Check, please

Top San Francisco restaurants facing exposure over health surcharge

City attorney Dennis Herrera is targeting restaurants that target their customers and employees.

San Francisco restaurants that have been cheating their customers and employees — charging diners for city-required healthcare coverage that they aren't fully providing to workers — will finally be exposed in the coming weeks, with some notable names in foodie circles among the likely culprits.

City Attorney Dennis Herrera is working on settlements with dozens of restaurants that responded to his investigation and partial amnesty offer, which had an April 10 deadline. His effort augments the complaint-driven enforcement actions by the city's Office of Labor Standards Enforcement, which has collected millions of dollars for thousands of employees of negligent local businesses in recent years.

At issue is the Healthcare Security Ordinance, the landmark 2008 law authored by then-Sup. Tom Ammiano that requires San Francisco businesses to provide a minimal level of healthcare benefits to their workers. Businesses are also required to report spending and surcharge figures to the OLSE annually, with the next report due April 30.

Last year's data show celebrity chef Michael Mina's Mina Group LLC — which includes the restaurants Michael Mina, RN74, Bourbon Steak, and Clock Bar — to be the top violator, collecting $539,806 in surcharges from customers and spending just $211,809 on employee healthcare.

Herrera used that list to ask more than 70 businesses to show they are in compliance with the law or reach discounted settlements now to avoid punitive fines or criminal charges later, and Herrera told us he received 60 responses and had his inquiry snubbed by fewer than a dozen.

"It's too early to talk about how large a recovery we'll be getting for workers, but I'm pleased with the response rate," Herrera told us. He refused to estimate how many of the respondents were found to be in violation, but in an April 11 message to reporters covering the issue, his spokesperson Matt Dorsey wrote, "Based on our investigation so far, we anticipate that the majority of these establishments will be required to pay money to compensate their workers."


The Guardian contacted many of the restaurants that topped the OLSE list. Some wouldn't respond, some said they've changed their policies since the controversy erupted, and some wouldn't talk until after a settlement is announced — including the Mina Group. That seems to indicate they're about to pay for past violations.

Nicole Kraft, who handles public relations for the Mina Group, responded to Guardian inquires by writing, "I wanted to let you know that Mina Group will soon be releasing a joint statement with the City Attorney's office, which should answer many of your questions. We'll be sure to send it your way ASAP." [UPDATE 4/29: Mina Group settled its case for $83,617.]

Sources in the City Attorney's Office say settlements with as many as 10 restaurants that admit clear violations of the HCSO could be announced in the next week or two, while another 10 or so have provided data showing they are not in violation. The rest are more complicated and could take weeks or months of investigations, which are being led by Deputy City Attorney Sarah Eisenberg.

"There are going to be some that are given a clean bill of health," Herrera told us. Herrera also told us that his investigation is just getting started and that it will look at businesses that haven't made required annual reports to the OLSE. "When we get to a place where we're announcing settlements, we'll have more to say," he said when asked for details and dimensions of his investigation.


So I really don't blame establishments for dodging it. This is a blatant attempt to interfere with the ability of employers and employees to freely negotiate their own pay and benefits, and places an undue burden on diners.

I have responded by reducing my tip by 4%, since the wait staff are already getting an extra 4% from me. My deal is simple - I pay for my healthcare and you pay for yours. I do not pay for BOTH yours and mine.

Posted by Guest on Apr. 23, 2013 @ 11:48 pm

The only 4% surcharge is the one the restaurateurs made up to rip you off. You hardware store doesn't charge you 4%, do they? Yet they're subject to the same law.

Posted by Guest on Apr. 24, 2013 @ 2:19 pm

Why not every business?

But at least with restaurants you can take the 4% off the tip. Most places of business do not allow discretion over what you pay.

Posted by Guest on Apr. 25, 2013 @ 7:45 am

@Guest - Why would you take the 4% off the tip, thereby ripping off not the restaurant but its underpaid employees? That's either haplessly ignorant or deliberately mean.

Posted by Jym Dyer on Apr. 25, 2013 @ 8:54 am

coverage they no long er have to buy their own cover. that is good as a 4% raise.

So reducing the tip by 4% makes them no worse off than before this change.

Posted by Guest on Apr. 25, 2013 @ 9:36 am

It is the restaurant which gains from this, as healthier employees are more productive.

It is the customer which gains from this, as healthier employees who handle food are less likely to transit disease.

And, yes, it is the employee and their families which benefit from HSF.

The only ones that lose are the libertarian extremists and that's just fine with me.

Posted by marcos on Apr. 25, 2013 @ 10:05 am
Posted by Guest on Apr. 26, 2013 @ 7:12 am

St. Francis himself said "it is in giving that we receive."

I give a days worth of work and receive as I get paid and relieve myself of the headaches of managing a business.

