The law leaves it up to employers to decide how they will make the expenditure, which this year is as much as $1.76 per hour per covered employee.
For example, the expenditure can be for an employer’s group health insurance premium contribution and/or its contribution to employees’ health savings accounts. Employers that do not offer health insurance coverage can satisfy the spending requirement by contributing to a city fund.
In calculating the amount of their health care expenditures on a per-employee basis, employers must include employees who have worked at least 90 days and at least 10 hours a week.
While employers typically spend far more than $1.76 per hour per employee on health care coverage, many employers with workers in San Francisco will be affected nonetheless. For example, few employers provide health care coverage to employees working as little as 10 hours a week.
For those employers who have elected to satisfy the spending mandate by making contributions to the city, payments are made on a quarterly basis. The first payment for employers with 50 or more employees is due April 30, while the first quarterly payment for employers with 20 to 49 employees is due July 30. Employers with fewer than 20 employees are exempt from the law.
While a U.S. District Court judge late last year ruled in a suit filed by a San Francisco-area restaurant association that the spending requirement was pre-empted by the Employee Retirement Income Security Act, a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled in January that the law can be implemented while the appeals court decides on the ERISA pre-emption issue.