November 5, 2013

Updates: San Francisco’s HCSO and New Family Friendly Leave Benefits

2014 Salary Exemption Limit

Along with adjusting an employer’s health care expenditure amounts for 2014 (see San Francisco HCSO Expenditure Rates for 2014) for purposes of the San Francisco’s Health Care Security Ordinance (HCSO), the Office of Labor Standards Enforcement (OLSE)  has adjusted the salary exemption figure.  An employee who is a manager, supervisor, or confidential employee, and who earns at or above an annual salary of $88,212 (or, $42.41 hourly) in 2014 is exempt from coverage under the HCSO.  In 2013, the annual salaried figure was $86,593 or $41.63/hour.

Coordination of Healthy San Francisco and the Affordable Care Act

The HCSO requires covered employers to contribute to the health care costs of its covered employees, either through the Health Access Program, “Healthy San Francisco”; or through private means. Most employers satisfy this obligation through their traditional health plan. Some employers satisfy this obligation through the use of a health reimbursement account (HRA). As a result of perceived abuse of utilizing HRAs (the unused HRA funds would revert to the employer at the end of each year), certain oversight requirements were put in place beginning January 1, 2012 (see HRAs Used to Satisfy the Employer Spending Requirement, Benefit Beat, 12/3/11).

The Affordable Care Act (ACA) is creating some challenges for certain of the methodologies that can be used to satisfy the Healthy San Francisco requirement, specifically, the stand-alone HRA.  In a nutshell, a stand-alone HRA will not be compliant with the ACA in 2014 and beyond (see CBIZ Health Reform Bulletin, Impact of ACA on HRAs, Health Care FSAs, and Other Employer Health Care Arrangements, 9/20/13).

The OSLE recently issued a number of FAQs on the HCSO and the Affordable Care Act addressing this issue.  Any employer who has satisfied its Healthy San Francisco obligation by funding an HRA would be well advised to review this information.  In a nutshell, the OSLE affirms that the obligations under the HCSO remain in full force and effect; though, the Mayor, the Board of Supervisors and the OLSE will continue to review surrounding this debacle. 

Of particular note, FAQ 3 addresses the several options that covered employers who utilize an HRA can satisfy their obligations for providing health care expenditures on behalf of covered employees, including:

  • Payments to a third party for providing health care services to employees, such as payments for health insurance or payments to a health care provider;
  • Payments on behalf of the employee to the City Option that coordinates the Healthy San Francisco program with medical reimbursement accounts for employees; 
  • Contributions on behalf of the employees to a reimbursement program; 
  • Payments to the employees to reimburse them for costs incurred in the purchase of health care services; or, 
  • Payment of costs incurred by the employer in the direct delivery of health care services for the employees.

Family Friendly Workplace Ordinance

On October 8, 2013, the San Francisco Board of Supervisors enacted the Family Friendly Workplace Ordinance.   In a nutshell, this law is intended to assist employees in providing flexibility in their work arrangements for purposes of attending to their family caregiving responsibilities.

Beginning January 1, 2014, an eligible employee who has been employed at least six months and who is regularly scheduled to work at least 8 hours per week is entitled to request a flexible or alternate working arrangements in order to care for:

  • His/her child(ren) under age 18;
  • A family member with a serious health condition; or
  • His/her parent (aged 65 and over). 

Such workplace accommodations may include requesting a modified work schedule, a change in start and end times for work, part-time employment, job sharing, or telecommuting.  Employers subject to this Ordinance include the City and County of San Francisco, as well as private employers who employ 20 or more employees.


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