UPDATED 3/24/20: Due to COVID-19, San Francisco has cancelled the employer reporting requirement for the 2019 calendar year (originally due April 30, 2020). Covered employers do not need to submit HCSO reporting for the 2019 calendar year. For more information, see the City’s announcement.
The San Francisco Health Care Security Ordinance (SF HCSO) requires “covered employers” to spend a minimum amount on health care expenditures for their “covered employees.” The required health care expenditures for a covered employee is based on their “hours payable” and the applicable SF HCSO hourly rate (which is determined by employer size). SF HCSO also requires covered employers to submit annual reporting to demonstrate that they complied with the law. Reporting is due to the San Francisco Office of Labor Standards Enforcement (OLSE) by April 30th of each year. OLSE releases the annual reporting form annually on April 1st. OLSE has not yet released the reporting form for this year; however, employers may want to begin gathering records to prepare for the upcoming reporting.
Which employers are subject to SF HCSO reporting? Covered employers who employ any covered employees must complete annual reporting.
Covered employers are those that:
- Employ one or more workers within the geographic boundaries of the City and County of San Francisco;
- Are a for-profit business with 20 or more employees worldwide or a nonprofit with 50 or more employees worldwide; and
- Are required to obtain a San Francisco Business Registration Certificate.
Covered employees are those that:
- Are entitled to be paid the minimum wage;
- Have been employed for at least 90 calendar days;
- Perform at least 8 hours of work per week in San Francisco (this includes employees working from home in San Francisco); and
- Do not meet an exemption.
Which employers do not need to submit reporting? Employers are not required to submit 2019 HCSO reporting (due April 30, 2020) if:
- they had less than 20 employees, on average, in 2019, and did not have a contract with the City and County of San Francisco; or
- they had no employees working in San Francisco in 2019.
What information must covered employers submit in the annual reporting? Covered employers must report on health care expenditures made for covered employees, as well as on any payments made to the City Option during the prior year. The reporting form requests the following information:
- Employer’s Name and Address;
- Employer’s Business Account Number;
- Quarterly number of total employees (including employees who work outside of San Francisco);
- Quarterly number of covered employees subject to SF HCSO;
- Note: Employers should not include employees that were exempt in 2019 in this count. Exempt employees include those who voluntarily waived their right to HCSO contributions by signing an HCSO waiver form, were managers/supervisors that made at least $100,796 annually (in 2019), were eligible for Medicare or TRICARE, were trainees in a non-profit bona fide program, and those who received health care benefits pursuant the San Francisco Health Care Accountability Ordinance (HCAO).
- Quarterly total spent on health insurance premiums (including medical, dental, and/or vision premiums) for covered employees;
- Quarterly total contributed to the SF City Option
- Quarterly total spent on all other irrevocable health care expenses (including, but not limited to, Health Savings Accounts (HSA) or Medical Savings Accounts (MSA)); and
- If applicable, the amount of surcharge imposed on the employer’s customers to help cover the cost of healthcare (this primarily applies to restaurants who add a “SF Health Mandate” charge to their customers’ bills).
OLSE usually hosts a webinar on how to fill out and submit each year’s reporting. The date for the 2020 webinar has not yet been released. How can covered employers prepare for SF HCSO reporting? To prepare for reporting, employers should compile the following information:
| Information to be Collected | Purpose of the Report | Where Employers Can Locate this Information |
| A report from their human resource information or management system (HRIS) that captures work locations, hours worked, managerial status, salary, and date of hire. | This report is used to determine which employees are considered “covered employees” subject to the SF HCSO. In addition, this report will be used to determine whether employees fall into the managerial/supervisor exemption. | Usually contained in employer’s human resource information or management system (“HRIS”). |
| Business Account Number | Employers are required to register with the San Francisco Treasurer and Tax Collector’s Office and obtain a Business Account Number prior to submitting reporting. | This number is located on the business registration certificate issued by the San Francisco Treasurer and Tax Collector or may be located on communications from the OLSE. Employers can also determine their Business Account Number by going to the San Francisco Data website. |
| A report from an enrollment system that shows how much the employer spent per month for each covered employee’s medical, dental, and/or vision coverage. | This report is used to determine how much the employer spent on covered employees’ health care premiums. | Employers can review their billing statements to carriers or can contact their benefits broker. |
| A report of employer contributions to covered employees’ HSAs (if applicable). | This report is used to determine how much (if any) the employer spent on additional irrevocable healthcare expenditures (in the form of HSA contributions) for covered employees. | Employers should contact their HSA vendor to determine how many covered employees received employer HSA contributions and the quarterly total of those contributions. Alternatively, employers could look at payroll information to determine HSA contributions. |
Are there penalties if covered employers fail to submit SF HCSO reporting? Covered employers who fail to submit reporting by April 30th may be subject to a $500 penalty per quarter. Please note that OLSE takes down the option to report after a certain time period and employers will not have the option of late reporting past that date. For more information on annual HCSO reporting, visit the OLSE FAQ website. If you have not already done so, please sign up for the HCSO email list here, so you will receive an annual reporting reminder from OLSE from here forward.
For Sequoia Clients Only: Sequoia will provide clients with additional instructions on how to complete their HCSO reporting once the OLSE releases the 2019 reporting form, which is expected to be posted on April 1, 2020.
Additional Resources/Important Links:
Official SF HCSO Website
Official Employer Reporting Instructions
HCSO Hotline: (415) 554-7892
The information and materials on this blog are provided for informational purposes only and are not intended to constitute legal or tax advice. Information provided in this blog may not reflect the most current legal developments and may vary by jurisdiction. The content on this blog is for general informational purposes only and does not apply to any particular facts or circumstances. The use of this blog does not in any way establish an attorney-client relationship, nor should any such relationship be implied, and the contents do not constitute legal or tax advice. If you require legal or tax advice, please consult with a licensed attorney or tax professional in your jurisdiction. The contributing authors expressly disclaim all liability to any persons or entities with respect to any action or inaction based on the contents of this blog.
