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(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 (with the exception of reporting on calendar year 2019 and 2020 compliance) 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.
(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. 62-21, File No. 210218, App. 4/30/2021, Eff. 5/31/2021)