For three years, Foreign Cinema did not meet the minimum required employee healthcare expenditures, according to the city.
One of the requirements for businesses that have employees in San Francisco is to spend appropriately on the healthcare that is provided to those employees. This requirement is responsible for millions of people having access to affordable healthcare, so it’s certainly an important part of the system and economy as a whole. Of course, these rules only work when they are being followed. As was recently learned, a popular restaurant in San Francisco was not meeting the standard for the rule that is in place in the city, and the business had to pay a fine for violating it, along with making up the missing spending.
At the heart of this story is a restaurant named Foreign Cinema in San Francisco. The restaurant is quite popular with residents and visitors alike and has an excellent reputation for food and service. Foreign Cinema added a 6% surcharge to their bills to account for the healthcare mandate put in place in San Francisco. The money that was collected was meant to be spent on healthcare for employees of the business, and that spending must meet a minimum threshold.
The city alleged that the restaurant did not meet their minimum expenditure on employee healthcare between 2020 and 2023. As a result of these allegations, the restaurant and the city agreed to a settlement that saw more than $220,000 distributed to 146 current and former employees. Along with the restitution that had to be paid to the employees, the business was forced to pay a $10,000 fine to the city for its non-compliance.
While it was determined that a settlement was in the best interest of everyone involved in the case, the co-owner of the restaurant did not necessarily agree with the city’s perspective on the underpayments of the business. The business did contribute to the SF City Option fund, but those contributions fluctuated and the insurance plans that were directly offered to employees did not count for the city mandate.
Co-owner John Clark said, “When we understood our liability according to the city, and we felt it wasn’t in our best interest to fight it…I’m a restaurant, I’m not Chevron,” Clark said. “I don’t have a team of lawyers. We felt it was just easier to pay it than to dispute some of the details of their findings.”
In the end, the settlement was a victory for the current and former employees more than anyone else. As a result of the agreement for violating the city’s rules, employees were sent payments to make up for what they should have been provided over the previous few years. Those payments ranged in size depending on how long and how frequently the employee worked for the restaurant, but on the high end the payments reached up over $9,000.
Given the significant cost that was incurred, it seems unlikely that Foreign Cinema will make a similar mistake anytime soon. More than that, the noteworthy nature of this story should highlight the risk for other businesses and will make it more likely that the rest of the businesses operating in San Francisco will take care to meet their requirements and take care of their employees appropriately.