Have Restaurants Been Pocketing Healthy SF Fees?

Michael Mina, whose owners are accused of pocketing $327,000 in fees. [Photo: Michael Mina.]

If you're not a fan of those pesky Healthy San Francisco fees that restaurants tack on to the bottom of your bill, you have even better reason to be irate: City Attorney Dennis Herrera has accused more than 50 local restaurants of collecting the extra fees and pocketing some or all of the cash. A report by the Office of Labor Standards Enforcement found that while restaurants collected more than $14 million in health care surcharges in 2011, only a third of that money was actually used for medical coverage. Herrera is offering a temporary amnesty program, under which restaurants can pay back what they owe with a modest penalty, and local pizza chain Patxi's (otherwise known as Layers, LLC) has already jumped on the bandwagon, increasing benefits by $100K, returning $205K to employees who worked there between 2009 and 2011, and paying the city a $15K penalty.

In an update to the story published on Sunday night, many restaurateurs disputed the accusations, saying they had followed the letter of the law. Not a single restaurateur the Chron spoke to said they received a letter from the City Attorney, and many said that they kept the excess cash in a fund specifically designated for workers' future health-care needs. "It's a broad swipe, which is sad because there won't be a chance for each restaurant to tell its story," Nancy Oakes said of her restaurant (and list member) Prospect.

On Friday, the Chron published a list of the main offenders, as determined by the OLSE:

· The Mina Group (which encompasses Michael Mina, RN74, and Bourbon Steak) leads the list with $539K in fees collected, but only $211K spent on benefits. That's a difference of $327K, meaning that anyone who was on the payroll in the past few years is probably about to see a nice chunk of change. "Funds collected have not been misappropriated and all funds remain available to all current San Francisco employees," the Mina Group said in a statement. "This surcharge is segregated in a cash reserve available for our employees to use toward health benefits. Mina Group provides a very robust health benefit plan that allows employees to roll over benefits year over year; it is not a use-it-or-lose-it plan. Unapplied funds are held and will continue to be held in a reserve solely for our employees."

· Janitorial company Trinity Building Services is next on the list, with a whopping $248K collected, compared to only $2,900 spent on health care. Considering their website prominently advertises "bilingual, dedicated professionals," we're guessing there's a group of immigrants out there who've been cheated out of health coverage.

· Also in the $200K club: Wayfare LP, otherwise known as Tyler Florence's Wayfare Tavern. Food 911, indeed.

· In addition to the aforementioned Prospect, other restaurants that are accused of pocketing $100K or more include Zero Zero, Burger Bar, Twenty-Five Lusk, The Cheesecake Factory, Max's Opera Cafe, One Market, and Tony Gemignani's International School of Pizza. Finally, Squat & Gobble has the unique distinction of being the only business on the list not to pay a dime in health care, despite collecting $160K in fees.

· SF restaurants pocketed health care fees [Chron]
· SF businesses listed in health care audit [Chron]
· SF restaurateurs dispute city allegations [Chron]