San Francisco’s Health Care Security Ordinance: 2012 Updates

Within San Francisco city limits, employers of 20 or more employees are subject to the Health Care Security Ordinance.  The following is a plain-English summary of these provisions, which can be somewhat perplexing for employers and employees alike, and the changes to the law effective in 2012.

San Francisco’s Health Care Security Ordinance (HCSO) requires mid to large-size employers in the City (for-profits with 20 or more employees and non-profits with 50 or more employees) to spend a minimum amount on their employees’ health care.  Employers can choose how to make these health care expenditures, including purchasing health insurance, setting up health spending accounts, or enrolling employees in the City’s Healthy San Francisco Program.  Employers with 1-19 employees are exempt from the HCSO provisions.

Employees covered by the HCSO, “covered employees,” are those employed for at least 90 calendar days and perform at least eight hours of work per week in San Francisco.

The new HCSO regulations, effective January 1, 2012, change the minimum health care expenditure rates and the annual salary figure exempting certain employees from the HCSO.

2012 Health Care Expenditure Rates

Large Employers (100+ employees) – minimum health care expenditure rate increased to $2.20/hour (previously $2.06/hour).

Medium-Sized Employers (20-99 employees) – the minimum health care expenditure rate increased to $1.46/hour (previously $1.37/hour).

The minimum expenditure rates require employers to pay a certain amount for each employee’s health care services, or reimbursing the costs of those services, in addition to wages and compensation.

The expenditure rate is to be paid for each hour worked by a covered employee for that quarter.  Required health care expenditures are calculated by multiplying the total number of “hours paid” to each covered employee by the applicable expenditure rate.  “Hours paid” include both work hours and any paid time off, including vacation and sick leave.

2012 Annual Salary Exemption Figure

Managers, supervisors, or confidential employees who earn an annual salary at or above $84.051 (or $40.41/hour) in 2012 are exempt from coverage under the HCSO (previously $81,450, or $39.16/hour).  In other words, these employees are not “covered employees” and the employer need not pay health care expenditure rates.

San Francisco employers are must comply with several city-wide ordinances regulating labor and employment, such as the HCSO, in addition to state and federal labor laws.



- Katie Weeks

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