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(a) Short Title. This Chapter shall be known and may be cited as the "San Francisco Health Care Security Ordinance."
(b) Definitions. For purposes of this Chapter, the following terms shall have the following meanings:
"City" means the City and County of San Francisco.
"Covered Employee" means any person who works in the City where such person qualifies as an employee entitled to payment of a minimum wage from an Employer under the Minimum Wage Ordinance, Chapter 12R of the Administrative Code, and has performed work for compensation for his or her Employer for ninety (90) calendar days, provided, however, that:
(1) "At least eight (8) hours" shall be substituted for "at least two (2) hours" where such term appears in Section 12R.3(a);
(2) The term "Covered Employee" shall not include persons who are managerial, supervisorial, or confidential employees, unless such employees earn annually under $88,212 in 2014 and, for subsequent years, the figure as set by the administering agency;
(3) The term "Covered Employee" shall not include those persons who are eligible to receive benefits under Medicare or TRICARE/CHAMPUS;
(5) The term "Covered Employee" shall not include those persons who are employed by a nonprofit corporation for up to one year as trainees in a bona fide training program consistent with Federal law, which training program enables the trainee to advance into a permanent position, provided that the trainee does not replace, displace, or lower the wage or benefits of any existing position or employee.
(6) Nor shall the term "Covered Employee" include those persons whose Employers verify that they are receiving Health Care Services through another Employer, either as an employee or by virtue of being the spouse, domestic partner, child, or other dependent of another person; provided that the Employer obtains from those persons a voluntary written waiver of the Health Care Expenditure requirements of this Chapter and that such waiver is revocable by those persons at any time.
"Covered Employer" means any Medium-sized or Large Business as defined below engaging in business within the City that is required to obtain a valid San Francisco business registration certificate from the San Francisco Tax Collector's office or, in the case of a nonprofit corporation, an Employer for which an average of fifty (50) or more persons per week perform work for compensation during a quarter. Small Businesses are not Covered Employers and are exempt from the health care spending requirements under Section 14.3.
"Employer" means an employing unit as defined in Section 135 of the California Unemployment Insurance Code or any Person defined in Section 18 of the California Labor Code. "Employer" shall include all members of a "controlled group of corporations" as defined in Section 1563(a) of the United States Internal Revenue Code, and the determination shall be made without regard to Sections 1563(a)(4) and 1563(e)(3)(C) of the Internal Revenue Code.
"Employer Spending Requirement" means the sum total of Required Health Care Expenditures that a Covered Employer must make for all of its Covered Employees.
"Health Access Program" means a public health benefit program administered by the Department of Public Health; comprised of Healthy San Francisco and Medical Reimbursement Accounts; and intended to increase every participant's access to Health Care Services.
"Health Care Expenditure" means an amount paid by a Covered Employer to a Covered Employee or a trustee or a third party on behalf of a Covered Employee for the purpose of providing or reimbursing the cost of Health Care Services for Covered Employees and/or their spouses, domestic partners. children. or other dependents. "Health Care Expenditure" also means an amount paid by a Covered Employer to the City on behalf of a Covered Employee to establish his or her eligibility to participate in the Health Access Program in the manner and according to the terms set by the Department of Public Health. "Health Care Expenditure" shall not include any amount otherwise required to be paid by Federal, State, or local law.
"Health Care Expenditure Rate" means the amount of Health Care Expenditure that a Covered Employer shall be required to make for each Hour Payable for each of its Covered Employees. The Health Care Expenditure Rate shall be determined annually based on the "average contribution" for a full-time employee to the City Health Service System pursuant to Section A8.423 of the San Francisco Charter based on the annual ten county survey amount for the applicable fiscal year, with such average contribution prorated on an hourly basis by dividing the monthly average contribution by one hundred seventy-two (172) (the number of hours worked in a month by a full-time employee). The Health Care Expenditure Rate shall be seventy-five percent (75%) of the annual ten county survey amount for the applicable calendar year for Large Businesses and fifty percent (50%) for Medium-sized Businesses.
"Health Care Services" means medical care, services, or goods that may qualify as tax deductible medical care expenses under Section 213 of the Internal Revenue Code, or medical care, services, or goods having substantially the same purpose or effect as such deductible expenses.
