In such a situation, the employer must still make the hourly contribution for that employee:
“A covered employer that maintains a health care program that requires contributions by a covered employee shall not have satisfied its obligation to make the required health care expenditures merely by offering a covered employee the opportunity to participate in such a program. Should the employee decline to participate in such a program, the employer shall not have satisfied its obligation to make the required health care expenditures.”
Obviously, in this situation, the employer will have to pay the expenditure to the City of San Francisco for that employee – thus there is no benefit accruing to the employer for employees that choose not to take the offered insurance coverage, the money must either go to premium or to the City. This is not a problem with the AGU Limited Accident & Sickness Indemnity Plan because the employer’s contribution funds the entire cost.
You can see the City & County of San Francisco Office of Labor Standards Enforcement website for more information about compliance with the HCSO by clicking on this link: http://sfgsa.org/index.aspx?page=418