San Francisco's Health Care Security Ordinance
Misconceptions place employers at risk...
What is Cal-COBRA?
Are you prepared for the new 401k regulations?
2012 plan administrator responsibilities increase more...
It's more than you think
Common Misconceptions of San Francisco's Health Care Security Ordinance
Even the most up to date employers unknowingly put their businesses at risk
San Francisco Health Care Security Ordinance (HCSO) requires employers to spend a minimum amount per hour worked per employee on health care for their employees who work in San Francisco. With costly penalties for non-compliance it pays to learn the rules. Here are five common misconceptions:
The City imposes penalties for noncompliance with the HCSO. The most severe fines are on employers who fail to make the required health care expenditures on behalf of their employees. Penalties range from 1.5 times the total expenditure that the employer failed to make plus 10% interest (not exceeding $1000 per employee per week) to $25 to $500 per violation sometimes calculated per day out of compliance.
If you would like more information or have questions please contact our HRA department.
- "I have less than 20 employees." While true that employers with less than 20 employees are exempt, a “Controlled Group” of corporations or businesses under “common control” are counted as one business even if all entities use different Federal Employer Identification Numbers (FEINs). The total number of employees per controlled group determines employer size.
- “I only have 2 employees that work in the city.” HCSO applies to all employees working in the City, whether the employer is based in San Francisco or not. For example, if your employees live in SF and telecommute to work (work from home), or your employees stop in SF for deliveries, the HCSO could apply.
- “I already provide a group health plan to my employees." Some group health plans do not meet the minimum spending requirement of HCSO and part time employees are usually ineligible for group benefits. In these cases the group health plan(s) must be supplemented to comply with the HCSO.
- "I only have part time or seasonal workers." The spending requirement is for all employees who averaged 8 hours per week and have been employed at least 90 days. The 90 days worked does not have to be consecutive days of employment. For example, an employee who works in June and then is rehired in November, the 90 days includes the time worked in June.
- "I use a temporary agency." Using a temporary agency does not necessarily exempt an employer from the HCSO. The employer is determined by the factors outlined in
CA Unemployment Insurance Code 606.5.
See also the City of San Francisco
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What is Cal-COBRA?
Since Federal COBRA applies only to employers with 20 or more employees, some states try to fill the gap with continuation coverage statutes that apply specifically to groups with less than 20 employees. Cal-COBRA is such a statute.
Cal-COBRA applies to:
a) California employers and group health plans with 2-19 employees
b) Allows participants to keep their health coverage for up to 36 months
c) Available to those that have exhausted their 18 months of Federal COBRA
Cal-COBRA is expressly written to avoid ERISA preemption requiring the insurer not the employer to provide coverage. This means the health insurance carrier is responsible for administrating Cal-COBRA
Cal-COBRA ensures California employees the right to continue group health coverage regardless of the size of the group-health-plan. Those eligible for Cal-COBRA are similar to those for Federal COBRA:
Family members of an employee who dies
An employee (and covered dependents) who loses or ends their job
An employee (and covered dependents) whose hours are reduced
A person divorced from an employee
A former dependent of an employee
Family member of an employee who enrolls in Medicare
COBRA participants that have exhausted their 18 months of Federal COBRA
For more information regarding Cal-COBRA go to California's Department of Managed Health Care
Or please contact our
COBRA Administration Department
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New 401k Regulations for 2012
Starting in 2012, regulations from the US Department of Labor's Employee Benefits Security Administration (EBSA) require plan sponsors of 401k plans and other defined contribution plans to ensure that workers in this type of plan are given, or have access to, the information they need to make informed decisions. This regulation goes beyond providing a summary of the plan document and passing off questions to the provider but mandates "apples-to-apples" comparisons among plan's investment options and a new level of fee and expense transparency. Beginning in 2012 the plan sponsor will be responsible for providing:
Plan related information: includes structure, mechanics, administrative expenses, individual expenses, statement of charges and deductions
Investment related information: includes performance, benchmarks, fees, and website access
Comparative Format: comparative chart of funds available
Contact your pension plan provider to evaluate what your business will need to stay compliant in 2012.
For more information please see the Department of Labor Fact Sheet
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How to Calculate Overtime in California
According to the California Department of Industrial Relations, eight hours of labor constitutes a day's work. In general, labor beyond 8 hours a day or more than 6 days in any work week constitutes overtime pay, however there a number of exemptions and exceptions to the general overtime law. An exception means that overtime is paid on a different basis to a certain classification of employees or due to an alternative workweek. Below is a simplified overtime guideline, however it is important to refer to Industrial Welfare Commission Wage Orders for all exceptions and exemptions:
Regular Rate of Pay: 8 hours a day or 40 hours a week
One & Half Rate of Pay: Over 8 hours in a day, or over 40 hours worked in a week, or first 8 hours worked on 7th consecutive day of work within a week
Double Rate of Pay: Hours worked in excess of 12 hours per day or in excess of 8 hours on the 7th day of consecutive work
Although the rates seem simple, complications arise from different situations, usually regarding calculating the regular rate of pay.
Salaried Employees. A salaried employee must be paid overtime unless they meet the test for exempt status as defined by federal and state laws or specifically exempted by a wage order.
Bonuses. A non-discretionary bonus must be included when determining the regular rate of pay for computing overtime. Non-discretionary bonuses are based upon hours worked, production, or proficiency.
Two or more rates of pay. If an employee is paid at two or more rates the regular rate is the "weighted average" which is determined by dividing total earnings for the workweek by the total hours worked.
Holiday pay. Overtime is calculated based upon hours actually worked. If an employee is getting holiday pay for time not worked, those hours do not count as hours worked for determining overtime.
Piece Work. For employees that are paid by the piece, the piece rate is used as the regular rate or by totalling the earnings for the week divided by the total hours worked to get the regular rate.
When calculating overtime pay, evaluate whether it is 1.5 or 2 times the regular rate, and then verify the regular rate, paying special attention to the above listed situations. Remember, we are here to serve you, so please contact us with any questions!
Detailed information can be found at California Department of Industrial Relations
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