Workers in Paxti's Chicago Pizza chain are now getting a bigger slice of healthcare benefits.
That's after an investigation found that between 2009 and 2011, Paxti's didn't use most of a 4 percent Healthy San Francisco surcharge added to customers' checks to fund employee healthcare.
San Francisco City Attorney said Paxti's, which has four locations, deserves credit for settling the health care claim, but other restaurants could be targeted next.
"The estimates showed that there was roughly $210,000, $220,000 that did not appropriately go to employees for employee health care," said San Francisco City Attorney Dennis Herrera.
Bill Freeman, Paxti's Chicago Pizza CEO, said the money was being spent for health care for invoices his employees turned in.
"We paid every single one of them," he said. "We accrued more than the employees actually redeemed."
Paxti's will pay $320,000 to 115 current and former employees and increase health care spending by $100,000 this year.
The settlement comes as San Francisco restaurants said they are grappling with rising rental and healthcare costs and the nation's highest minimum wage rate.
"So, if you put that together, you're looking at closer to $12, $13 an hour," said Golden Gate Restaurant Association executive director Rob Black. "In Oakland, you can pay someone $8 an hour for the same job."
Freeman told KTVU he now plans to eliminate the surcharge and raise menu prices to fully fund employee health care.
"It adds more infrastructures to our company," Black said. "We have to have an extra person that just does that."
A source indicated to KTVU dozens of other businesses are under investigation for violating the Healthy San Francisco ordinance.
The City Attorney's office would not confirm that, but said it is looking toward a larger effort to address the issue.
Watchdogs are questioning an exclusive agreement between the City of Oakland and a non-profit group, tapped to lead a multi-million dollar project to redevelop the area around the Coliseum BART station.