Media Targeting SF Businesses on HCSO Compliance
Compliance with the San Francisco Security Healthcare Ordinance (HCSO) is no longer enough to keep you out of trouble with the City. Educating your employees on HCSO is not enough. Now you must prove that your employees are actually using the funds made available to them. The city is actively targeting employers, and companies that charge their clientele a “Health Reimbursement” surcharge are at the top of the list.
Recent attacks on SF businesses include:
- May 2012: San Francisco fined a commercial janitorial service 1.3 million dollars because they were not in compliance with the HCSO.
- July 2012: CBS went undercover to restaurants, asking employees if they knew about their benefits. CBS found that most employees did not know their benefits or rights under HCSO, even when the information was being made available to them.
A recent article by Fenit Nirappil, Associated Press, on SF Gate, reported that "Donna Levitt, who is head of the city's Office of Labor Standards and Enforcement, said self-reporting by the 5 percent of businesses with surcharges last year confirms the city's suspicion that the money doesn't always go to health care." The article included HRI clients the Mina Group, Blue Plate, and Squat and Gobble, and comments by HRI President, Deisy Bach, defending her client's efforts to comply with — and educate their employees on— SF's HCSO.
Grand Jury Report
On the heals of a Grand Jury Report concluding that "a small but growing segment of employers, primarily in the restaurant industry" are profiting from the required monies collected for employees' health benefits, the media is now aggressively investigating local employers' compliance with the ordinance. They're especially interested in businesses that pass along the costs of the ordinance to their patrons via a surcharge. Click here to download a PDF of the report.
How far are they willing to go?
An undercover CBS reporter recently visited an establishment in the city wearing a concealed camera and recorder. She questioned the wait staff about their employer and the HCSO. Unfortunately, they did not know what the reporter was talking about, as the she kept referring to "health insurance."
The restaurant in question is an HRI client, and Deisy Bach, President of HRI, was on hand and spoke to the reporter at length, demonstrating the restaurant's comprehensive compliance: Their employees had received HCSO training a couple of months earlier; all of the required posters were up in plain view; reimbursement forms were visibly posted in the break room. But their compliance with the ordinance wasn't enough to stop the reporter from singling out the restaurant. Click here to see the story.
What are the penalties for non-compliance?
Of course, there is more at stake than just bad press. Penalties range from 1.5 times the total expenditure (calculated on current and former employees) that the employer failed to make, plus 10% interest, to $25 – $500 per violation, which can be calculated by the number of days the employer is out of compliance. For example:
- For small employers with 20 employees, averaging 20 per week at 1.46/hr, the estimated exposure is $45,000;
- For small large employers with 100 employees, averaging 20 hours per week at $2.20/hr, the estimated exposure is $340,000.
If you have any questions about the SF HCSO, or other compliance concerns, please give us a call at 925.556.4404. HRI can provide the tools, solutions, and on-site assistance you need to keep your business focused and profitable.