Health benefits already constituted a complicated arena, but the creation of the Affordable Care Act (ACA), Healthy San Francisco Plan, and the city’s Health Care Security Ordinance (HCSO) have made compliance a veritable minefield for employers. And while the Office of Labor Standards Enforcement (OLSE) has been scrutinizing Bay Area businesses to ensure employees are getting the benefits required under these laws, it is restaurants in particular that are taking the brunt of HCSO audit attention.
We have answers and insight for restaurant owners about the pitfalls of non-compliance and how The ABD Team can help.
Why are restaurants under more OLSE scrutiny than other businesses?
Most restaurants operate under tight profit margins and so owners are always looking to keep costs down. This makes sense, but can be a losing proposition if they fail an HCSO audit. OLSE crawls through all your records to verify you’re paying in the $1.65 per employee per hour worked if you have 20 or more employees, and $2.48 per employee per hour worked if you have 100+ employees. If you can’t prove you were paying these amounts towards healthcare expenditures, you may be forced to pay the prior year’s shortfalls directly to former and current employees, plus pay a stiff fine. It’s no joke.
Which healthcare laws apply to restaurant owners and employees?
The Affordable Care Act is the law that applies at the federal level. Although employer penalties were delayed until 2016, the law is still in force. But here in San Francisco, local and California state healthcare laws are also a factor. You’ll have to contend with guidelines from California’s Department of Managed Health Care and San Francisco’s regulations concerning HCSO, the Employer Spending Requirement (ESR), and the Healthy San Francisco program. With this many laws overlapping and affecting your business, it can be hard to know if you’re compliant with all regulations that apply.
Why is compliance with these different tiers of healthcare laws such a challenge?
Unfortunately, the reporting requirements for each set of laws is different and uniquely convoluted. The original understanding was that once the ACA was fully in effect, the city of San Francisco would step back, but that has not happened and the city’s OLSE is aggressively enforcing local ordinances and auditing to look for those not in compliance and restaurants are a frequent target. Recordkeeping can be a challenge to demonstrate that you’re properly paying in your ESR. You can be paying in as you are required to do, but if your records aren’t up to spec, you could still end up in trouble.
What can happen if your restaurant is out of compliance with these health care laws?
The city has levied fines against many restaurants as part of their audit process and the hardest hit have been those who charged diners a healthcare surcharge but then did not spend 100% of those funds on healthcare. Penalties range from a few thousand dollars up to more than $60,000 depending on the seriousness of the non-compliance. On top of any fines the federal, state or local government may assess, many restaurants also had to pay the full amount of surcharges withheld plus interest to current and past employees. For some businesses, this was hundreds of thousands of dollars.
How can ABD help restaurants stay in compliance and avoid penalties and fees?
When you choose The ABD Team as your insurance broker, you get not only the coverage you need, but the expert consultation you need, particularly when it comes to healthcare compliance. We are unique in that we have an in-house compliance team, led by Brian Gilmore, an ERISA attorney who lives and breathes healthcare laws and regulations. Our team will review your plans and recordkeeping to identify areas of exposure and risk so that you can get and stay in compliance. Not a lot of firms offer this level of service. And if your restaurant is audited, The ABD Team stands with you.
If you own a restaurant or any type of food or beverage-based industry, The ABD Team can help you assemble a competitive benefits plan to keep you in compliance with all of the applicable regulations, keep your employees happy, and keep an eye on your bottom line. Contact us to learn more.