Posted by marcos on Apr. 26, 2013 @ 7:31 am

Unless someone pays you?

And you have achieved nothing except show up?

Posted by Guest on Apr. 26, 2013 @ 8:07 am

that they came into contact with you.

Posted by Guest on Apr. 25, 2013 @ 10:09 am

strong and convincing arguments.

Posted by Guest on Apr. 26, 2013 @ 7:01 am

No, these surcharges don't benefit the workers, who are entitled to minimum health care coverage under city law, just like everyone who works in San Francisco. Restaurants that use these surcharges are making you pay for their obligations, seeking an advantage over their competitors in the process, and often using language intended to deceptively leave the impression that workers are benefiting and that it was the city that mandated the surcharge -- neither of which is true. In other words, they're lying to you as they increase their profit margins. How does that make you feel?

Posted by steven on Apr. 25, 2013 @ 2:35 pm

optional perk. As such, it is a matter purely between employer and employee. It's not an "obligation" - it's a discretionary benefit of working there.

If the city did not mandate this charge, then why don't the restaurants simply tell their employees that the job does not come with benefits, and that they can take or leave the job on that basis?

That's the way it works everywhere else.

I withhold the 4% because it is the only way I can protest this. But I have no desire to interfere with free market negotiations between emploers and emloyees.

Posted by Guest on Apr. 26, 2013 @ 3:48 am

and your food doesn't become as bitter and shrivel'd as you yourself appear.

Posted by marke on Apr. 26, 2013 @ 4:34 am

so that the staff there can all get free sex change operations?

Posted by Guest on Apr. 26, 2013 @ 5:23 am

is covered by our health care (and Healthy SF!), which is exactly the point here. Thanks so much for proving it!

Posted by marke on Apr. 26, 2013 @ 5:33 am
Posted by Guest on Apr. 26, 2013 @ 6:43 am

with anonymous internet comments.

Posted by marke on Apr. 27, 2013 @ 10:57 am

Who do you think you are kidding? Like I know who you are or whether "Marke" is your real name? I didn't even know that was a name - I thought it was spelled "Mark"

Anyway, focus on the message, not the messenger. That's the general rule for online forums.

Posted by Guest on Apr. 27, 2013 @ 11:15 am

It's not delivery, it's DiGiorno. Feel free to cook and serve yourself at home anytime.

Posted by Guest on Apr. 24, 2013 @ 2:29 am

to directly pay for an employee's healthcare? So far, nobody has made that case.

I could understand this more in a location where the minimum wage is waived for staff who get tips (that is almost universally the case).

But In SF, where wait staff get minimum wage (or more) AND get to keep all their tips, it really is a step too far to ask diners to pay their healthcare as well. What next? A surcharge for their childcare? School fees? Commuting costs?

Pay should be a matter between an employer and the employees. And not foisted onto a customer's bill. I still tip 15% - 4% for healthcare and 11% for the waiter. Assuming they are good of course - tips are for going beyond the call of duty and not just for showing up.

Hopefully, when ObamaCare arrives next year, staff will buy their own insurance, like the rest of us have to.

Posted by Guest on Apr. 24, 2013 @ 4:21 am

That's a good question, but it's one for the restaurants that invented this surcharge and not the city. These surcharges were born of sour grapes by restaurants that fought this law and lost. The fact that it amounts to consumer fraud in many cases is just shameless and diners have every right to be upset.
As far as the commenter upset that he's paying for someone's health coverage and thus reducing his tip, you're punishing the wrong person and displaying a lack of understanding of basic economics. We all pay for the health coverage of all people, whether it's using businesses that provide health insurance to their employees and factor that into their prices, or through businesses that don't offer health coverage or good wages, whose workers' coverage we pay for through our taxes or higher healthcare costs. Punishing your waitress for this reality is just stupid and vindictive.

Posted by steven on Apr. 24, 2013 @ 10:06 am

Why don't the itemize the costs of rent increases alongside the pittance they charge for HSF?

I'm glad that I'm not being served by sick wait staff even though they are often employed by sicko restauranteurs.

Posted by marcos on Apr. 24, 2013 @ 10:32 am

incorporates part of their total comp. When the 4% are introduced, effectively their pay went up by 4% and the customer paid 4% more. The restaurant is in the middle and not really affected.

So if the staff get 4% less tip, they are no worse off than before this 4% surcharge was introduced.

That said, I agree with Steven that restaurants should not keep it. Nor should they charge it if they provide health coverage anyway.

Posted by Guest on Apr. 25, 2013 @ 7:48 am

if others had reacted the way I do every time I see one of these on the bill.

I was shocked to see such an overt effrontery -- essentially a reactionary political pitch -- on my bill at a restaurant I frequented on a regular basis. After I questioned the manager on the topic, and learned it was a new policy and unlikely to change, I STOPPED EATING THERE>

The *gall* of these "hospitality industry" goons in bringing up politics over the dinner table is incredible. That they should be cheating their employees *and* their customers by doing so is unforgivable.

