In 2008 San Francisco implemented a pay-or-play employer mandate that required firms operating in the city to provide health insurance coverage for employees or contribute to the city's "public option" health access program, Healthy San Francisco. Using data from our Bay Area Employer Health Benefits Survey, we found that in the first two years after implementation, more employers offered insurance and provided employee health benefit coverage relative to employers outside San Francisco not subject to the mandate. Sixty-seven percent reported in 2009 that they had expanded benefits since 2007. Although 22 percent of firms responding to the survey reported contributing to Healthy San Francisco for some employees, we observed no crowd-out of private insurance. Premium changes between 2007 and 2009 were similar in San Francisco and surrounding areas, but more of the burden of premium contributions in San Francisco shifted from workers to employers. Overall, 64 percent of firms responding to the survey supported the employer mandate. San Francisco's experience indicates that such a mandate is feasible, increases access, and is acceptable to many employers, which bodes well for the national employer mandate that will take effect under the Affordable Care Act in 2014.