Constant Readers,
Before we jump into the specifics of the Golden Gate Restaurant Association v. City and County of San Francisco case, I want to take moment to go over the specifics of the Health Care Security Ordinance (HCSO), so I don’t have to keep spelling it out later.
The law itself basically has two parts: (1) the employer spending requirement (Sec. 14.3 and 14.4), and (2) the Health Access Program (HAP, aka "Healthy San Francisco") which is government-provided health care (in part funded by the employer spending requirement) for all uninsured San Francisco residents regardless of employment status. (Sec. 14.2.) [NOTE: The recent ruling did not strike down the HAP system - only the employer spending requirement part.]
The employer has to contribute a certain amount of money (see chart below) for each hour worked by a “covered employee”. A covered employee is one who has been employed for at least 90 calendar days and performs at least 10 hours of work per week in San Francisco. (Sec. 14.1(2).) The chart below is from the Office of Labor Standards Enforcement (the agency that is supposed to enforce the employer spending requirements) and sets forth the employer contribution rates:
So, where are the contribution rates supposed to go? Well, Section 14.3(a) of the HSCO says that a contribution must be “paid by a covered employer to its covered employees or to a third party on behalf of its covered employees for the purpose of providing health care services for covered employees or reimbursing the cost of such services for its covered employees.” Examples are:
“(a) contributions by such employer on behalf of its covered employees to a health savings account [];
(b) reimbursement by such covered employer to its covered employees for expenses incurred in the purchase of health care services;
(c) payments by a covered employer to a third party for the purpose of providing health care services for covered employees;
(d) costs incurred by a covered employer in the direct delivery of health care services to its covered employees; and
(e) payments by a covered employer to the City to be used on behalf of covered employees.” (Nonresidents who work in San Francisco aren't part of the HAP system but would get a City-administered health care reimbursement account.)
Finally, and this is important: there is a requirement that all covered employers keep records of (1) actual health care expenditures, (2) required health care expenditures, (3) proof of such expenditures made each quarter each year, and (4) voluntary waiver forms (submitted by employees who get health insurance through a spouse or some other source). (14.3(b) and Regs. 3.2(A)(5)(b).) Also the OLSE can make up whatever additional recordkeeping rules it wants. (14.4(a).) The penalties for failure to keep required records are no joke: $25 per worker per day. (Sec. 14.4(e)(2).)
Okay, got all that? On to the lawsuit...
-Melissa
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