As we approach the compliance date for the Employer Expenditure Requirement under the Healthy San Francisco Ordinance, I have received numerous questions from clients. The purpose of this bulletin is to provide answers to some of the more common questions I have received.

My FAQs

1.      Which Employers Must Comply?

a.      The Business License Issue. Some employers say they are not required to have a Business Registration Certificate (Business License). In fact, the San Francisco Municipal Code, Section 853, requires every person who engages in business within the City to have a Business License. Here is the link to Section 853 of the San Francisco Municipal Code: http://www.municode.com/content/4201/14132/HTML/ch012.html

b.      City Contractors. Organizations which contract with the City of San Francisco must comply with the Health Care Accountability Act for employees who work 20 or more hours per week. Healthy San Francisco generally exempts these organizations from the compliance requirements of Health Care Security Ordinance aka Healthy San Francisco with one exception: City contractors must comply with the Employer Expenditure Requirement under Healthy San Francisco with regard to employees who work between 10 and 20 hours per week. Please refer to the City’s FAQs of December 7, 2007 (Q&A 8): http://www.sfgov.org/site/uploadedfiles/olse/hcso/HCSO%20FAQs,%20released%2012-7-2007.pdf

c.       Engaged in Business in the City. Regulation Section 2.2(B) states that whether an employer is physically located within the City has no bearing on whether it is a covered employer. The requirement is “engaged in business in the City.”

2.      Who are Covered Employees?

a.      Delivery Drivers and the Like. Regulation 3.1(C) and Section 6.1(C)(1) require counting travel time spent in San  Francisco for employees who make pick ups or deliveries, even though they may also make deliveries outside of the City (6.1(C)(1)(b).

b.      Telecommuters. For covered employees who telecommute or work from home in San Francisco for a business with a San Francisco Business License, Section 6.1(C)(1)(d) of the Regulations requires the employer to count hours worked from home in calculating their required expenditures.

3.      How Do I Count My Required Expenditure?

a.      Maximum Number of Hours? The employer must count all hours worked in the City by each covered employee up to a maximum of 172 hours per month (40 x 4.3). Exempt employees are presumed to work 40 hours.

b.      Managers and Supervisors. The 2008 regulations allow an employer to exclude hours worked by managers, supervisors, and confidential employee who will earn more than $76,851 in 2008.

c.       Terminated and Newly Hired Employees. For purposes of calculating the required expenditures, employers must count the hours worked in the City by employees who are terminated during the quarter, as well as the hours worked in the City for newly hired employees who have worked more than 90 days.

4.      How do I Determine Whether My Expenditures Meet or don’t’ meet the Statutory Requirement?

a.      Group Health Plans. For employees who are covered under group health plans, the employer can calculate the total premiums paid to the carriers for coverage minus employee contributions, whether paid through a pre-tax plan or not. Here, Regulation 6.2(B)(1) allows the employers to take the total premium (minus employee contributions) and divide it by the hours worked by all covered employees (excludes managers etc.)

b.      Employees Not Covered by a Group Health Plan. For most group health plans, the minimum number of hours worked for purposes of eligibility is 20 hours per week. If the employer has employees who work between 10 and 20 hours per week, most likely these employees have no coverage. The Regulation requires that each of these employees must receive a benefit (mini-med, self funded health plan, etc.) equal to or greater than $1.76 per hour worked in the City. This calculation must be separate from the calculation for employees covered under the group health plans. In other words, if the group health plan expenditure, for sake of this issue, is $2.00 per hour, the employer cannot use the excess over $1.76 toward the cost for the uncovered employees.