Does Obamacare Really Need to Result in Bigger Restaurant Bills?

Some restaurants factor it into the bottom line; others are putting up signs.

(Photo: Lonely Planet/ Getty Images)

Mar 6, 2014· 2 MIN READ
Solvej Schou writes regularly for TakePart, and has also contributed to the Associated Press, Los Angeles Times,, and Entertainment Weekly.

Charming restaurant servers have long upsold gooey appetizers and whipped cream–laden desserts to diners, but some business owners are trying to sneak some flab onto your restaurant tab: the costs for covering worker health care under the Affordable Care Act.

The approach varies as widely as opinions on Obamacare do. Several restaurants belonging to one Florida eatery chain have posted sharply worded signs on tables and doors requiring their customers to pay a 1 percent Obamacare surcharge.

The fee, the chain claims, is needed so it can avoid raising meal prices to comply with an employer mandate that businesses with more than 50 full-time-equivalent employees provide health benefits by 2016.

A few cents more to help out workers doesn’t sound bad, right? But the surcharge practice, part of a growing trend, has its willing fans and vocal detractors.

“A normal organization would build health care into their wages. It’s unfair to say these surcharges are going to the health care costs of people serving you, when there’s no way to tell if the money will actually go to padding profits,” said Dylan Roby, an assistant professor at the University of California, Los Angles, Fielding School of Public Health. “It’s legal for restaurants to have a surcharge, but they’re not bound in any way to use that money to buy health care for their employees.”

After the famously progressive city of San Francisco began requiring businesses with more than 20 employees to provide health insurance coverage or extra money for health care costs in 2006, restaurants started tacking on a worker health care surcharge at the bottom of each bill. Yet, earlier this year the city found that owners of more than 90 restaurants actually pocketed a portion of that money, more than $9 million, instead of spending the funds on employee health insurance.

Roby said the surcharge practice, though entirely legal, brings with it a level of comfort—or discomfort—for both customers and workers, depending on the politics in that city and state.

“In San Francisco, customers might be more likely to go to a business that announces they’re paying for health care, since the city is liberal,” said Roby. “In Florida, the surcharge would be viewed as a negative thing,” given a more rooted opposition to government regulation.

A Portland chef who enacted a "health and wellness" program at his restaurant to help boost wages and provide health care said the 5 percent surcharge works in a place that inspired the hippie-hipster mockery of the TV show Portlandia. In a city that can be parodied for serving chickens that are practically identified by their first name on menus, such a progressive move from a local business fits right in.

Businesses with 50 or more full-time employees—those who work 30-plus hours a week—that don't provide health care face penalties: For every worker after the first 30, they pay a fine of $2,000, Roby noted. But lower-income workers who make below a certain pay grade can quality for public programs, such as Medicaid.

In Los Angeles, upscale French restaurant Republique has added an optional 3 percent surcharge to pay into health care costs for full-time employees, though the restaurant has said the fee is not related to Obamacare.

The move is notable for L.A., which has the largest restaurant industry in the nation. It has almost 300,000 workers, and a staggering 90 percent of them don’t have health care, said Sophia Cheng, a policy organizer at the worker rights group Restaurant Opportunities Center of Los Angeles. That makes the employer mandate even more necessary, though smaller restaurants don’t need to adhere to it.

Regardless, providing health care pays off.

“What we’ve seen, in terms of affecting the business of the restaurant, the bottom line, not providing health care to employees means a higher turnover rate,” said Cheng. “There’s presenteeism—the opposite of absenteeism. People are going to work sick. It’s a public health issue because you’re spreading your germs.”

Ilecara Velez, a former restaurant server and manager who now works as a labor organizer, said she views a surcharge approach as a valid and creative way to raise health care funds.

“I think it’s a great idea to have a surcharge. It’s usually just a few dollars more. People who eat out can afford to pay that,” she said. “If I was still a server, I wouldn’t feel uncomfortable giving customers a bill with a surcharge. I think everyone should have affordable health care.”