A commercial janitorial company has been ordered to pay more than $1.3 million in restitution to 275 current and former employees after it failed to give them access to health care money required under San Francisco’s Health Care Security Ordinance, city officials said today.
The decision by a city hearing officer upheld an Office of Labor Standards Enforcement finding that GMG Janitorial Inc. had failed to make health care expenditures required under the Healthy San Francisco program during a three-year period, according to the City Attorney’s Office.
GMG maintained a bank account for the purpose of complying with the ordinance, which requires that employers create a health reimbursement account for employees. But the company failed to calculate how much money should be set aside for each employee based on hourly wages paid, said Donna Levitt, manager of the Office of Labor Standards Enforcement.
More importantly, numerous employees testified they were unaware the money existed.
“Each one of them said that not only did they not know about the account but some of them said they had been explicitly told by their supervisors that their company had no health benefits for them,” Levitt said.
The employees will receive the reimbursement in cash, after the hearing officer found that allowing the company to keep the money would constitute a windfall for the employer, Levitt said.
“This is a significant legal victory–not just for the employees who were systematically denied benefits to which they were entitled, but for all the competing businesses that play by the rules,” City Attorney Dennis Herrera said. The City Attorney’s Office represented the Office of Labor Standards Enforcement in the hearing.
“This decision sends a strong message that San Francisco’s Health Care Security Ordinance has teeth, and that city leaders are committed to enforcing it,” Herrera said.
The Office of Labor Standards Enforcement has issued dozens of determinations leading to restitution for more than 5,000 employees since the health care ordinance was enacted in 2006, according to the City Attorney’s Office.
GMG, which was also ordered to pay an administrative penalty of nearly $67,000, is the first company to appeal a determination. Any further appeals would need to be made through San Francisco Superior Court, Levitt said.
The health care ordinance was amended last year to make it clear that health care money set aside for employees should not revert to employers, Levitt noted.
A call to GMG seeking comment was not returned.
Sara Gaiser, Bay City News