"Healthy San Francisco" means a Department of Public Health program to provide health care for uninsured San Francisco residents who meet the eligibility criteria established by the Department of Public Health.
"Hour Payable" or "Hours Payable" means a work hour or work hours for which a person is paid wages or is entitled to be paid wages for work performed within the City, including paid vacation hours and paid sick leave hours, but not exceeding 172 hours in a single month, and without regard to the date such wages are actually paid. For salaried persons, "Hours Payable" shall be calculated based on a 40-hour work week for a full-time employee. "Hours Payable" does not include hours worked prior to the first day of the calendar month that begins on or after the date that is ninety (90) calendar days after the date of hire.
"Irrevocable Health Care Expenditure" or "Irrevocable Expenditure" means any amount of Health Care Expenditure that has not been retained by and cannot at any time be recovered by or returned to the Covered Employer.
"Large Business" means an Employer for which an average of one hundred (100) or more persons per week perform work for compensation during a quarter.
"Medical Reimbursement Account" means a public health benefit administered by the Department of Public Health, funded in whole or in part by Health Care Expenditures made by Covered Employers to the City under Section 14.3, from which eligible Covered Employees may obtain reimbursement for Health Care Services as determined by the Department of Public Health.
"Medium-sized Business" means an Employer for which an average of between twenty (20) and ninety-nine (99) persons per week perform work for compensation during a quarter.
"OLSE" means the Office of Labor Standards Enforcement or any successor City entity charged with enforcing the obligations of Employers under this Chapter.
"Person" means any natural person, corporation, sole proprietorship, partnership, association, joint venture, limited liability company, or other legal entity.
"Required Health Care Expenditure" means the Health Care Expenditure that a Covered Employer is required to make to or on behalf of a Covered Employee.
"Revocable Health Care Expenditure" or "Revocable Expenditure" means any amount of Health Care Expenditure that has been allocated for use by a Covered Employee but retained by the Covered Employer, or any amount that has been paid to a trustee or third party but that may at some time be recovered by or returned to the Covered Employer.
"Small Business" means an Employer for which an average of fewer than twenty (20) persons per week perform work for compensation during a quarter.
(a) The San Francisco Department of Public Health shall administer the Health Access Program, comprised of Healthy San Francisco and Medical Reimbursement Accounts. The Department shall determine eligibility and benefits under each program component to maximize participants' overall access to Health Care Services.
(b) Under Healthy San Francisco, eligible uninsured San Francisco residents may obtain health care from a network consisting of San Francisco General Hospital and the Department of Public Health's clinics, and other community non-profit and private providers that meet the program's quality and other criteria for participation. Healthy San Francisco is not an insurance plan for Healthy San Francisco participants.
(c) Healthy San Francisco shall be open to eligible, uninsured San Francisco residents. Eligibility criteria shall be established by the Department of Public Health, but no person shall be excluded from Healthy San Francisco based on employment or immigration status or a pre-existing condition.
(d) Healthy San Francisco may be funded from a variety of sources, including health care expenditures by Covered Employers pursuant to Section 14.3, from individuals, and from the City. Funding from the City shall prioritize services for low and moderate income persons, with costs based on Healthy San Francisco participants' ability to pay.
(e) Healthy San Francisco shall use the "Medical Home" model in which a primary care physician, nurse practitioner, or physician assistant develop and direct a plan of care for each Healthy San Francisco participant, coordinate referrals for testing and specialty services, and monitor management of chronic conditions and diseases. Healthy San Francisco participants shall be assigned to a primary care physician, nurse practitioner, or physician assistant.
(f) Healthy San Francisco shall provide medical services with an emphasis on wellness, preventive care and innovative service delivery. The program shall provide medical services for the prevention, diagnosis, and treatment of medical conditions, excluding vision, dental, infertility, and cosmetic services. The Department of Public Health may further define the services to be provided, except that such services must, at a minimum, include: professional medical services by doctors, nurse practitioners, physician assistants, and other licensed health care providers, including preventive, primary, diagnostic and specialty services; inpatient and outpatient hospital services, including acute inpatient mental health services; diagnostic and laboratory services, including therapeutic radiological services; prescription drugs, excluding drugs for excluded services; home health care; and emergency care provided in San Francisco by contracted providers, including emergency medical transportation if needed.
