. Perhaps most crucial, she adds, all communications should emphasize the link between real financial needs and the solid actions you are taking to deal with them.