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Wednesday, April 7, 2010 as of 11:14 AM ET

Business

Claudia Cowan

San Francisco, CA

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On the Tab: Food, Drinks & Health Care

March 24, 2010 - 10:48 AM | by: Claudia Cowan

One of the provisions in the new health care law requires small businesses to provide coverage for workers. Such an “employer mandate” has been in place in San Francisco, Calif., for over a year. The mandate has earned mixed reviews at best.

Under the law, businesses with 20 or more employees are required to provide medical coverage, either on their own or by paying into a city-run program. That’s what most restaurants are doing — albeit grudgingly.

To cover the cost, owners are either having to raise their menu prices or tack on a so-called “Healthy Surcharge” onto the tab. At some places, it’s around 4 percent of the check. Others charge a flat fee of a dollar or two.

Either way, customers are footing the bill for the health care of their waitstaff, busboys, and cooks, regardless of whether the workers work part time, live in San Francisco, or are in the U.S. legally.

How well the plan is going over seems to depend on where the restaurant is located. Management at many neighborhood bistros and cafes say customers don’t seem to mind paying the extra surcharge. But folks running downtown restaurants — many of which depend on visitors — say the mandate is hurting their bottom line.

At the venerable Fior D’Italia in North Beach, Calif., owner Bob Larive says he’s having to tax his customers to fund a political mandate. “It makes doing business here much more expensive, which makes the city less attractive in the long run to the visitors and the locals,” he says.

Some eateries worry they’ll have to let people go, or cut shifts. But Mayor Gavin Newsom gives a different view. A former restaurant owner himself, who lobbied hard for this universal health care program, Newsom argues it’s saving restaurants and taxpayers money, by offering workers preventative care. Newsom argues that this in turn keeps them out out emergency rooms, and on the clock.

“Businesses get the benefit in the back end,” Newsom says. “We have a more robust work force, greater productivity and output because employees have health care.” He adds the program is providing healthcare to 50,000 people who don’t have insurance.

But in a city that lost more than 200 restaurants in the past 4 years, critics say the extra expense is costing jobs and revenue San Francisco can’t afford. What’s more, the local restaurant lobby, the Golden Gate Restaurant Association, has filed suit, claiming the “employer mandate” violates federal law. The U.S. Supreme Court is now deciding whether to hear the case.

Photo Gallery
Fior D'Italia, one San Francisco restaurant opposed to the "Healthy Surcharge."
Image 1 of 6
  • Fior D'Italia, one San Francisco restaurant opposed to the
  • Customers pay the surcharge through higher menu prices, or a fee tacked onto their check.
  • Bartender Giovinni Rivas points out where the surcharge is clearly printed and explained.
  • Bartenders, waitstaff, and cooks in San Francsico get health care thanks to the employer mandate.
  • At Zazie, the SF health care ordinance surcharge is a flat rate of $2.00, no matter the bill amount.
  • At Fior D'Italia, this plaque clearly states the owner is being forced to add a surchage.
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