(g) The Department of Public Health shall also be authorized to use payments made to the City by Covered Employers to satisfy their Health Care Expenditure requirements as set forth in Section 14.3 to establish and maintain Medical Reimbursement Accounts from which eligible Covered Employees may obtain reimbursement of Health Care Expenditures in the amount and under the terms set by the Department of Public Health.
(h) The Department of Public Health may coordinate with a third party vendor to administer program operations, including enrollment, tracking service utilization, billing, and communication with the participants.
(i) The City Controller shall ensure that any Health Care Expenditures made by a Covered Employer to the City pursuant to Section 14.3 are kept separate and apart from general funds and shall limit use of the expenditures to support the Health Access Program.
(j) In accordance with the guiding principles and key findings of the 2013 Universal Healthcare Council Final Report, the Department of Public Health shall develop a plan to ensure that Employer Health Care Expenditures made to the City pursuant to Section 14.3 can be used to maximize enrollment in health insurance through Covered California and include possible options for incenting employers to provide quality, affordable health insurance directly to employees. This plan shall be presented to the Health Commission no later than August 1, 2015, so that it may be considered and approved by the Health Commission and by the Board of Supervisors in time for full implementation beginning in the 2016 Covered California plan year. Unless and until the plan is approved by the Board of Supervisors, the Department of Public Health shall continue to administer the Health Access Program, which includes Healthy San Francisco and Medical Reimbursement Accounts, in a manner that is consistent with the guiding principles and key findings of the 2013 Universal Healthcare Council Final Report.
(Added by Ord. 218-06, File No. 051919, App. 8/4/2006; amended by Ord. 69-07, File No. 070255, App. 4/2/2007; Ord. 99-14, File No. 140317, App. 6/26/2014, Eff. 7/26/2014)
(a) Required Expenditures. Covered Employers shall make Required Health Care Expenditures to or on behalf of each Covered Employee each quarter. The quarterly Required Health Care Expenditure shall be calculated by multiplying the number of Hours Payable to the Covered Employee during the quarter by the applicable Health Care Expenditure Rate. Health Care Expenditures to or on behalf of a Covered Employee that exceed the Required Health Care Expenditure for that Covered Employee shall not be counted toward the Employer Spending Requirement except as expressly permitted by OLSE.
(b) Irrevocable Expenditures.
(1) At least sixty percent (60%) of each Required Health Care Expenditure for Hours Payable in calendar year 2015 must consist of Irrevocable Expenditures. Revocable Expenditures that exceed forty percent (40%) of Required Health Care Expenditures shall not be counted toward the Employer Spending Requirement.
(2) At least eighty percent (80%) of each Required Health Care Expenditure for Hours Payable in calendar year 2016 must consist of Irrevocable Expenditures. Revocable Expenditures that exceed twenty percent (20%) of Required Health Care Expenditures shall not be counted toward the Employer Spending Requirement.
(3) For Hours Payable on and after January 1, 2017, only Irrevocable Health Care Expenditures shall be counted toward the Employer Spending Requirement.
(c) Revocable Expenditures. Subject to the limitations in subsection (b). Revocable Health Care Expenditures shall be counted toward the Employer Spending Requirement, provided that:
(1) The expenditure is reasonably calculated to benefit the employee; and
(2) No portion of the expenditure is revoked prior to the earliest of: (A) twenty-four (24) months from the date of the expenditure; (B) ninety (90) days after separation from employment; or, (C) for Revocable Expenditures made for Hours Payable prior to January 1, 2014, the date that the Covered Employee knowingly, voluntarily, and permanently waives in writing the unused portion of such expenditure; and
(3) The Covered Employee receives from the Covered Employer or its agent a written summary within 15 calendar days of the date of the expenditure that includes: (A) the name, address, email address, and telephone number of any third party to whom the expenditure was made; (B) the date and amount of the expenditure; (C) a summary of how the benefit may be used, including types of health care services available; (D) restrictions on the use of this benefit, including maximum dollar value of benefits or account balances; and (E) the date on which any portion of this benefit will be revoked; and
(4) A Covered Employee who separates from employment with any amount of unused Revocable Expenditures receives, within three business days following the separation, (A) a written notice with a summary of how the benefit may be used, including types of health care services available; (B) restrictions on the use of this benefit, including maximum dollar value of benefits or account balances, and (C) the date on which the benefit will be revoked.
