Mike Koozmin/The S.F. ExaminerLa Mar on The Embarcadero is among dozens of San Francisco restaurants paying hefty fines for taking surcharges intended for their employees’ health care.

More than $2M to be paid to SF employees over delinquent healthcare surcharges

In 2009, an extra charge started appearing on customers’ checks at La Mar, a Peruvian restaurant on The Embarcadero, along with some other San Francisco restaurants.

The charge, not required by law, was a move by restaurants to pay for the health care of their employees in light of The City’s universal health care law, which took effect in 2008.

But there was one problem: some restaurants never spent that money on health care costs.

La Mar, for instance, collected hundreds of thousands of dollars in surcharges from customers from 2009 to 2011, but failed to use the funds for employee health care, according to the City Attorney’s Office.

Another restaurant, Patxi Chicago Pizza, charged customers $205,000 in surcharges from 2009 to 2011 but only used a fraction of those funds toward their employees’ health care.

Those are just two of the 57 restaurants that took part in a partial amnesty program offered by the City Attorney’s Office this year. Participation was predicated upon several terms, including the businesses taking part in an investigation into who failed to pay for their employees’ health care and continued compliance, among other requirements.

In all, about 4,000 employees will be reimbursed $2,085,915 from 38 restaurants, according to the City Attorney’s Office.

Seventeen restaurants that participated were found to have done nothing wrong. Two establishments agreed to nonmonetary settlements.

“The success of this enforcement program owes in large part to good-faith efforts by restaurants to honor the intent of fees paid by their customers, and to do right by their employees,” City Attorney Dennis Herrera said about the settlement.

The City’s Healthcare Security Ordinance, of which Healthy San Francisco is a part, requires employers to provide their employees with health care or make a contribution in several ways to The City’s health care plan in lieu of providing health care.

Some in the business community had begun adding a surcharge in order to pay for the increased expenses, even though that surcharge was not part of The City’s ordinance, said Donna Levitt, who heads the Office of Labor Standards Enforcement. In 2009, The City amended its ordinance mandating that any surcharge for employee health care be used for that express purpose.

As of May 31, there were 198 businesses citywide tacking surcharges on to their bills. That amounts to only 4.7 percent of employers in The City.

Big checks

Total settlement payments from amnesty program: $2.1 million

Top 10 settlements:

Patxi’s Chicago Pizza: $205,000 settlement

Squat & Gobble Cafe LLC: $200,766.10 settlement

La Mar: $200,000 settlement

Trattoria Pinocchio: $140,265.50 settlement

Burgermeister: $134,088 settlement

Burger Bar San Francisco: $112,770 settlement

Trinity Building Services: $85,862 settlement

Mina Group LLC: $83,617.50 settlement

Resmex Partners: $76,352.50 settlement

Zero Zero: $63,620.84 settlementBay Area NewsCity Attorney’s OfficeLa MarPatxi Chicago Pizza Restaurant

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