San Francisco Compliance Reminder: SF Health Care Security Ordinance (HCSO)

Panko Compliance · May 31, 2026

## What it is The San Francisco Health Care Security Ordinance, in effect since 2008, requires covered employers to make health care expenditures on behalf of each covered employee. You can satisfy the requirement by paying for actual health insurance, contributing to a health reimbursement account, OR paying into the SF City Option (which funds Healthy San Francisco and Medical Reimbursement Accounts). The HCSO is administered by the SF Office of Labor Standards Enforcement (OLSE). ## What compliance looks like 1. Calculate required spend per hour. 2026 rates: • Small employer (20–99): $3.85 per hour worked in SF • Large employer (100+): $5.78 per hour worked in SF • Rates update each January — check OLSE for the current year. 2. Spend it. Options: • Pay for actual health insurance for the employee • Contribute to a stand-alone HRA (must be irrevocable, employee-accessible, and meet SF rules) • Pay into the SF City Option — easiest for restaurants with high turnover or part-timers • A mix of the above 3. Notice to employees. Post the official HCSO notice in the workplace (in English + Chinese + Spanish + Tagalog). Provide individual notice of each employee's expenditure quarterly. 4. Annual Reporting Form. File with OLSE by April 30 each year. Reports each Covered Employee, hours worked, and spend made on their behalf. 5. Records. Keep 4 years of HCSO calculations, payroll, and expenditure proof. 6. Audits. OLSE audits ~50 employers per quarter. Restaurants are over-represented in the audit pool. ## Penalties for non-compliance Failure to make required expenditure: 1.5× the unpaid amount + 10% per quarter interest. Failure to file Annual Reporting Form: $500 per quarter unfiled. Failure to post notice or provide quarterly employee notices: $50 per employee per quarter. Retaliation against an employee asserting HCSO rights: $1,000 per occurrence + 3× back-pay damages. Real-world enforcement: OLSE settlements often run $50k–$500k for mid-sized restaurants who didn't realize the City Option was an option, or who tried to count workers' comp / unemployment as health spend (they don't count). --- Full guide with sources: https://alerts.getpanko.app/compliance/sf/health-care-security-ordinance

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