Michael Mina reaches settlement after overcharging customers at his SF restaurants

Celebrity Chef Michael Mina is among the SF restaurateurs who charge customers for his employee health care obligations.

Celebrity Chef Michael Mina and his four San Francisco restaurants – Michael Mina, RN74, Bourbon Steak, and Clock Bar – have agreed to pay $83,617 to their employees to settle charges of overbilling their customers a 4 percent meal surcharge ostensibly intended to cover the company's employee health care obligations.

As I reported last week, City Attorney Dennis Herrera is investigating fraudulent use of surcharges by restaurants, and its settlement with Mina Group LLC was the first of what could be dozens with local restaurants to come clean under Herrera's partial amnesty offer. The company was the city's worst violator, according to filings last year with the city's Office of Labor Standards Enforcement, which showed the company collected $539,806 in surcharges and spent just $211,809 on employee health care.

A spokesperson for Mina Group had told the Guardian that a settlement was in the offing and that the company would forward it to us as soon as it was available. Instead, the company leaked the settlement to SFgate.com's Inside Scoop restaurant column, which posted a story about it on Friday evening, the dead spot in the weekly news cycle.

Mina told Inside Scoop that all the surcharges it collected are being held in a fund for employee health care and the company has lowered its surcharges from 4 to 3 percent to correct the overcharging. San Francisco's restaurant industry – which waged an aggressive legal battle against the employer health care mandate – is the only industry to use explicit customer surcharges to cover its obligations under city law.

The full joint statement by the City Attorney's Office and Mina Group follows:

“The City Attorney’s Office and Mina Group announce a settlement regarding surcharges imposed in response to San Francisco’s Health Care Security Ordinance. The settlement terms have been guided in part by findings in which the City Attorney’s Office acknowledges that Mina Group’s employee health care program reflects some best practices in administration of health care surcharge funds.

“Mina Group and its affiliates collected surcharges during 2009 – 2011, as previously reported to the Office of Labor Standards Enforcement (OLSE). The City recognizes that 100 percent of the surcharges collected will continue to be used exclusively for employee healthcare and that the majority has already been used. Under the settlement agreement, Mina Group will contribute $83,617.50 of remaining surcharges to eligible persons who were employees during that period.

“The City Attorney’s Office reaches no conclusions on liability in successfully concluding its enforcement action with Mina Group and its affiliates. Mina Group will continue to fully support the San Francisco Health Care Security Ordinance.”