The final tally is in for the dozens of local restaurants being investigated for withholding money earmarked for employee health care. Under City Attorney Dennis Herrera's special enforcement plan, which offered 50 percent amnesty for the restaurants that cooperated in his settlement plan, over $2 million will be distributed to 4,000 or so eligible restaurant employees. No lawsuits have been filed.
As previously reported, Herrera commissioned an audit of healthcare set-aside funds pocketed by local restaurants as a Healthy SF surcharge on diners' bills. Due to a loophole in the law, much of the money never made it towards employee health care, prompting consumer fraud accusations from Herrera's office.
Of the 57 restaurants investigated in the audit, 17 were cleared of any wrongdoing, including 1300 on Fillmore, 25 Lusk, Bimbo’s 365 Club, Bluestem Brasserie, Cafe Claude, Cheesecake Factory, Firefly, Fourth Floor, Gitane, Lark Creek, Liverpool Lil’s, NOPA, One Market and Ristobar.
Of the 38 dining establishments that did settle, the largest payment will come from Paxti's Pizza, which has been dinged for $205,000, along with Squat & Gobble Cafe LLC ($200,766), La Mar ($200,000), Trattoria Pinocchio ($140, 265) and Burgermeister ($134,000). Here's the full list of offending restaurants and the settlement amounts. Numbers listed here directly reflect the sums that will be paid out to employees, and don't include penalties from the city.
A legal loophole is to blame for the confusion, which stated that restaurant surcharges for employee healthcare only had to be set aside in healthcare reimbursement account for a year. After the year was up, restaurants began absorbing the earmarked funds.
"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," stated Herrera. "I'm grateful to these businesses for understanding our duty to enforce the law even-handedly, and for working cooperatively with us to either reach settlements or identify the errors responsible for their reported discrepancies."