File your 2023 HCSO report in under 5 minutes

San Francisco has more worker protection laws than any other local government in the country. 

While these protections benefit employees, they also come with tedious regulatory filings for HR teams, like the San Francisco Health Care Security Ordinance (HCSO)—a unique protection in San Francisco that requires covered employers to spend a minimum amount on employee health care. Employers covered under the HCSO must submit an Employer Annual Reporting Form (ARF) to the Office of Labor Standards Enforcement (OLSE) each year. The 2023 ARF is due on May 3, 2024.

To fill out this form, you need reliable employee information across employment, compensation, hourly time tracking, and health insurance enrollment to determine who is an eligible employee and who is exempt. If your employee data isn’t perfectly synced between your HRIS, time and attendance, payroll, and benefits administration software, filling out this form—and staying on top of all regulatory filings—is not only manual and time-consuming, but error-prone.

That’s why Rippling built a ready-to-use report template that does it for you.

All your ARF information, right in Rippling

Rippling is the only HCM that offers custom, ready-to-use report templates that unify employee data across all your apps, so you can get more done, faster. 

Without Rippling for your entire global workforce, you’d need to filter out employees whose work location isn’t San Francisco, work fewer than eight hours per week, and are managers making above the salary threshold—and then factor in health plans and HSAs. 

Under the SF HCSO, minimum health care expenditure can be determined on a quarterly basis by multiplying the total number of hours each employee worked by your applicable expenditure rate (by company size). 

Rippling automatically pulls real-time data from Payroll, Time & Attendance, and Benefits, and calculates the amount to contribute for each employee in a simple snapshot. Then, you can head right over to www.sf.gov/olsearf with everything you need to fill out and submit the ARF.

Rippling also has other ready-to-use HCSO report templates that can give you a more detailed overview of your health care expenditures throughout 2024 so that you can make sure you’re contributing the right amount per employee ahead of next year’s filing period. You can access all of these templates in our Reports app.

How to build your HCSO report in Rippling

In your Reports app, hit New Report on the top right of the screen. From there, you can find this HCSO report template, which aligns directly with what you need to submit to OLSE. Copy and paste the title of the recipe into the search bar for easy access: San Francisco Health Care Security Ordinance (HCSO) - 2023 Annual Reporting Form.

Once you select the Recipe, hit Start Building Report on the bottom right. 

This will take you directly to the completed report, which populates with your company’s data automatically. This screen has the exact information you need to fill out the ARF. 

HCSO without the headache

It’s never been easier for businesses to comply with worker protection laws in San Francisco. With Rippling’s HCSO report template, your HR team no longer needs to spend their time scrambling for accurate employee data across multiple siloed systems to file the ARF on time every year. 

The only HCM built natively on a unified data model, Rippling can automatically report on anything happening in your workforce. Check out our hundreds of other ready-to-use templates, like the California Pay Data report due on May 8, 2024.

FAQs about the Health Care Security Ordinance (HCSO)

What is the Health Care Security Ordinance (HCSO)?

The Health Care Security Ordinance (HCSO) is a law in the City and County of San Francisco that established health care obligations for employers and created a Health Access Program administered by the San Francisco Department of Public Health.

The HCSO requires covered employers to spend a minimum amount on health care for employees who have been employed for more than 90 days and work eight or more hours per week. This protection was instituted in hopes of making health care more accessible for employees.

What does it require?

The HCSO requires all covered employers to:

• Satisfy the Employer Spending Requirement (ESR) by calculating and making required health care expenditures for all covered employees.
• Maintain records to prove compliance with the expenditure requirement.
• Post an HCSO notice in all workplaces with covered employees.
• Meet reporting requirements by submitting an HCSO Annual Reporting Form (ARF) to the Office of Labor Standards Enforcement (OLSE) each year.

Who counts as a covered employee?

