Employees of a janitorial services firm never received health care benefits required under The City’s Healthy San Francisco program, and now the company must pay $1.3 million to cover the past medical expenses of 275 current and former workers.
Calling the decision by an administrative hearings officer a “groundbreaking case,” City Attorney Dennis Herrera’s office said Friday that the ruling sends a message that the health care policy has teeth.
GMG Janitorial Inc. set up a fund to comply with The City’s 2006 law that requires employers to set aside funds for workers’ health care based on the number of hours they clock, according to appeal documents. But some employees testified that when they notified supervisors of their ailments, they were told no such funds existed. Others said they were not made aware of the program, although company officials insisted that paper materials detailing the benefits were made available on an “employee table.”
Ultimately, the hearings officer ruled against the company because its bank account to cover the expenses did not suffice as a health care account, the company failed to prove it notified employees of the program, and none of the 275 employees ever used the account despite its purported availability between 2008 and 2010.
“This is a significant legal victory — not just for the employees who were systematically denied benefits to which they were entitled, but for all the competing businesses that play by the rules,” Herrera said in a statement.
San Francisco’s Office of Labor Standards Enforcement is charged with upholding the Health Care Security Ordinance, and while it has made dozens of determinations resulting in restitution to 5,000 local workers, the GMG case was the first to reach the level of an administrative appeal.
Along with paying $1.3 million to workers, the company was slapped with an administrative penalty of $67,000.
John Kevlin, an attorney for GMG, said the company has no comment on the case and also wouldn’t discuss whether it planned to appeal the decision.
Healthy San Francisco was the subject of debate last year when it was revealed that employers were rolling unused funds back into their general budgets. An amendment from Supervisor David Campos that would have required the accounts to build up in perpetuity was vetoed by Mayor Ed Lee.
Weeks later, a compromise measure was approved to require employers to maintain two years’ worth of health
benefits for each employee.