San Francisco’s HCSO Requires New Contribution Rates for 2017

Employers in San Francisco should be aware of a rate change in the Employer Spending Requirement (ESR) effective January 1, 2017.

With the changes from San Francisco’s Health Care Security Ordinance (HCSO), businesses must meet the ESR requirements by making health care contributions on behalf of all covered employees. A “covered employee” is an individual that has been employed for more than 90 days and who regularly works at least 8 hours per week in San Francisco.

Beginning January 1, 2017, businesses must pay the following rates:

  • Employers with 100+ employees: $2.64 per hour
  • Employers with 20-99 employees: $1.76 per hour
  • Employers with fewer than 20 employees are exempt from the requirement

(To date, it is still unclear which rate category nonprofit organizations will fall into.)

As long as they make the minimum required expenditures, employers may choose how they spend the money. For example, employers may pay for health insurance, make payments to the City’s health benefit program (called the City Option), etc.

Health care contributions also include payment toward employee health insurance, or to Healthy San Francisco (HSF). HSF is a program designed to make health care services available and affordable to uninsured San Francisco residents. It is operated by the San Francisco Department of Public Health.

An employer must also post an Official HCSO notice from the Office of Labor Standards Enforcement (OLSE) at all workplaces with covered employees. Employers are required to post the Official Notice in English, Spanish, and Chinese. The official OLSE notice includes these three languages. The notice must also be in any other language spoken by at least five percent of the employees at the workplace or job site.

An employee can waive their rights by signing an official HCSO voluntary waiver or if they show they have insurance through another employer.

Be aware, the city may investigate possible violations of the Ordinance, and can order employers who violate the Ordinance to pay penalties and make payments for health care benefits. Employers may not punish employees who exercise their rights under the Ordinance or cooperate with the City in enforcing the Ordinance.

With this new rate, it is likely that other ordinances will start changing their rates as well. Stay tuned for more San Francisco ordinance updates.


Ben Clairday

About Ben Clairday

As Bolton’s Compliance Assistant, Ben Clairday is responsible for handling Business Associate Agreements, Form 5500s, HIPAA files and Summary Plan Descriptions for clients. He also supports Bolton’s employee benefits service teams by providing his knowledge on the Affordable Care Act, wage and labor laws and paid sick leave laws. Ben works closely with Bolton Chief Compliance Officer John Garner, and recently assisted with updates on the 12th edition of the Health Insurance Answer Book. Ben is licensed in Life & Accident & Health Insurance and holds a Bachelors of Art in History from Humboldt State University.

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