Under the HCSO, covered employees must work for a covered employer and:

• Be entitled to be paid the minimum wage.
• Be employed for at least 90 calendar days.
• Perform at least eight hours of work per week within the geographic boundaries of San Francisco.

There are also five exemptions:

• Employees who voluntarily waive their right to health care expenditures under the HCSO.
• Employees who work as managers, supervisors, or confidential employees and earn more than the applicable salary exemption amount (for the 2023 reporting period, the earnings requirement applicable to this exemption is an annual Salary of $114,141, or an hourly salary of $54.88).
• Employees who are eligible for Medicare or TRICARE.
• Trainees in bona fide training programs for nonprofit corporations for up to one year, consistent with federal law.
• Employees who receive health care benefits pursuant to the San Francisco Health Care Accountability Ordinance (HCAO).

How much are covered employers required to spend on health care?

It depends on how many workers they have and the current applicable Health Care Expenditure Rate, which changes each year.

There are two Health Care Expenditure Rates each year, one for medium-size employers (those with 20-99 persons ) and another for large employers ((those with 100 or more persons performing work). In 2024, the rates are:

• $2.34/hour for medium-size employers
• $3.51 for large employers

An employer’s minimum health care expenditure is determined quarterly by multiplying the total number of Hours Payable to each covered employee in the quarter by the applicable Health Care Expenditure Rate.

What types of employer expenditures satisfy the ESR?

Under the HCSO, employers have a lot of freedom to choose how to make the required employer contributions to satisfy the Employer Spending Requirement (ESR). Some common expenditures include:

• Payments for employees’ health care insurance premiums, including health, dental, and/or vision insurance.
• Self-funded health plans.
• Health care coverage for covered employees’ dependents, including spouses, domestic partners, and children.
• Health Savings Accounts
• Payments to the SF City Option Program.
• Contributions to medical reimbursement accounts for out-of-pocket health care services, as long as they meet HCSO eligibility requirements for the ESR.

Note that payments made directly or indirectly for workers’ compensation or Medicare do not count toward a covered employer’s required health care expenditures.

When is the HCSO report due?

Typically, the report is due by April 30 of each year. If April 30 falls on a weekend or holiday, the due date may shift. For example, in 2024 (when the 2023 ARF is due), the due date is May 3.

Who must file the HCSO report?

All “covered employers” under the HSCO are required to submit the annual report. An employer is covered by the HSCO for a calendar quarter if they meet these three conditions:

1. They employ at least one worker within the geographic boundaries of San Francisco City or County.
2. They are required to obtain a San Francisco business registration certificate according to Article 12 of the Business and Tax Regulations Code.
3. They are a for-profit business with 20 or more persons performing work, or a nonprofit business with 50 or more persons performing work. This includes all people who work for the business, whether they are located in San Francisco or elsewhere.

How are employees counted when determining employer size?

When determining employer size, all workers are counted (not just covered employees). This includes:

• Workers both inside and outside of San Francisco.
• All persons who perform work, whether they are seasonal, permanent, temporary, full-time, part-time, contracted, or commissioned.
• Owners who work for their own companies.
• Anyone who works for compensation, which can include money, benefits, or in-kind compensation, such as room and board.

If a business has a fluctuating number of workers throughout the year, its employer size is based on the weekly average number of persons performing work for compensation during each quarter.

Where do you file the HCSO report?

The HCSO ARF is a web-based form that must be submitted online. It’s available on the HCSO website by April 1 each year.

What if covered employees have their own health insurance?

It depends. If the employee has coverage through another employer, they can voluntarily waive their rights to health care expenditures under the HSCO by signing the OLSE’s Employee Voluntary Waiver Form. However, note that even if the employee is receiving health care benefits from another employer, if they do not sign the waiver, you must still satisfy the ESR and all reporting requirements for that employee under the HSCO.

If a covered employee has coverage that isn’t provided by another employer (for example, if they purchase their own coverage or receive MediCal), they cannot sign a waiver and you must meet health care expenditure minimums for that employee under the HSCO.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.