After months of passionate debate, three proposals and Mayor Ed Lee’s first veto, the Board of Supervisors approved a veto-proof initiative last week to close a loophole in the city’s health care ordinance.
The plan, proposed by District 10 Supervisor Malia Cohen, calls for every employer to provide written materials for employees that detail their rights to the health care accounts; it also requires that the money contributed to the reimbursement accounts accrue for two years and be available 24 months after it’s contributed, and for 90 days after the employee is terminated.
In a recent statement, Lee said, “These are goals I have embraced from the beginning of this discussion, and I thank the Board for putting forward amendments that align with these goals.”
The proposal came after District 9 Supervisor David Campos and others pointed out the loophole in the 2008 Health Care Security Ordinance, which requires all San Francisco employers with 20 employees or more — 50 for nonprofit organizations — to offer health insurance for employees.
The 2008 law requires employers to contribute to reimbursement accounts that can add up to $4,252 for employees to use for medical, vision or dental care. To do this, many restaurants have been charging diners a 4 percent surcharge. But the loophole meant that the surcharge ended up being a bonus for the restaurants, because if unused, the funds automatically revert to the employer.
Data show that 80 percent — or roughly $50.1 million — of the allocated money was unused and returned to the 860 businesses that contribute to the program. Sixty-one of those businesses are in the Mission’s 94110 zip code, according to the Health Care Security Ordinance 2010 annual report.
At the same time, city officials discovered that restaurant employees were often unaware their accounts existed, or had difficulties accessing the money set aside.
“Unfortunately, there are bad restaurant businesses casting a bad light on the ethical businesses here in San Francisco,” said Geffner. “We don’t charge a 4 percent surcharge and our employees are fully aware of their health care accounts.”
When the pizza restaurant’s employees were asked if they were aware of their health care rights, most said yes. Cashier Natasha Riggins said, “I use it at Kaiser all the time.”
Yet right around the corner at Luna Park, 694 Valencia St., which adds the 4 percent surcharge to every customer’s check, manager Ashleigh Plasterer acknowledged that many restaurants, including Luna Park, don’t offer employees enough information about their health care rights.
Unlike the employees at Escape from New York, the majority of Luna Park’s workers are not signed up for a health plan.
“We just don’t have the staff,” Plasterer said. “We tell them they have it, but because we don’t have a packet that outlines their rights, if they want it they have to do everything themselves.”
For Geffner, the appeal of the new legislation is that the money allocated to the reimbursement accounts will be available to employees until it expires, but unused funds will still be returned to the employer. An earlier proposal by Campos, which Lee vetoed, had no provision to return the money to the employer.
With 120 employees, Geffner said that Campos’s bill would have forced him to close a restaurant and cost him $200,000 a year: $100,000 for full-time employees and $100,000 for part-time employees, because the accounts for the latter would roll over every year and could not be collected.
“Every employee doesn’t use up all their health care funds,” said Geffner. “The returned unused money helps businesses — like myself — with high employment and low gross [to] pay the bills.”
Geffner remains skeptical about the health care ordinance in general, saying that it puts an extra burden on businesses, discourages new hiring and is unappealing to customers because of the added charge.
Plasterer agreed, and said that customers sometimes deduct the health care surcharge from the tips they leave. She called it a lose-lose situation. “You either don’t charge a surcharge and the business loses money, or you do charge a surcharge and your employees could possibly lose money.”
Geffner added, “This whole system is very poorly thought out, but with all that was given, this was the most pragmatic solution … I guess sanity prevailed.”