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Navigating the San Francisco Health Care Security Ordinance (HCSO) is a critical seasonal task for business owners in the Bay Area. Failure to submit the required documentation can lead to substantial fines, yet the filing process remains a source of regular confusion for HR departments and small business owners alike.
The HCSO requires “Covered Employers” to meet a minimum Health Care Spending Requirement (HCSR) and report those expenditures annually to the Office of Labor Standards Enforcement (OLSE) [1]. If you have employees working within the geographic boundaries of San Francisco, understanding your reporting obligations is not just about compliance—it is about avoiding unnecessary overhead.
Table of Contents
- Who is Required to File the Annual Reporting Form?
- Critical Deadlines for 2025
- Step-by-Step Guide to Filing the Reporting Form
- Common Compliance Pitfalls
- Summary of Key Takeaways
- Sources
Who is Required to File the Annual Reporting Form?
Not every business in San Francisco is a “Covered Employer.” You are generally required to file the 2024 Employer Annual Reporting Form (ARF) if you met the following criteria during any quarter of 1024:
Employee Count: You employed 20 or more persons (nationwide) for a for-profit business, or 50 or more persons for a non-profit [2].
Location: You had at least one employee working within the geographic boundaries of San Francisco (this includes employees working from home within the city) [3].
Duration: The employee in question must have worked at least 8 hours per week and been employed for more than 90 days [1].
Exemptions: You are exempt from filing if you employed fewer than 5 people (including those outside SF) in all four quarters and do not have a contract with the City and County of San Francisco [2].
While filing this report, many businesses also take the opportunity to review their broader risk management strategies. For example, just as you protect your business from labor law penalties, ensuring your physical assets are covered via Property Insurance is a cornerstone of operational security.
If an employee works from home within the geographic boundaries of San Francisco for at least 8 hours per week and has been employed for more than 90 days, they are considered a covered employee, requiring you to file if you meet the headcount thresholds.
Non-profits are not exempt, but they have a higher threshold; they only need to file if they employ 50 or more persons nationwide. For-profit businesses must file if they have 20 or more employees.
You are exempt from filing the annual report if you employed fewer than five people total (including those outside of San Francisco) across all four quarters and do not have a contract with the City and County of San Francisco.
Critical Deadlines for 2025
For the 2024 reporting year, the Employer Annual Reporting Form is due by May 2, 2025 [3].
Missing this deadline is costly. The OLSE may impose a penalty of $500 per quarter for failing to submit the form on time [2].
Special Note for Self-Funded Employers
If your company utilizes a self-funded medical plan, you have an earlier benchmark. Top-off payments for the 2024 plan year were due by February 28, 2025. If you missed this, you must prioritize these payments before filing the annual report to remain compliant [4].
The Employer Annual Reporting Form for the 2024 reporting year must be submitted by May 2, 2025.
The Office of Labor Standards Enforcement (OLSE) can impose a penalty of $500 for every quarter that the form is not submitted, potentially totaling $2,000 for a full year of non-compliance.
Step-by-Step Guide to Filing the Reporting Form
The reporting form must be completed online. According to SF.gov instructions, you cannot save your progress once you start, so you must have all your data ready beforehand.
1. Gather Identification Details
You cannot file without your seven-digit Business Account Number from the San Francisco Treasurer and Tax Collector. The OLSE does not keep this on file for you; if you cannot find it, you must retrieve it from the Office of the Treasurer and Tax Collector before starting.
2. Calculate Quarterly Headcounts
You will need to categorize your total workforce (including those outside San Francisco) into specific ranges for each quarter:
0-4, 5-19, 20-49, 50-99, or 100+ employees.
Identify the specific number of “Covered Employees” (those working in SF more than 8 hours/week) for each quarter [2].
3. Total Your Expenditures
The form asks for the total health care expenditures made in 2024. This includes:
Insurance Premiums: Medical, dental, and vision insurance payments.
SF City Option Payments: Contributions made to the San Francisco City Option (including MRAs) [1].
