SF Healthy surcharge?
How common is this? We had dinner and I saw this additional charge tagged onto the bill.
The bill was $130 - the SF Healthy surcharge was about $5.20. I've never heard of this before. The waitress explained it was to cover the mandated health insurance for staff.
Although I understand the cause, I think it should be mentioned up front and not a surprise when the bill comes.
I think some restaurants have added the surcharge onto the bill as a point to let people know they're being "stuck" and now "you should feel some of our pain and see... you don't like this either."
I don't know why restaurants just don't factor the health care costs into the menu. I don't think anyone would blame them for the increases and would understand employees need coverage and the restaurant biz is risky.
Most customers aren't going to notice or care about 5-10% if it's hidden. OTOH, no one likes to see an extra amount there and have to ask. Placing the surcharge on the bill and not factoring it in seems rude, and actually a bit ironic and lame if the waitstaff has to explain it.
No one likes to be played, esp. if you're dropping $150 or so.
I hate this surcharge. I believe that employees should have health insurance and I also think that it is up to the employer to provide it. That should be part of the cost of doing business and how they need to raise those funds is up to them. I already pay for my own health insurance and don't feel it is my responsibilty to subsidize insurance for anyone else. I realize that restaurant owners could hide the surcharge via higher prices and I would actually prefer this. At least that way, I have the option of going to a different restaurant if I feel the prices are too high and I am not left with the feeling that my pocket is being picked.
It's increasingly common. The tax is only imposed on restaurants with 20 or more employees, and is higher for restaurants with 40 or more, so factoring the cost into the prices would put larger restaurants at a competitive disadvantage relative to smaller restaurants.
I've never seen it on a bill where it wasn't mentioned on the menu.
Thanks for your replies. I agree, I empathize about everybody needing health insurance, but I want to know up front. It's too late after I've eaten my meal and the bill is slipped under my nose to sign - at that point there's no going back. This was especially annoying since it was a very expensive restaurant.
Is this a recent thing and is it legal?
It is NOT a tax! It is a requirement that the health insurance be provided or that the employer pay into the city plan if they don't want to provide it, but it is up to the restaurant to decide how to pay for it: they can raise prices, use a surcharge, eat it since they don't want to raise prices, or some combination thereof.
re: Robert Lauriston
NO, sorry, you have not read all the fine print. It is NOT a payroll tax, city or otherwise. It IS a cost of doing business in San Francisco.
The amounts you are quoting is the amount per covered employee that the covered employer is required to pay for health care expenditures. It is up to the employer whether or not they pay that amount for health insurance, or pay into the City plan, or choose one of several other listed alternatives (including, if they wish to do so, direct reimbursement of health care costs employees incur). (If you read the law, there is a lengthy description of what does and does not qualify as a health care expenditure).
Therefore, since it is NOT a payroll tax and the city is not required to collect it as such, it is not like a sales tax that must be collected on every bill, which was my point. It is up to the employer (restaurant, or whoever) to decide how to fund that cost of doing business.
Under those circumstances, if the restaurant does not warn in advance (normally by a notation on the menu) that they have CHOSEN to use a surcharge to get the money to pay for this cost of business, I would encourage the patron to request that the charge be removed from their bill, or refuse to pay for it. (though my guess is that in this instance it was on the menu and the patron just didn't notice).
re: Robert Lauriston
the reason it is not effectively a tax is that there is nothing that requires the employer to pay anything to the government, city or otherwise. A tax is a fee paid to the government.
In this case, if the employer were already providing health insurance at the required rates or higher, they are required to pay absolutely nothing to the city (nor anything above their current costs.)
Of course, unlike many other types of employers, restaurants have traditionally never provided health insurance to their employees, which is of course why the bill is a thorn in their sides, but has not been a major concern for SF employers in industries such as banking or education (just to give a few examples) where health insurance is traditionally provided as a benefit to employees, and is commonly recognized as a cost of doing business.
Sure, it's a cost of doing business, but the only other costs that are mandated by the government and based directly on the number of hours worked are taxes.
So from the perspective of a restaurant owner paying the SF minimum wage of $9.36, it's effectively a city payroll tax of 11.3 or 17.1%.
re: Robert Lauriston
a perspective that is based on the assumption that minimum wage was being offered with no health insurance whatsoever. If they were already providing health insurance, they aren't impacted by this law.
Most coverage would cost more than the $1.60 maximum per hour of payroll imposed under this law. Example: my most recent employer's cost to provide me with coverage, per the COBRA notice I got when I left employment, was $435 per month for me alone (for simplicity, I am excluding my husband). ( am assuming the figure they provided me is a true, correct figure, since they are required to provide it to me under federal law. )
The average full time worker works about 173 hours per month. That means that as a full time worker the cost for my health insurance to my employer for me was approximately $2.51 for every hour I worked. My employer would have SAVED almost a dollar an hour for every hour I worked by buying into the city plan instead of choosing to cover me.
Of course, I didn't work in an industry where it was the norm to only pay minimum wage, and not to provide any benefits, so my employer would obviously not have been able to attract employees if they had chosen to do so. The industries that have been hurt by this law are the ones that pay minimum wage or little better than minimum wage, and no insurance. If you are saying it is a 'tax' on employers that don't pay a liviing wage and provide for health care for our servers and cooks, fine, I will go along with your perspective on that....
re: Robert Lauriston
Gotta disagree with you. Minimum wage is an employer's cost that's mandated by the government and based directly on the number of hours worked. And nobody claims that the minimum wage laws impose a tax.