(d) Effect of Court Order. If the City Attorney certifies to the Mayor and the Board of Supervisors that a court of competent jurisdiction has struck down any provision of Section 14.3(c), or permanently enjoined its enforcement, then only Irrevocable Expenditures shall count toward the Employer Spending Requirement as of the first day of the next calendar quarter following the City Attorney's certification.
(e) Employer Notice to Employees.
(1) By December 1 of each year, OLSE shall publish and make available to Covered Employers, in all languages spoken by more than five percent of the San Francisco work force, a notice suitable for posting by Covered Employers in the workplace informing Covered Employees of their rights and the Covered Employer's obligations under this Chapter.
(2) Every Covered Employer shall post in a conspicuous place at any workplace or job site where any Covered Employee works the notice published each year by OLSE. Every Covered Employer shall post such notices in English, Spanish, Chinese and any other language spoken by at least five percent of the Covered Employees at the workplace or job site.
(f) Additional Employer Responsibilities. A Covered Employer shall:
(1) maintain accurate records of Health Care Expenditures, Required Health Care Expenditures, and proof of such expenditures made each quarter each year, and allow OLSE reasonable access to such records, provided, however, that Covered Employers shall not be required to maintain such records in any particular form; and
(2) provide information to OLSE, or the OLSE's designee, on an annual basis containing such other information as OLSE shall require, including information on the Employer's compliance with this Chapter, but OLSE may not require an Employer to provide information in violation of State or federal privacy laws. In the event the information required by OLSE is comingled with information protected by privacy laws, the Employer shall redact the private information. If a Covered Employer uses a Revocable Expenditure to satisfy its obligation to make Required Health Care Expenditures for any of its Covered Employees, the Employer shall also report to OLSE any conditions or restrictions on the Covered Employee's use of the expenditure, and the condition or conditions that permit any portion of the expenditure to be revoked by or returned to the Covered Employer.
Where an Employer does not maintain or retain adequate records documenting the Health Care Expenditures made, or does not allow OLSE reasonable access to such records, it shall be presumed that the Employer did not make the Required Health Care Expenditures for the quarter for which records are lacking, absent clear and convincing evidence otherwise. The Office of Treasurer and Tax Collector shall have the authority to provide any and all nonfinancial information to OLSE necessary to fulfill OLSE's responsibilities as the enforcing agency under this Chapter. With regard to all such information provided by the Office of Treasurer and Tax Collector, OLSE shall be subject to the confidentiality provisions of Subsection (a) of Section 6.22-1 of the San Francisco Business and Tax Regulations Code.
(g) Surcharges. If a Covered Employer imposes a surcharge on its customers to cover in whole or in part the costs of the Health Care Expenditure requirement under this Chapter, the Covered Employer shall provide to OLSE on an annual basis the amount collected during the 12-month reporting period from the surcharge for employee health care and the amount spent on employee health care. If the amount collected from the surcharge is greater than the amount spent on employee health care, the Covered Employer must make additional Irrevocable Health Care Expenditures to or on behalf of its Covered Employees in an amount equal to that difference. OLSE may refer any potential cases of consumer fraud to appropriate authorities.
(a) The City shall develop and promulgate rules and regulations to govern the operation of this Chapter. The Department of Public Health shall develop and promulgate rules and regulations to govern the operation of the Health Access Program identified in Section 14.2, including but not limited to eligibility for enrollment in Healthy San Francisco and the establishment of Medical Reimbursement Accounts. OLSE shall develop and promulgate rules and regulations for enforcement of the obligations of Employers under this Chapter. The rules and regulations shall also establish procedures for Covered Employers to maintain accurate records of Health Care Expenditures and Required Health Care Expenditures and provide a report to OLSE without requiring any disclosures of information that would violate State or Federal privacy laws. The rules and regulations shall further establish procedures for providing Employers notice that they may have violated this Chapter, a right to respond to the notice, a procedure for notification of the final determination of a violation, and an appeal procedure before a hearing officer appointed by the City Controller. The sole means of review of the hearing officer's decision shall be by filing in the San Francisco Superior Court a petition for a writ of mandate under Section 1094.5 of the California Code of Civil Procedure. No rules or regulations shall be adopted finally until after a public hearing.
(b) OLSE shall maintain an education and advice program to assist Employers with meeting the requirements of this Chapter.
