the City Attorney's Office has been aggressive in upholding the ordinance with businesses in San Francisco. Patxi's Chicago Pizza
agreed to provide $320,000 in health-care benefits to its employees to be in compliance with the City of San Francisco's Health Care Security Ordinance
- which is the City's universal health care ordinance enacted in 2006 to protect uninsured employees not eligible for Medi-Cal or Medi-Care. The settlement announced on January 13 by the City Attorney Dennis Herrera and his staff seeks to send a very strong message to businesses like restaurants that employee's health care is a vital compensation that employer's should provide.
Patxi's which has four locations in San Francisco is cooperating with City officials by making a commitment to pay health benefits for current and former employees who were eligible for health benefits during the 2009 to 2011 time-frame. The restaurant franchise which specializes in "Chicago-style pizza and other fresh made food items with a selection of wine and beer will also pay $15,000.00 in penalties to the City.
Patxi's CEO Bill Freeman released a statement on its web site.
"In the beginning of 2011, we noticed that we’d made a reporting error in 2009 and 2010 on the health insurance account balances for our employees." "When we found this error, we corrected it immediately and in accordance with Healthy SF regulations." And, then later Patxi's public relations representatives sent word to this reporter saying that the franchise is working with the City to cooperate. But insists "when the city contacted Patxi’s about this matter in late 2012, the company had been in full compliance for 13 months." Though this was an unfortunate clerical error, Patxi’s made a business decision to avoid expensive and distracting litigation with the City of San Francisco, and instead accepted a settlement offer from the City.
The City Attorney's press secretary Matt Dorsey would not provide details as to what exactly the error was, only that through The City's Office of Labor Standards Enforcement (OLSE)
investigations, Patxi's was not in compliance with the health care ordinance by collecting surcharges from customers that was not being correctly applied to health care benefits to its employees. "Patxi's deserves credit for working cooperatively with us to remedy the problem, to avoid litigation and to make sure its workers are fully and fairly compensated," said Herrera.
CEO Freeman noted to the press that "we knew we needed to take immediate steps to make things right." Patxi's is proud of the role it plays in the community and we want to make sure we comply with the spirit as well as the letter of the law," he said.
Herrera successfully defended key provisions of San Francisco's Health Care Security Ordinance, which was authored in 2006 by then-Board President Tom Ammiano with the support of Mayor Gavin Newsom, from a four-year legal attack by the Golden Gate Restaurant Association
aimed at effectively gutting the Healthy San Francisco program. Since that time Herrera and his staff have gotten tough on other worker issues like wage theft.
This reporter surmises that it is from experiences on that level that Herrera is not letting any SF business, especially restaurant business slip by compliance.
The trade association of local restaurants alleged that the federal Employee Retirement Income Security Act, or ERISA, preempted local laws such as San Francisco's from requiring ongoing employer spending for employee health benefits, or alternative payments to a local government. The U.S. Supreme Court ultimately denied GGRA's petition for review on the last day of the high court's 2009-10 term, on June 28, 2010, sustaining a prior Ninth Circuit Court of Appeals decision that upheld the legal validity of the City's employer spending requirement for health care.
"This settlement should send a strong message that San Francisco is serious about making sure that restaurants keep their promises to their customers about health care surcharges," said Herrera at press conference. "I look forward to announcing a larger, more global effort in the coming days to address this issue, said Herrera, to make sure health care surcharge money goes to the workers rather than being pocketed by business owners."
Meanwhile, Patxi's CEO pledged that the franchise will be spending 50 percent more on health care benefits in 2013 than what had been collected in 2012. Freeman also said he hoped other restaurants would step up and participate in Herrera's efforts to meaningfully address the issue.
"Based on Patxi's conscientious and productive effort to resolve this dispute, said Herrera, Iam perfectly comfortable to continue being a loyal Patxi's customer."