Yelp Inc. has joined its San Francisco-based peers Twitter Inc. and Zynga Game Network Inc. on a collision course with the city's unique payroll tax.

San Francisco is the only city in California that levies a payroll tax, at 1.5%, which also makes it the only city to levy a tax on gains realized from employee stock options. That could be particularly onerous for companies like Yelp, Twitter or Zynga, which are all seen as candidates for an initial public offering of shares.

The...