(c) Any Employer that reduces the number of employees below the number that would have resulted in the Employer being considered a "Covered Employer," or below the number that would have resulted in the Employer being considered a Medium-sized or Large Business, shall demonstrate that such reduction was not done for the purpose of evading the obligations of this Chapter or shall be in violation of this Chapter.
(d) It shall be unlawful for any Employer or Covered Employer to deprive or threaten to deprive any person of employment, take or threaten to take any reprisal or retaliatory action against any person, or directly or indirectly intimidate, threaten, coerce, command or influence or attempt to intimidate, threaten, coerce, command or influence any person because such person has cooperated or otherwise participated in an action to enforce, inquire about, or inform others about the requirements of this Chapter. Taking adverse action against a person within ninety (90) days of the person's exercise of rights protected under this Chapter shall raise a rebuttable presumption of having done so in retaliation for the exercise of such rights.
(e) (1) OLSE shall enforce the obligations of Covered Employers under this Chapter 14, including requiring restitution to employees where appropriate, and shall impose administrative penalties on Covered Employers who fail to make Required Health Care Expenditures on behalf of their Covered Employees within five business days of the quarterly due date. Failure to make a Required Health Care Expenditure shall include making a purported expenditure that OLSE determines is not reasonably calculated to benefit the employee. The amount of the penalty shall be up to one-and-one-half times the total expenditures that a Covered Employer failed to make, but in any event the total penalty for this violation shall not exceed $100 for each Covered Employee for each quarter that the required expenditures were not made within five business days of the quarterly due date.
(2) For other violations of this Chapter by Employers and Covered Employers, the maximum administrative penalties shall be as follows: For refusing to allow access to records, pursuant to Section 14.3(f), $25 as to each worker whose records are in issue for each day that the violation occurs; for the failure to maintain or retain accurate and adequate records pursuant to Section 14.3(f) and for the failure to make the annual reports of information required by OLSE pursuant to Sections 14.3(f) and 14.3(g), $500 for each quarter that the violation occurs; for violation of Section 14.4(d) (retaliation), $100 as to each Person who is the target of the prohibited action for each day that the violation occurs; and for any other violation not specified in this subsection (e)(2), $25 per day for each day that the violation occurs.
(3) The City Attorney may bring a civil action to recover civil penalties for the violations set forth in subsections (e)(1) and (e)(2) in the same amounts set forth in those subsections, and to recover the City's enforcement costs, including attorneys' fees.
(4) Penalties recovered under this Section 14.4 shall be deposited in the City's General Fund.
(Added by Ord. 218-06, File No. 051919, App. 8/4/2006; amended by Ord. 69-07, File No. 070255, App. 4/2/2007; Ord. 232-11, File No. 111030, App. 11/22/2011, Eff. 12/22/2011, Oper. 1/1/2012; Ord. 99-14 , File No. 140317, App. 6/26/2014, Eff. 7/26/2014; Ord. 6-17, File No. 161081, App. 1/20/2017, Eff. 2/19/2017)
If any section, subsection, clause, phrase, or word of this Chapter is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Chapter. The Board of Supervisors hereby declares that it would have passed this Chapter and each and every section, subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional without regard to whether any other portion of this Chapter would be subsequently declared invalid or unconstitutional.
Nothing in this Chapter shall be interpreted or applied so as to create any power, duty or obligation in conflict with any Federal or State law.
By this Chapter, the City is assuming an undertaking only to promote the general welfare and otherwise satisfy its obligations to provide health care under applicable law. This Chapter should in no way be construed as an expansion of the City's existing obligations to provide health care under State and Federal law, and the City shall set all necessary criteria for enrollment consistent with its legal obligations. The City is not assuming, nor is it imposing on its officers and employees, an obligation for breach of which it is liable in money damages to any Person who claims that such breach proximately caused injury. To the fullest extent permitted by law, the City shall assume no liability whatsoever. To the fullest extent permitted by law, any actions taken by a public officer or employee under the provisions of this Chapter shall not become a personal liability of any public officer or employee of the City.
(Added by Ord. 218-06, File No. 051919, App. 8/4/2006; amended by Ord. 72-07, File No. 070354, App. 4/2/2007; repealed by Ord. 99-14, File No. 140317, App. 6/26/2014, Eff. 7/26/2014)