The San Francisco Health Care Security Ordinance (SF HCSO) requires employers with San Francisco employees to meet specific healthcare expenditure-related obligations. The San Francisco Office of Labor Standards Enforcement (OLSE) updated the SF HCSO website to reflect changes made during the July 19, 2021, San Francisco Board of Directors (the Board) meeting. During the meeting, the City amended the SF HCSO related to telework. On August 6, 2021, the City also announced the updated Health Care Expenditure (HCE) rates for businesses. In addition, the annual employer reporting must be submitted as typically required before the 2022 annual filing deadline.
The HCSO requires employers with San Francisco-based employees to meet four obligations.
Under the HCSO, all covered employers must meet four requirements.
- Employers with a total of 20 or more workers worldwide must satisfy the Employer Spending Requirement (ESR)
- Covered employers must maintain records that establish compliance with the ESR
- Covered employers must post the HCSO Poster
- Employers covered by the SF HCSO must submit an Annual Reporting Form to the OLSE by April 30th of each year (the Board waived that requirement for 2019 and 2020)
On August 6, 2021, the Board updated the HCE rates used to determine the ESR for 2022.
As of January 1, 2022, the required HCE amount to satisfy the ESR for large businesses (those with 100 or more workers) is $3.30 per payable hour on behalf of all covered employees. The ordinance defines “covered employees” as employees who work eight or more hours per week in San Francisco and have been employed for more than 90 days. For medium-sized businesses (those with 20 to 99 workers), the HCE is $2.20 per payable hour on behalf of all covered employees. The 2022 exemption threshold for managerial, supervisorial or confidential workers is $109,643 annually (or $52.71 hourly). These employees are exempt from the HCSO and are not included in the ESR calculation.
On July 19, 2021, the Board issued an amendment related to teleworkers and the ESR calculation.
The amendment provides HCSO coverage to employees working remotely outside the San Francisco city and county limits, while a public health order recommends that employees work remotely. In addition, the amendment assigns the City as the legal office or worksite for an employee’s telework while health orders continue to encourage telework and/or place restrictions on onsite work within the City’s limits as a way of reducing disincentives for teleworking. This rule applies to employees that the covered employer did, is, or will permit or require them to work from the covered employer’s office or worksite within the geographic boundaries of San Francisco. According to the amended ordinance, covered employees must receive health insurance that meets the HCE rate requirements or make other HCEs, including contributions on their behalf to the SF City Option program. The Board will more comprehensively address teleworkers and the HCSO requirements in future ordinances.
The requirements that employers must maintain records sufficient to establish compliance with the ESR and post the HCSO Poster remain unchanged.
The HCSO requires covered employers to retain compliance records for four years from each employee’s dates of employment. The records that employers must maintain include itemized pay statements; the employee’s address, telephone number, and date of the first day of work; records of the healthcare expenditures made; and copies of the Employee Health Care Payment Confirmations provided when making HCEs by contributing to the SF City Option. Additionally, the HCSO requires covered businesses to post the HCSO poster in all workplaces or job sites with covered employees.
The annual reporting form for the HCSO will be available online sometime next year.
The HCSO annual reporting form is a web-based form that employers must submit online before the annual April 30th deadline. This year the OLSE announced that the City of San Francisco would waive the 2021 reporting for the 2020 calendar year due to the COVID-19 public health crisis. However, the Board has not issued reporting relief for the 2021 year. Therefore, as of the date of publication of this article, that reporting will be due April 30, 2022. The OLSE has information on calculating the HCE here.
Employers can review the OLSE’s HCSO site and the amendment for details on the HCSO requirements. In addition, anyone with questions regarding the HCSO can email or call (415) 554-7892. Interested individuals can also sign up for email updates to receive periodic updates about the HCSO and other San Francisco labor laws.
EPIC offers this material for general information only. EPIC does not intend this material to be, nor may any person receiving this information construe or rely on this material as, tax or legal advice. The matters addressed in this document and any related discussions or correspondence should be reviewed and discussed with legal counsel prior to acting or relying on these materials.
Compliance Manager – Atlanta, GA