Irrevocable Expenditures: Contributions to Health Savings Accounts (HSAs) or other irrevocable health-related funds.
4. Review Fair Chance Ordinance (FCO) Compliance
The HCSO annual report is combined with the Fair Chance Ordinance report. You will be asked about your hiring practices, specifically how you use arrest and conviction history during the recruitment process [4].
No, the online reporting form does not allow you to save your progress. You must gather all identification details, headcount data, and expenditure totals before starting the submission process.
The Business Account Number is issued by the San Francisco Treasurer and Tax Collector; the OLSE does not provide it, so you must retrieve it from the Office of the Treasurer and Tax Collector website if you don’t have it on file.
Yes, the HCSO annual report is combined with the Fair Chance Ordinance (FCO) report, so you will also need to provide information regarding your company’s hiring practices and use of conviction history.
Common Compliance Pitfalls
Community discussions on platforms like Reddit often highlight that the biggest hurdle is the Managerial Exemption Threshold. Not all high earners are exempt from HCSO requirements.
In 2024, the threshold for managerial, supervisory, and confidential employees was $121,372 per year (or $58.35 per hour).
For 2025, this increases to $125,405 per year (or $60.29 per hour) [1].
If an employee earns less than this amount, the employer must still make healthcare expenditures on their behalf, regardless of their job title. Additionally, be aware of “surcharges.” If your business adds a “San Francisco Mandate” surcharge to customer bills, you are required to report the total amount collected on the annual form [2].
Protecting employee data during this reporting process is paramount. As noted in our guide on Privacy and Security in Insurance, maintaining strict controls over sensitive health and wage information is a legal necessity under California law.
| Compliance Year | Annual Salary Threshold | Hourly Rate Equivalent |
|---|---|---|
| 2024 | $121,372 | $58.35 |
| 2025 | $125,405 | $60.29 |
For 2024, managerial or confidential employees earning at least $121,372 per year (or $58.35 per hour) are exempt. This threshold increases to $125,405 per year for 2025.
Yes, if your business applies a “San Francisco Mandate” surcharge to customer invoices to cover HCSO costs, you are legally required to report the total amount collected on the annual form.
No, you must total all health care expenditures, including dental and vision premiums, contributions to the SF City Option (MRAs), and irrevocable contributions to Health Savings Accounts (HSAs).
Summary of Key Takeaways
The San Francisco HCSO filing is a mandatory administrative task for most employers with a presence in the city. Key highlights include:
Deadline: May 2, 2025, for the 2024 reporting year.
Penalty: $500 per quarter for non-filing.
Requirement: Employers with 20+ workers (50+ for non-profits) must spend a minimum amount on healthcare for SF-based employees.
Preparation: You must have your SF Business Account Number and quarterly spending totals ready before starting the online form.
Action Plan for Employers
- Verify Coverage: Confirm if you had employees in San Francisco for more than 8 hours per week during 2024.
- Locate Account Number: Find your 7-digit Business Account Number now to avoid last-minute delays.
- Audit Expenditures: Summarize all healthcare spending, including HSA contributions and insurance premiums, broken down by quarter.
- Complete the Form: Use the official OLSE portal to file before the May 2 deadline.
Ensuring compliance with local mandates like the HCSO is a fundamental part of operating in San Francisco. By staying ahead of deadlines and maintaining accurate quarterly records, businesses can focus on growth rather than navigating penalty disputes.
| Requirement | Details |
|---|---|
| Reporting Deadline | May 2, 2025 (for 2024 data) |
| Non-Compliance Penalty | $500 per quarter of violation |
| Key Identification | 7-digit SF Business Account Number |
| Included Expenses | Premiums, SF City Option, and HSAs |
You should have your 7-digit Business Account Number, quarterly headcount ranges for both nationwide and SF-based employees, and a summary of all healthcare expenditures made during the 2024 calendar year.
Your first step should be to verify coverage by auditing if any employee worked in San Francisco for more than 8 hours per week for over 90 days during 1024, then determine if your total nationwide headcount met the 20 (for-profit) or 50 (non-profit) threshold.