SF’s Foreign Cinema paid over $230K for violating health care mandate

Popular San Francisco restaurant Foreign Cinema has paid over $220,000 in restitution to workers, along with fines, over allegations that it failed to spend enough on health care for employees — despite having long added a 6% surcharge to diners’ bills to cover the city’s health care mandate. 

Under city law, restaurants must spend a minimum amount on health care for their employees, whether by directly paying for health insurance or by contributing to San Francisco’s public benefits program, called the City Option. Records from the Office of Labor Standards Enforcement, obtained by SFGATE, show that Foreign Cinema “failed to satisfy the health care expenditure requirements” between April 1, 2020 and March 31, 2023. 

In response, the Mission District restaurant sent checks to employees totaling $226,217.48, as well as paying $10,122.82 in penalty fees to the labor agency. 146 current and former employees received payments, which ranged from $16.77 to over $9,000. 

Foreign Cinema co-owner John Clark disputed the accuracy of the city’s claims, calling it a “difference in opinion,” but said he couldn’t afford potential litigation. Foreign Cinema is a 25-year-old restaurant known for its outdoor patio where films are screened and California-Mediterranean cuisine from chefs Clark and Gayle Pirie.

“When we understood our liability according to the city, and we felt it wasn’t in our best interest to fight it … I’m a restaurant, I’m not Chevron,” Clark said. “I don’t have a team of lawyers. We felt it was just easier to pay it than to dispute some of the details of their findings.”

Foreign Cinema began sending employees checks in November 2023; the restaurant finalized a settlement with the labor agency on Dec. 15, 2023. The agency initially fined the restaurant over $40,000 for violating the health care mandate, but later agreed to reduce the fine to just over $10,000 in recognition of the owners paying employees promptly, according to compliance officer Maura Prendiville. 

“The full amount was reduced when they agreed to pay everybody quickly without asking for a payment plan,” she told SFGATE. 

Foreign Cinema is one of many San Francisco restaurants that began charging customers an “SF Mandate” fee, often between 4% and 10%, after the voter-approved health care requirement went into effect in 2008. Employers can choose how to spend the health care money, whether by paying for health, dental or vision insurance or by contributing to City Option, which provides medical reimbursement accounts to San Francisco workers.

Foreign Cinema contributed $20,426.21 to the SF City Option fund in February 2021, but only $5,485.45 in July 2022, according to records obtained by SFGATE. The restaurant also offered insurance plans directly to employees, according to co-owner Clark. But neither of those routes was enough to meet the city mandate, which requires businesses to spend a few dollars on health care for every hour worked by covered employees.

“They had medical, dental and vision insurance — and still managed to fall short,” Prendiville said.

Clark said Foreign Cinema encourages employees to choose the restaurant’s insurance plans, and that the fluctuation in contributions to the City Option program was due to a number of factors, including the number of employees who chose to participate in the city’s reimbursement program rather than accept the benefits offered by their employer. 

“We are not guilty of any wrongdoing, and we are not guilty of any sort of malicious behavior,” Clark said. “… The fact that we paid up promptly at the end of the findings is evidence of our good faith to the program.”