Posted by lillipublicans on Apr. 26, 2013 @ 7:51 am

presumably never eat out at all.

What I object to is the idea that I should be directly paying the employees wages and benefits.

I will pay 15% over and above what I have no choice about. How the employer and employee divide that up is their problem and none of my business.

4% slush fund means a 11% tip. Just the way it is. Deal.

Posted by Guest on Apr. 26, 2013 @ 8:11 am

in San Francisco that do not impose the 4% fee then those who do. You really hang yourself when you rely on those "most people/places" argument as it shows you really do not know what you are talking about.

Don't you directly pay for the employee wages and benefits by purchasing any goods and services? If you object to this you should stay home and make your goods.

Posted by Guest on Apr. 26, 2013 @ 2:36 pm

buy a product or service.

When I buy a shirt at WalMart, there isn't an extra 4% on the cost of the shirt for workers' comp.

And if some restaurants are not charging the 4%, then good for them.

Posted by Guest on Apr. 27, 2013 @ 10:58 pm

wholesale price? One of them is employee wages and benefits. Therefore, you are directly paying for them. You are just playing word games now as your initial argument has been shown to be profoundly moronic.

Nice back-peddle from claiming that almost all restaurants charge the 4% to congratulating the restaurants that do not. (I guess that is as close to you admitting you were wrong as we get here.) Perhaps you should frequent the ones who don't and stop blaming the employee for the tactics of the restaurant owner to create a climate of resentment to workers.

Posted by Guest on Apr. 28, 2013 @ 10:15 am

Directly paying for, say, an employees healthcare is having it separated out as a line item on a bill.

Indirectly paying for it is where it is smushed in with the bill.

As for charging the 4%. there is no inconsistency at all. Diners should not be charged an additional 4% for something that employees should be paying for themselves. But if the law wrongly imposes that on restaurants then they absolutely should draw attention to that extortion by itemizing it.

And especially since diners then have the simple option of reducing the tip by 4% to leave themselves flat.

Posted by Guest on Apr. 28, 2013 @ 11:24 am

wages and/or benefits, so you are already paying for it . A decent owner would raise the prices by 4% --which I am sure you can afford because you always brag here about how much money you have-- and not attempt to create hostility towards workers which is exactly what you, it appears willingly, are playing into. If you object to it so much, just don't go those restaurants, as there are not as many charging the 4% as you earlier claimed and that you are totally wrong about.

At this point, your just bitching and spewing out a lot of gas. (A lot like Lucreita and anon.) But what type of moron goes to a left-leaning newspaper, claims that it is biased --no shit, the Guardian makes its political ideology blatantly apparent,-- and throws a fit about this stuff on a regular basis? Like the moron (you?)who protested that there was no obituary for Margaret Thatcher here. Do you go to McDonalds and ask for a Whopper? And you protest that people accusing you of trolling.

As much as you, Lucerita, anon, et al take dumps on this paper and its readers, it simply amazes me that the editors here don't ban you. It is very evident that the editors here can suffer fools more gladly then me. Hope you blew a wad getting this reaction out of me, and now please continue to piss in the wind here, allowed by the graciousness of the hosts you so pathologically despise.

Posted by Michael W. on Apr. 28, 2013 @ 1:34 pm

I envision you as a San Francisco Ignatius Reilly:

a fat blowhard, not nearly as smart as you think you are, uncultured, rude, bombastic and cheap.

yup, I'm sure that restaurant was really sad that you never came back

Posted by Guest on Apr. 26, 2013 @ 2:17 pm

I'll take it as a compliment since such attributes would make me a far, far, far better person than any kind of SFBG forum corporatist troll.

Posted by lillipublicans on Apr. 26, 2013 @ 3:09 pm

No one cares about your petty life.

Why is everything with progressives about their emotions of the now?

This is the product of the participation culture of the left, everyone gets a ribbon, everyone is a winner and their moronic opinions are earth rattlingly deep.

Posted by Matlock on Apr. 26, 2013 @ 6:22 pm

who so gracefully flies free from the constraining limits of facts.

Here, Matlock transcends reality in a way which is a wonder to behold, and in particular it should be noted that chaff of this sort can have not one whit of bearing to that which it purports to be a response. It is *truly* amazing.

Posted by lillipublicans on Apr. 26, 2013 @ 7:27 pm

Has anyone refused to pay it?

Obviously you can just deduct it from the tip. But it seems to me that the fee can only be advisory if it is not reflected in the cost of the menu items.

