An employer does not need to be physically located in San Francisco to be deemed a Covered Employer by the Office of Labor Standards Enforcement (OLSE). The HCSO defines a covered employer as
|Employee Size||Number of workers||2019 Expenditure||2020 Expenditure|
|Large||All employers w/100+ workers.||$2.93 per hour payable||$3.08 per hour payable|
|Medium||Businesses w/20-99 workers.
Non-Profits w/50-99 workers.
|$1.95 per hour payable||$2.05 per hour payable|
|Small||Businesses w/0-19 workers.
Non-Profits w/0-49 workers.
The above table shows us that for 2020, medium-sized covered employers and large covered employers can spend a maximum of up to $352.60/month and $529.76/month respectively on their covered employees’ health care. Non-managerial, supervisory, and confidential employees who earned more than $100,796 (or $48.46 per hour) were exempt from this expenditure requirement in 2019. In 2020, that exemption limit will rise to $104,761 (or $50.37 per hour). For more information on historical rates from previous years, follow this link.
Employers are only obligated to make Health Care Expenditures on behalf of employees. However, merely labeling an employee as an “independent contractor”, or issuing a 1099 form does not make him or her so. A fact-specific inquiry issued by the OLSE will ultimately determine whether a person is an employee or an independent contractor.
Once an employee has been deemed as such by the OLSE, Covered Employers are obligated to:
With some exceptions, an Employee is covered by the HCSO if the Employee works for an Employer covered by the HCSO and:
What is important to understand with Covered Employees under SF HSCO is that any work performed by an employee who lives in San Francisco and works from home is still considered work performed within San Francisco. On the other hand, Employees who travel through San Francisco while carrying out their job duties are not considered to have performed work in San Francisco. For a comprehensive overview of the Covered Employee exemption criteria, see the section on Covered Employees.
A health care expenditure (HCE) is any amount paid by a Covered Employer to its Covered Employees to ensure health care services are provided for or costs are reimbursed. Covered Employers are required to keep adequate HCSO records and documentation including (but not limited to):
Covered Employers must carefully assess the new changes to health care expenditure reporting and compliance requirements under SF HSCO. Having a financial strategy in place that outlines the plan for how to itemize your Covered Employees’ contributions will save a plethora of time in the long term. Make sure that your organization knows when a new Annual Reporting Form is available by signing up for the HCSO Email List. It is also wise to review the complete 28 page SF HSCO rules implementing the Covered Employer spending requirement document to get a full spectrum understanding of the entire OLSE regulations contents.