San Francisco is working out a new plan to enforce the city's health insurance law. The effort follows a settlement with Patxi's Chicago Pizza.

Starting in late 2010, Patxi's owners collected a 4 percent surcharge from customers, but held on to the money instead of putting it  directly into employees' health care coverage.

City Attorney Dennis Herrera has reached a settlement with the chain to pay back 115 workers.

"You have $320,000 approximately, that is being dedicated to employee healthcare, which is exactly what the statute was designed to accomplish."

In 2006 San Francisco passed an ordinance requiring employers to provide health benefits to employees or make alternative payments to local goverment.

Patxi's admits to no wrongdoing. Owner Bill Freeman says, "We likely would have won in court, but it wasn't worth the expense."

Herrera says the settlement sends a strong message to other businesses. "If you're going to advertise that your surcharge is going for healthcare, you better make sure that that's what it is in fact going for."

Two years back, the Golden Gate Restaurant Association unsuccessfully attempted to block the city's health care ordinance at the U.S. Supreme Court.  

Herrera says while he's not seeing widespread violations of the ordinance, restaurants are the most common offenders. He'll release details on a plan targeting non-compliant businesses in the coming days.