California Restaurant Owners Pocketed The Money Intended To Fund Their Employees’ Health Care

Over 50 San Francisco-based restaurant owners are under fire for prioritizing their own profits over their workers’ health care coverage. A city-wide investigation revealed that, after the restaurant industry collected a total of $14 million in worker health care surcharges in 2011, just a third of that money actually went toward providing low-wage workers with insurance.

Under a city-wide requirement, businesses in San Francisco are supposed to set aside some extra money — about $2 dollars an hour for each worker — to help their employees afford their insurance costs. When the rule first went into effect in 2008, some restaurant owners avoided raising the prices on their menu by tacking a surcharge onto the bottom of their bills and explaining to their customers that the fee would help fund workers’ health care.

But according to San Francisco Supervisor David Campos and Assemblyman Tom Ammiano, who helped conduct the investigation into the restaurant owners’ practices, those customers were being deceived. “I can’t say all of them, but for some of these restaurants it was a marketing ploy,” Campos said. And that marketing ploy came at the direct expense of their workers, some of whom didn’t have health insurance at all:

In some cases, not only did the surcharge money go back into owners’ pockets, but employees were denied health care altogether, Ammiano and Campos said.

The inconsistencies were caught after the health law was amended in 2011, requiring city audits of the surcharges. Last year, 3,652 restaurants turned in their paperwork to the labor office, which found oddities in the accounting. The documentation was then turned over to the city attorney for a full-fledged investigation. [...]

For Campos, it’s a consumer-trust issue. “These diners thought they were paying for workers’ health care. Instead these owners were gaming the system,” he said.

Low-wage workers like the employees in San Francisco’s restaurant industry typically don’t have access to health insurance — in fact, more than half of low-wage workers at small firms were uninsured in 2010. And workers’ health care costs are continuing to rise while their wages are stagnating, so it’s nearly impossible for them to afford their own insurance on the private market if their employers choose to deny them health coverage.

Obamacare will help address some of these issues in a similar way as San Francisco began doing in 2008. Starting in 2014, the health reform law will help ensure that employers can’t deny their workers health care simply to protect their own profits, and require businesses with more than 50 employees to offer basic health benefits. Nonetheless, profitable members of the restaurant industry like Olive Garden, Taco Bell, and Wendy’s are already using Obamacare as a convenient excuse to keep perpetrating their anti-worker labor practices and avoid giving their workers any benefits.

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