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Top San Francisco restaurants facing exposure over health surcharge

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

OLSE figures show the agency has investigated more than 100 complaints since 2008, resulting in $8.1 million in health care benefits provided to more than 6,400 employees and $244,000 in penalties paid to the city. Herrera's office also reached a $320,000 settlement with the owners of Patxi's Chicago Pizza in January, just before announcing his broader investigation.

"The vast majority of San Francisco employers have complied with their obligation to make health care expenditures pursuant to the HCSO," OLSE Manager Donna Levitt told the Guardian. "With respect to the minority of businesses who fail to meet their obligations, the OLSE works tirelessly to ensure that workers receive the benefits to which they are entitled and that all businesses compete on a level playing field."

Among the restaurants near the top of the OLSE list that did not respond to the Guardian inquires are Squat & Gobble, Wayfare Tavern, and Trinity Building Services.

"We are actually in complete compliance," Larry Bouchard, manager of One Market restaurant, told us, explaining its inclusion on the OLSE list by saying, "It's my understanding that we reported the wrong information." He said the restaurant uses health savings accounts, but that they are widely used by employees, who get their expenditures repaid within three weeks.

Scott Carr, general manager of Boulevard — who sources say was one of the first restaurants to use the healthcare surcharges on customer bills, and whose parent company, Reroute LLC, was fifth on the OLSE list, underspending by $169,777 — told us the figures didn't fully reflect the company's spending on employee health care.

He wouldn't say whether the company will be settling with Herrera for any past violations, but he did say that the restaurants decided to abandon health savings accounts in favor of health insurance policies for employees starting on Jan. 1. As he told us, "We feel we've made a positive step."