California Governor Gavin Newsom, who is considered a rising star in the Democrat Party, is under fire after a report this week revealed that he pushed for a special carveout in the state’s new $20 minimum wage law that affects businesses owned by one of his top political allies and donors.
Bloomberg News reported that billionaire Greg Flynn was getting a “new boost” after his chain of Panera Bread locations were exempted from a new law that forces fast food restaurants to increase their minimum wage from $16 to $20 per hour. Flynn is the largest “restaurant franchisee in the US, if not the world,” the report added.
Panera Bread was spared from the law because it offered “unusual exemption for chains that bake bread and sell it as a standalone item.” The report states that Newsom “pushed for that break.”
The report showed the numerous connections that the two men have, including going to the same high school, Flynn donating significant sums of money to Newsom’s political campaigns, Flynn allegedly bragging about his easy access to Newsom, and Flynn buying a resort managed by a company that Newsom owned.
Newsom and his office refused to disclose details about how they decided to create the carveout that benefited Newsom’s donor and only claimed that it was the “result of countless hours of negotiations with dozens of stakeholders” and was “part of the sausage-making” in politics.
The report noted that Flynn, who has also been involved in “business dealings” with the governor, would not respond to questions about his connections to Newsom. Panera Bread also would not respond to requests for comment, according to Bloomberg.
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Flynn strongly opposed the law, dubbed the FAST Act, saying that it would harm franchise businesses. The report said that he “urged the governor’s top aides to reconsider whether fast-casual chains such as Panera should be classified as fast food,” which ultimately went nowhere.
“The Service Employees International Union, a labor group that was the driving force behind the bill, decided to accept a narrower carve-out as the talks progressed — one that would only apply to restaurants operating bakeries,” the report added. “That position was adopted as a means of winning the governor’s support for the legislation, said a person with knowledge of the discussions. The rationale was the governor’s longstanding relationship with a Panera franchisee, the person said.”
The report highlighted multiple examples of major entities in the fast food industry who were puzzled about the special carve out and who also said that law was a “devastating financial blow” to businesses.
Flynn owns thousands of restaurants, including Applebee’s, Pizza Hut, Taco Bell, Wendy’s, Panera Bread, and more. The only restaurants he owns in California are Applebee’s — which is exempt from the law because it’s not a fast food restaurant — and Panera Bread.