Patxi’s Pizza details and clarification regarding Healthy SF settlement

(Press Release), San Francisco, Calif. January 18, 2013–Patxi’s Pizza today addresses the recent news regarding their settlement with the city of San Francisco in the hopes of setting the record straight and clarifying the terms of the settlement. 
In the beginning of 2011, Patxi’s discovered a reporting error in 2009 and 2010 on the health insurance account balances for their employees, which they corrected immediately, and in accordance with Healthy SF regulations.
When the city contacted Patxi’s about this matter in late 2012, the company had been in full compliance for 13 months.  Though this was an unfortunate clerical error, Patxi’s made a business decision to avoid expensive and distracting litigation with the City of San Francisco, and instead accepted a settlement offer from the City. 
This settlement requires Patxi’s to pay to 115 current and former employees 100% of the benefits they accrued during 2009 and 2010 ($205,000). Additionally, as a concession to the City, this year Patxi’s will be increasing the money spent on employee healthcare by about $100,000 (above what Healthy SF regulations ordinarily require). 
In 2011, like many restaurants in San Francisco, Patxi’s added a 4% surcharge to their menu to offset the increasing cost of employee health care. That year, Patxi’s paid each and every healthcare claim filed by their employees, the total of which amounted to less than what was collected for this purpose.
Contrary to information released, Patxi’s has never spent money collected through surcharges on anything other than healthcare for their employees (unused balances sit in a liability account, waiting to be paid out to employees).  Additionally, Patxi’s did not collect any money from customers in 2009 and 2010 by way of a surcharge. 
Unused surcharge funds were set aside to pay future healthcare claims, which accounting records reflect.  Pursuant to the San Francisco Health Ordinance, Patxi’s has until the end of 2013 to use that money towards employees’ health benefits.  In 2012, Patxi’s collected the same amount of money that was spent on employee health coverage.  
In August of 2012, Patxi’s eliminated the healthcare surcharge from their menu, and, this year, will be removing all surcharges from the menu.  Instead, Patxi’s will be adjusting the menu pricing at San Francisco locations to ensure that sufficient funding is available for employees in accordance with the Healthy SF regulations. 
In addition, as an act of good faith, Patxi’s has agreed to pay the City $15,000.
Says CEO Bill Freeman, “We hope this will ease speculation about our intentions and protect our reputation as a community-minded and fair organization that goes above and beyond for our employees. As an example, last year, one of our new managers suffered a stroke prior to their health coverage being active. We informed his family that we would keep him on the payroll indefinitely, even if he were never able to work again. Our employees come first, always.”