Cheated janitors to receive $1.34 million in restitution in healthcare benefits settlement

Herrera negotiates agreement ending legal appeal; affirming administrative order and S.F. Superior Court ruling to benefit 275 current and former workers

SAN FRANCISCO (July 7, 2014) — City Attorney Dennis Herrera today finalized a settlement agreement with GMG Janitorial, Inc., ending the local company’s legal appeal of an Oct. 16, 2013 San Francisco Superior Court ruling to pay some $1.34 million to 275 of its current and former employees who were denied health care benefit expenditures to which they were entitled under the City’s Health Care Security Ordinance, or HCSO. Enacted in 2006, the HCSO established the popular “Healthy San Francisco” program and created an employer spending requirement to fund health care benefits for employees in the City.

Under terms of the stipulated amended judgment entered with the Superior Court this morning, GMG Janitorial will remain liable for the full amount of benefits owed to workers under the original administrative orders and court ruling. The company is required to pay installments of at least $200,000 every six months to a third-party settlement administrator, who will disburse payments to eligible employees, most of whom are Latino. Financial incentives included in the settlement to satisfy the debt sooner involve dollar amounts otherwise owed to the City, to ensure that workers receive their full compensation plus any interest accrued. The agreement contains additional provisions governing former employees who can’t be located and securing the debt through liens on the owner’s personal assets.

“This agreement will fully compensate employees who were denied benefits, while also assuring law-abiding competitors that they’ll no longer be undercut by businesses that cheat,” said City Attorney Dennis Herrera. “I think this settlement reflects the strong ruling Judge Marla Miller issued last October, and I hope it sends an unmistakable message that our Health Care Security Ordinance has teeth, and that we’re committed to enforcing it aggressively. As always on these kinds of cases, I’m grateful to everyone in the Office of Labor Standards Enforcement for their outstanding work.”

“When low-wage workers are denied their rightful health care benefits, the human consequences are incalculable,” said OLSE Manager Donna Levitt. “Workers at GMG Janitorial weren’t getting their health care needs addressed when the case came to our attention, and it was gratifying to see GMG start providing their workers health care benefits after OLSE began its investigation. The settlement finalized today will compensate these employees for what they were rightfully due in the first place. The vast majority of San Francisco employers comply with both the letter and the spirit of the law, which is why it’s so important that violators are brought to justice.”

The court order issued by Judge Marla J. Miller last October found “substantial evidence” to support prior findings by San Francisco’s Office of Labor Standards Enforcement and an administrative law judge that GMG Janitorial, Inc. failed to make the required expenditures on behalf of its workers for the period 2008 to 2010. After losing its administrative appeal before the administrative law judge, GMG Janitorial filed suit in Superior Court on July 2, 2012, arguing that the OLSE exceeded its authority under local law by ordering full restitution, and that the administrative law judge’s findings were unsupported by the evidence. Judge Miller’s ruling decisively rejected both contentions in ordering the company to pay $1,339,028 to its employees “in order to correct its failure to make the required expenditures.” The order additionally allowed the City to recover its costs in the action in an amount to be determined.

The San Francisco City Attorney’s Office played a key role in working with then-Supervisor Tom Ammiano and Mayor Gavin Newsom to craft the City’s groundbreaking universal health care law enacted in 2006. Almost immediately thereafter, the office embarked on a four-year legal battle to defend the law from a challenge by the Golden Gate Restaurant Association. The ordinance was conclusively upheld when the U.S. Supreme Court denied review in the case on June 28, 2010. San Francisco’s OLSE enforces labor laws adopted by San Francisco voters and the San Francisco Board of Supervisors. In addition to investigating violations of the Health Care Security Ordinance, OLSE also enforces San Francisco’s Minimum Wage Ordinance; Paid Sick Leave Ordinance; Minimum Compensation Ordinance; Health Care Accountability Ordinance; and Sweatfree Contracting Ordinance. Violations of the Health Care Security Ordinance may be reported to OLSE at (415) 554-7892 or HCSO@sfgov.org. Its website is http://www.sfgov.org/olse.

The case is: GMG Janitorial, Inc. v. City and County of San Francisco et al., San Francisco Superior Court, Case No. 512328, filed July 2, 2012.

Related Documents:

PDF iconPDF of the GMG Janitorial Settlement Presskit (July 7, 2014)

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