Posted by anon on Apr. 26, 2013 @ 8:13 am

action here is laudable, every time I hear of him now I think of his inexplicable acquiescence to the Ed Lee's connivance in the Mirkarimi matter; I'd like to hear Herrerra's own account of how his office's 2012 policy with regard to "official misconduct" (not pertaining to official acts in office) came to conflict so eggregiously from the previous policy as delineated by former Ethics Commissioner and Chairman Paul Melbostadt's account of what it had been since the inception of the program and well into Herrerra's own tenure as City Attorney.;_ylt=A0oGdSjgvXpRmh0AwsRXNyoA?ei=UTF-8&fr...

Without Herrerra being able to explain his apparently naked political calculation in regard to the attack on Mirkarimi -- and by extention the people's right to elect the sheriff of their choosing -- everything the man does must be seen in a political light.

Posted by lillipublicans on Apr. 26, 2013 @ 9:59 am

Herrera didn't really have a choice in the matter. It was Lee's decision, and then it became the City Attorney's Office job to represent him. Refusing to do so might actually be official misconduct.

Posted by steven on Apr. 26, 2013 @ 1:32 pm

Correct me if I'm wrong, but both Paul Melbostad and Dennis Herrerra are lawyers entitled to an opinion on the meaning of the city charter, and Ed Lee is not; Ed Lee does not seem to have the position to instruct the CA in matters of law. Am I wrong?

If the mayor does have that right, perhaps the office has too much power.

Posted by lillipublicans on Apr. 26, 2013 @ 1:42 pm

cover the costs of his legislation.

When they do the progressives bitch like little bitches.

Posted by Matlock on Apr. 26, 2013 @ 5:59 pm

Jason Grant Garza here ... well, a check on programs working as they should by the city attorney ... ha, ha,ha. Wasn't here an article today regarding the settlement in which NO LIABILITY was found? where it is said that there is an unaccountable WAY out ... "If you recall, last we checked in on this ongoing story, City Attorney Dennis Herrera was turning up the heat and investigating San Francisco restaurants that may have been profiting from health care surcharges, even instituting an amnesty program." Why NOT LIABILITY?

Sort of reminds me of when SF broke the LAW in HEALTH CARE ... lied to get my case dismissed (C02-3485PJH) and then YEARS later signed a settlement/confession ADMITTING FAULT AND GUILT YET left heir VINDICATED INNOCENT VICTIM for DEAD ... where is or was Herrera then or NOW? He was the city attorney ... HOW COULD this happen and why NO FOLLOWUP ???

As a matter of fact the city again breaks medical law and has a FRAUDULENT restraining order against me and when I go to the DA (I am told they do NOT care about my legal rights) and then assaulted when I try to followup then told on 11/27 ( in one of the 6 parts - ) by the SHERIFF that if the city attorney or DA DO NOT support me (do their duty) there is NOTHING the SHERIFF can do. I ask does it mean it can happen again and SURPRISE on 12/19 it does and when I try to go and file a police report I am denied

So keep looking at videos as I followup with the city attorney ...

Shall we see ... keep watching the youtube videos and go to to see what the city does to its victims ... please realize that the signed setllement/confession DID NOT come from the city attorney's good heart rather my continuing against all odds ... now ask me if the city attorney even had CONTRITION after the damage and harm in FEDERAL COURT ... ha,ha,ha. It just started again .... WHAT WAS THE CONSEQUENCE he offers amnesty ... easy when you yourself do not account. Shall we see if ANYONE asks in regard to case C02-3485PJH or was that travesty to fade away so that the spin of a caring city attorney can manifest without question? Health care ... will the city attorney arrest DPH for CRIMINAL FRAUD and other lawbreaking medical denying CRIMES ...


Posted by Jason Grant Garza on Apr. 27, 2013 @ 7:51 am

Whenever a restaurant breaks out its bill to "add" a 1-5% health care tax, I write on the check that this is wrong and offensive to me as a patron. I explain briefly that any employer costs should be included in the stated menu prices. The Health Care fee was never meant to be passed on to the consumer as some sort of government tax. It is instead a business cost like any other. This explicit, on-the-bill % add-on is, as others have stated, a political statement by the restaurant owners. And I 'm not interested in their pout about having to put money toward their employees' health care costs, just like every other type of SF business does. Maybe writing that comment on every check/bill does no good -- I don't know. But I hope that restaurant owners realize that at least some customers like me walk away with a poor impression of the owners. I have to believe we return less often or not at all to those places.

Posted by voltairesmistress on Apr. 27, 2013 @ 2:13 pm

Are you taking the position that in SF political statements are meaningless and bad?

Posted by Matlock on Apr. 27, 2013 @ 6:59 pm

price increases. That's true for any business and any government "mandate".

The difference here is that the customer is being billed separately for it. And although I do not like it, it does serve to show the high cost of government mandates.

And, crucially, it allows us to refuse to pay it by reducing the tip by 4%

Posted by Guest on Apr. 27, 2013 @ 11:01 pm

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