©2025 Seyfarth Shaw LLP www.seyfarth.com 2025 Cal-Peculiarities | 333 more than $128,861 per year (or $61.95 per hour) are exempt. The Ninth Circuit has upheld the San Francisco ordinance against a challenge that ERISA preempts the ordinance. Under the San Francisco Health Care Accountability Ordinance (HCAO), an employer that has a service contract with the City or County of San Francisco, or a lease at the San Francisco International Airport (SFO) or the Port of San Francisco, must offer health plan benefits to their covered employees, make payment to the City for use by the Department of Public Health, or in certain circumstances, make payments directly to covered employees.48 The service contract or lease must be for of at least $25,000 annually (in the case of a for-profit entity or person) or $50,000 annually (in the case of a non-profit entity).49 Covered employees include employees who work for 20 or more hours per week in the U.S. or on property that is covered by a lease or sublease.50 Health plans are deemed compliant with the HCAO if they either meet all 16 minimum standards prescribed by the City or constitute a gold- and platinum-level plan written in California (or actuarial value of at least 76%), where: (A) the employer covers 100 percent of both the plan premium and medical services deducible (employers may use any health savings/reimbursement product that supports coverage of the medical deductible); and (B) the plan covers certain required covered services minimum standards as prescribed by the City.51 Effective July 1, 2025, employers subject to HCAO who make payments to San Francisco General Hospital to satisfy the requirements of the HCAO must pay $7.50 per hour (up to $300 per work week).52 The pay rate is adjusted for inflation annually on July 1.53 The HCAO was subsequently amended by the Healthy Airport Ordinance (HAO) on November 10, 2020. The HAO applies to employees covered by the Quality Standards Program (QSP) at SFO and continues to be in effect.54 The HAO requires employers of such employees to either: (a) provide family health insurance that meets the compliance requirements at no cost to those employees and their dependents; or (b) contribute on the employees’ behalf at a rate of $12.15per hour worked (up to $486 per week) effective July 1, 2025 to the City Option Program.55 This ordinance required the implementation of minimum standards for hiring, training, performance management, and compensation and benefits for employees covered by the QSP. To comply with the family health insurance requirement, benefits must include: (1) at least one plan that is offered at no cost to the covered employee, provides a level of coverage that is designed to provide benefits that are actuarially equivalent to at least 90% of the full actuarial value of the benefits provided under the Plan, and includes all benefits listed in California’s Essential Health Benefit Benchmark Plan; and (2) be offered to covered employees within 30 days of their start date.56 Employers offering multiple health benefit plans may charge a limited share of premium costs on more expensive plans. In addition, the covered employee’s health benefits must, at a minimum, cover the covered employee, the covered employee’s spouse or registered domestic partner, and the covered employee’s child, including any legally adopted child, recognized natural child, stepchild, foster child, and minor legal ward. A covered employee may voluntarily waive an offer of health plan benefits by providing proof of a current health plan coverage, including coverage for their dependents, and completing the Voluntary Waiver Form.57 Compliance requirements cannot be waived in a collective bargaining agreement.58 It will be important for unionized employers to carefully consider whether they can unilaterally impose changes to comply with the Ordinance without bargaining with their unions. Employers also may want to consider whether they can avail themselves of any labor law-related preemption arguments with respect to their labor contracts. Originally, employers had to either provide family health insurance by March 21, 2021 or contribute to the City Option Program by April 15, 2021. An amendment to the ordinance delayed the deadline for health insurance coverage to April 1, 2021.
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