Company Ordered to Pay $1.3 Million in Denied Benefits

By Sylvia Ramirez

Wed Oct 16th, 2013 9:23pm America/Los_Angeles

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SAN FRANCISCO – A San Francisco Superior Court judge today upheld orders for a janitorial company to pay more than $1.3 million to its employees who did not receive benefits they were entitled to under the city’s health care law.

GMG Janitorial Inc., a company based on Palou Avenue in the city’s Bayview District, must pay a total of $1,339,028 to 275 current and former employees who did not receive benefits under San Francisco’s Health Care Security Ordinance between 2008 and 2010, Judge Marla Miller ruled today.

City Attorney Dennis Herrera said in a statement, “This is an important ruling that will directly compensate employees who were denied benefits, while also assuring law-abiding competitors that they won’t have to compete with cheaters.”

The city’s health care ordinance, approved in 2006, requires medium- and large-sized employers to make a minimum amount of health care expenditures for each covered employee, according to the city attorney’s office.

GMG, owned by Gina Gregori, allegedly only offered health insurance to a limited class of employees such as managers and corporate office staff and posted flyers at the workplace to notify other employees of their rights under the ordinance.

However, many employees testified that the company explicitly told them that they had no health benefits, according to the city attorney’s office.

The OLSE in 2011 ordered GMG to pay the $1.3 million to its employees but the company appealed, then filed a lawsuit that argued the agency had exceeded the authority of the city’s law by ordering full restitution.

Miller, in her ruling issued today, found the OLSE acted in accordance with the law and ordered the company to pay the $1.3 million, as well as an as-yet-unspecified amount to the city for its legal and administrative costs.

Douglas Robbins, the attorney representing GMG, said the company would appeal the ruling.

Robbins said the $1.3 million represented the amount that should have been in the company’s health reimbursement account required by the city’s law, but that the city’s analysis found workers’ medical expenses generally only use between 10-12 percent of the money in a company’s account annually.

“If a company of GMG’s size was required to hand out $1.34 million every year in medical expenses, it would have to shut down,” he said. “It doesn’t make any sense.”

City Attorney Herrera said, “Judge Miller’s ruling sends a strong message that our Health Care Security Ordinance has teeth, and that the city is committed to enforcing it aggressively.”

The city for four years defended the law from a legal challenge by the Golden Gate Restaurant Association, with the U.S. Supreme Court eventually upholding the ordinance in 2010.

OLSE manager Donna Levitt said in a statement, “The vast majority of San Francisco employers comply with both the letter and the spirit of this law, which is why it’s so important that violators are brought to justice.”

(Copyright 2013, Bay City News, All rights reserved.)

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