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An Employer’s Guide to San Francisco’s Wage and Labor Laws

San Francisco is arguably the most entrepreneurial city in the world, drawing thousands of entrepreneurs and new startups every year. Its eclectic culture that fosters innovative thinking and dynamism provides the perfect environment for startups to blossom rapidly from two to twenty to two hundred employees.

San Francisco is special in other ways as well — in particular when it comes to making sure workers are treated fairly and provided with forward-looking work environments and benefits.  Entrepreneurs need to be aware of these specific rules and obligations that come into play as their company grows. With established HR services for small businesses, you can access experienced outsourced HR consultants familiar with the latest changes to employment laws and other ordinances that affect your company.

This now includes protection for workers with COVID-19. For example, under the Worker Protections Ordinance, restaurants, grocery stores, drug stores, restaurants, and delivery services must initiate COVID-19 protection measures. In addition, the COVID-Related Employment Protections Ordinance penalizes employers for discrimination based on COVID-19 status.

Learn more about the city’s wage and labor laws below.

Important Wage and Healthcare Ordinances

Like the rest of the state, San Francisco has generous wages and healthcare regulations that protect employees:

  • Paid Sick Leave Ordinance: All employers are required to provide paid sick leave to each employee who works in San Francisco, including part-time and temporary employees. For every 30 hours worked, an employee accrues 1 hour of paid sick leave. This may be in addition to the company’s existing vacation/PTO benefit.
  • Minimum Wage Ordinance: San Francisco has a minimum wage law in effect that is higher than the Federal or State mandated minimum wage. Currently, the SF minimum wage is $16.99/hour, and the minimum wage is reviewed every year.
  • Health Care Security Ordinance: San Francisco’s Health Care Security Ordinance requires “Covered Employers” (applies to ‘for-profit’ companies with 20 or more employees, and non-profit companies with 50 or more employees) to spend a minimum amount of money each fiscal quarter on health care for their “Covered Employees”. Most health insurance offered by employers should meet this requirement.  Those employers who do not offer health insurance are obliged to establish Medical Spending Accounts for employees and fund the accounts from $2.20/hour to $3.30/hour depending on the size of the business. These rates typically increase every year.
  • “Healthy San Francisco” Program: This program was created to provide inexpensive medical care to uninsured residents of San Francisco. Only uninsured people between the ages of 18 – 64 qualify for this program. Employers must meet certain requirements and register in order for eligible employees to participate.

Commuter Policies and Programs to Benefit Employees

Employers with 20 or more full-time and part-time employees (10 or more hours/week) must offer a Commuter Program.  Such programs provide for pre-tax contributions by employees to pay for public transit or vanpools, with some employers providing a small subsidy to participating employees.  Many such programs now include benefits to bicycle commuters as well. Registration and compliance reporting for all employers is mandatory. Employees can save up to 40% on pretax commuter programs.

Emergency Ride Home is a free program that provides transportation if an emergency situation occurs. All part-time or full-time employees of a registered San Francisco business are eligible.

Ravix Group is one of the best HR outsourcing and consulting companies if you want to get up to speed on compliance for commuters and other programs required by the city.

Other Requirements You Need to Know to Avoid Fines

  • San Francisco Family-Friendly Workplace Ordinance: Under the new San Francisco “right to request” Ordinance, after six months or more of employment, an employee who works at least eight hours per week on a regular basis has the right to request a “Flexible” or “Predictable Working Arrangement.” The Ordinance applies to any employer who regularly employs 20 or more employees. The law defines “employee” as any person who is employed within the geographic boundaries of the City and County of San Francisco. Labor Rule Posting Requirements. All employers are required to prominently display posters for their employees that incorporate the specific rules for San Francisco.
  • Business Registration: Every entity conducting business in the City and County of San Francisco must have a valid Business Registration Certificate from the Office of the Treasurer & Tax Collector. This regulation also applies to entities that may be located outside of San Francisco but perform business or services within the city. Eligible businesses must file with the City Treasurer’s office within 15 days of establishment in San Francisco and must be renewed each year by May 31st.  The fee varies based on the size of the business.
  • Payroll Expense Tax: In addition to business registration, employers are required to file an annual payroll expense report each February for the prior year. Those businesses with payroll expenses exceeding $250,000 annually must pay a payroll tax of 1.5% of total wages. Certain companies are required to make an estimated payment each July for a portion of their payroll taxes.
  • Since 2014, San Francisco has phased out the payroll tax in favor of a “gross receipts” tax based on sales of the company.  The transition and rules for the gross receipts tax are complex and based on the business type

Get help with Compliance Through HR Outsourcing in San Francisco

As you can see, there’s a lot to understand and comply with when it comes to running and growing your San Francisco based startup, and this list is not all-encompassing. Make sure you get expert advice and assistance from a top-notch outsourced HR consultancy firm. The fines and penalties for non-compliance can be significant.

Ravix Group offers comprehensive human resources consulting in San Francisco. You can partner with our team to learn more about the regulatory and compliance rules for Bay Area employers. Contact us today to schedule a consultation.

Resources and Further Reading