More Than 50 San Francisco Restaurants Accused Of Scamming Customers & Employees By Pocketing Health Care Surcharge

(Consumerist)

For more than four years, dozens of restaurants in San Francisco have been tacking on surcharges to diners’ bills, claiming that the money was to go toward health care costs. But it turns out that millions of those dollars were just going into restaurant owners’ pockets. The San Francisco Chronicle reports that starting in 2008, some owners decided that, rather than raise their menu prices to cover city-mandated health care costs, they would just add a surcharge to customers’ invoices. In some cases the surcharge was a flat amount, in others it was a percentage of the total bill. Regardless, this money was to be used for health care for employees.
But per the city’s Office of Labor Standards Enforcement, that just wasn’t happening. It tells the Chronicle that in 2011 alone, $14 million was collected via these surcharges, yet only around one-third of that ever went to health care.
“It was pocketed back to the restaurateur,” said San Francisco Supervisor David Campos, who says that some restaurant employees were actually denied health care when they shouldn’t have been.
The City Attorney is expected to announce an amnesty program today that would forgive violators if they fess up to the skim and pay back some of that money to employees.
“Requiring these people to pay restitution is a compromise,” Assemblyman Tom Ammiano tells the Chronicle. “If it was up to me, I’d throw them in jail.”
One pizzeria has already settled with the city for failing to provide health care benefits to 115 employees between 2009 and 2011. Those employees will receive a total of $205,000 in reimbursement from the owners, who will also pay a $15,000 penalty to the city.