It would be fair to say that the ordinance effectively increases the minimum wage by over a buck an hour. But to call it a tax is, IMHO, simply incorrect.
Actually, it would have been a tax savings for my employer to opt into paying the city rather than providing me with the insurance they did, which was more expensive (see my reply above).
They can't do business in the City if they don't pay rent either (unless they are fortunate enough to own the building). Does that make rent a tax?
If they were already providing health insurance, this 'tax' probably has little or no impact.
i thought about this for a bit and i'm going to come down on it is a tax
[which was my first inclination].
specifically it is an *indirect tax* on a specific action: that of hiring
an employee not covered by a health care plan.
i dont think rent is a good example ... although property tax might be.
how about this example: if a resto buys a car for the business, there
is an indirect tax on that "activity" too. now they can avoid that too
by renting a car.
in this case there is actually a transfer of $$$ to the govt. now if
say the city passed a law requiring some special air filtration
system for a BBQ or bakery, where there is no real choice to either
do this privately or have the city come out and install the system
i would personally still call that a tax. i think taxes can either be for
generating revenue or as a way of conditioning behavior.
so i think of taxes in the broad sense of regulations that change
the cost of doing business. as opposed to 'sources of govt revenue".
e.g. a gas station in CA being required to provide compressed air
is a tax. see e.g.
i am not going to do this, but frankly i'd be tempted to leave a little card
saying "tip reduced by half of health care surcharge". ultimately who cares
if we call it a tax or not. the interesting question is how this changes
money flows, i.e. is there a windfall, what is the distribution of the
windfall etc ... same issue in that incanto fellow's discussion of the
increase in min wage without a tip credit and the FOH vs BOH disparate
impact. [see also "flypaper theory of tax incidence"].
but see, you are just plain incorrect when you say there is a transfer of money to the government! There isn't, unless the restaurant chooses that from among many options. It is like rent: your landlord could be the City or another government entity, in which case your check would be made out to the City, but it could also be an individual or company. In this case of providing the health services under the SF law, the check could be written to the employee, to a physician provider group, or an insurance company. or to the City.
That is exactly why I say it is a 'tax' only on those companies that choose not to provide any sort of health care for their employees.
I'd like to know about windfall revenue too: since the restaurant is charging on a percentage of bills paid, but the obligation is based on payroll hours, there is no way to know if there is any correlation. It could be that the cost to the restaurant is x amount, but the amount being collected is Y, no way to know how they correlate. The only thing we know for sure: if the restaurant was already providing health insurance, it is quite likely that they were paying more than 1.06 to 1.60 per hour for health insurance for employees for whom it was provided, and in that case any money they collect is gravy that stays in their pocket (and they DON"T need to give to the government).
If I wasnt clear:
You can either think of a tax as sources of govt revenue, either
"direct or indirect" OR you can think of them as regulations which
increase the cost of doing business, regardless of where the
revenue goes. If the govt says "pharmacies must put a neon sign
above their doorway" and they dont care if the owner makes it in
their garage or buy one from a private supplier, for a certain
kind of analysis, it's reasonable to think of as a tax. [i suppose
there are things that would increase the cost of doing business
that i wouldnt call a tax ... like maybe some kind of takings, but
that in part because it is usually against an individual party
rather than general policy]. i suppose i wouldnt call an increase
in the bay bridge toll a tax ... that feels more like a service purchased
from the govt, so i would call it a USE FEE. but since this is about a
PUBLIC POLICY GOAL i would call it a TAX.
>That is exactly why I say it is a 'tax' only on those companies
>that choose not to provide any sort of health care for their >employees.
yes, that is why i carefully wrote "it is a tax on a certain behavior"
... specifically the action of hiring an employee who is not
covered by an adequate health care plan.
We can call it a tax. We can call it a tariff. We can call it a surcharge. We can call it a cost of doing business. The bottom line is that someone will need to pay for it. It might come from the profits of mom-n-pop, who are in the restaurant business, scraping by and hoping to put a few $ aside for retirement, or from the stockholders of a restaurant corporation. In the end, someone will pay for this, and other programs. In that end, it will be the consumers. The best that we can hope for is that these charges go toward the betterment of mankind. Whether this will happen is not something to discuss on CH. After all, we are here to talk about food, wine, restaurants and their ilk.
re: Bill Hunt
re: "We can call it a tax" vs "someone will pay for this" ...
as i wrote above, the interesting question is not the name
but the question of change in behavior and "incidence" ...
>ultimately who cares if we call it a tax or not. the interesting
>question is how this changes money flows, i.e. is there a
>windfall, what is the distribution of the windfall etc ... same
>issue in that incanto fellow's discussion of the
>increase in min wage without a tip credit and the FOH vs BOH
>disparate impact. [see also "flypaper theory of tax incidence"].
>In that end, it will be the consumers
you have not shown that. see again "fly paper theory" for an
opening of this discussion.
conclusion: the economy is getting worse here, as it is in a lot of places.
Since the law was in effect in January, and since you dont know what sectors are having the greatest increases in unemployment, (ie they could have been sectors that were already providing health insurance and thus were not impacted at all by this law) you cannot factually correlate rise in unemployment with this law. or any other law for that matter.
Of course, anyone can draw any sort of conclusion they want to about any thing, whether or not it has any base in logic or fact.
In what month did this requirement go into effect?
Not that it would matter much. The national unemployment rate for 7/08 was also 5.7%. What might be more telling would be a comparison of changing unemployment rates over the last year between San Francisco and neighboring municipalities/counties such as Oakland, Santa Clara, Marin, etc.