Spotlight on San Francisco Employment LawsFirst Quarter 2012 – Newsletters California Update
- Increase in Minimum Wage: San Francisco has established a minimum wage higher than that required by state or federal law. Effective January 1, 2012, the San Francisco minimum hourly wage is $10.24. This rate applies to all employees who work more than 2 hours per week within the boundaries of San Francisco, including part-time and temporary employees. Employers must display in each workplace a poster in six languages describing the minimum wage. Employers must also give a minimum wage notice to every employee at the time of hire, which contains the employer's name, address and telephone number.
- Commuter Benefits Ordinance Annual Compliance Form Due April 30, 2012: Effective January 19, 2009, the San Francisco Commuter Benefits Ordinance (“SFCBO”) requires San Francisco employers with 20 or more employees to provide commuter benefits to employees who work an average of at least 10 hours per workweek within the geographic boundaries of San Francisco. The SFCBO applies to all employers with 20 or more employees who do business within San Francisco and are required to obtain a business registration certificate. The SFCBO also applies to employers who are based outside of San Francisco, but have employees working in the city, if the employer is still required to obtain a business registration certificate. All San Francisco employers, whether or not they need to comply with the SFCBO, must submit an Annual Compliance Form. For more information and to complete your Annual Compliance Form (due April 30, 2012) visit CommuterBenefits.org.
Amendments to San Francisco Health Care Security Ordinance (“HCSO”): The Health Care Security Ordinance (“HCSO”) is a San Francisco law that creates an Employer Spending Requirement enforced by the San Francisco Office of Labor Standards Enforcement. The Employer Spending Requirement requires employers to spend a minimum amount of money on health care expenditures for their covered employees. Beginning January 1, 2012, San Francisco employers must comply with several new requirements:
- Increased Expenditure Rate: Effective January 1, 2012, the minimum health care expenditure for small employers (20 to 99 employees) is $1.46/hour. For large employers (over 100 employees), the expenditure rate is $2.20/hour.
- New Poster: The new Official Office of Labor Standards Enforcement (“OLSE”) Notice must be posted in a conspicuous place at every workplace or job site where a covered employee works. The notice must be posted in English, Spanish and Chinese. It must also be posted in any other language spoken by at least five percent of the employees at the workplace or job site. The required poster is available on the OLSE’s website.
- Annual Report Due April 30, 2012: Covered employers must submit an Annual Reporting Form (ARF) by April 30, 2012, which provides data on health care expenditures made in the previous year. Instructions on how to file the ARF will be mailed to covered employers and will be available on the HCSO website in March 2012.
New Penalties Provision: There are three new penalty provisions in the amendments.
- First, OLSE is now required to impose administrative penalties upon covered employers who fail to make the required health care expenditures on behalf of their employees within five business days of the quarterly due date (which is 30 days after the conclusion of each quarter). The maximum penalty for this type of violation is now $100 for each employee for each quarter that the required expenditures were not made within five business days of the quarterly due dates. This maximum penalty amount will increase each year for inflation.
- Second, the penalty for failing to maintain or retain accurate and adequate records has increased to $500 per quarter that the violation occurs.
- Third, the penalty for failing to submit the annual reporting information to the OLSE has also increased to $500 for each quarter that the violation occurs.
New Requirements for Health Care Reimbursement Accounts: Beginning January 1, 2012, employers using health care reimbursement accounts to satisfy the HCSO are subject to several new requirements:
- Funds Must Be Available for 24 Months: Employers must keep contributions available for at least 24 months after the date of the contribution. Previously, workers would lose access to money that went unused by the end of the year.
- 2011 Balance Rollover: The amended ordinance also requires that employers “roll over” any December 31, 2011 account balance to January 1, 2012 in order to ensure that participants start 2012 with an account balance.
- Detailed Contribution Summaries: Employers are also required to provide written summaries of reimbursement account contributions (“Contribution Summaries”) to covered employees within 15 days of the date of the contribution. The Contribution Summary must include (1) the name, address, and telephone number of any third party to whom the contribution was made; (2) the date and amount of the contribution; (3) the date and amount of any other debits or credits to the account since the most recent Contribution Summary provided to the employee; (4) the balance in the account, and (5) any applicable expiration dates for the funds in the account.
- Separation Notice: Employees must also receive within three days of their termination a written notice containing (1) the name, address, and telephone number of any third party to whom the contribution was made; (2) the date and amount of the contribution; (3) the date and amount of any other debits or credits to the account since the most recent written summary provided to you; (4) the balance in the account; and (5) any applicable expiration dates for the funds in the account.
- Funds Accessible for at Least 90 Days After Termination: Any balance in the account at the time of the separation must be preserved and made available for at least 90 days from the date of the separation. Also, any funds already earned but not yet contributed to the account at the time of the separation should be contributed on the next contribution date (i.e., no later than 30 days after the end of the quarter) and must be made available for the employee’s use for 90 days after the date of that post-separation contribution.
- Non-exempt employees must accrue paid sick leave on all hours worked, even overtime hours.
- For exempt employees, paid sick leave accrues based on a 40-hour workweek absent evidence that the employee’s regular work week is less than 40 hours (in which case paid sick leave accrues based upon that regular workweek).
- Benefits provided on an hourly basis must also be provided when employees are using paid sick leave hours.
- Accrued paid sick leave does not expire; it carries over from year-to-year.
- Employers may require reasonable notification for use of paid sick leave, but cannot require employees to find replacement workers to cover the hours they are absent from work.
- Employers may also require a doctor’s note or other verification after an employees’ use of paid sick leave for more than three consecutive work days. Employers that suspect abuse of sick leave may also require a doctor’s note or other verification.
- Employers are required to post a notice published by the San Francisco Office of Labor Standards Enforcement advising employees of this benefit
- Prevailing Wage. Workers on government-funded construction projects must be paid prevailing wages. In California, the Department of Industrial Relations sets the prevailing wage rate for each craft. San Francisco has adopted these rates for city-funded projects. The current prevailing wage rates are available on the Internet at http://www.dir.ca.gov/DLSR/PWD.
- Minimum Compensation Ordinance (MCO). The MCO, which became effective October 8, 2000, generally requires city contractors that provide services and tenants at the San Francisco Airport to provide to their covered employees: (1) no less than the MCO hourly wage in effect; (2) 12 paid days off per year (or cash equivalent); (3) 10 days off without pay per year. For 2012, the MCO wage rate has been increased to $12.06/hour. Non-profit wage rate remains $11.03/hour. These wage rates affect contracts that are entered or amended on or after October 14, 2007.
- Health Care Accountability Ordinance (HCAO). Effective July 1, 2001, the HCAO generally requires city contractors and certain tenants to offer health plan benefits to their covered employees, to make payments to the city for use by the Department of Public Health, or, under limited circumstances, to make payments directly to their covered employees. Effective July 1, 2011, the fee option for contractors/tenants is $3.50 per hour, capped at $140.00 per work week. Note: Each July 1 the fee option will be adjusted for inflation.