Governor Gavin Newsom (D) pushed back last week on accusations that Panera Bread is exempt from California’s new $20 minimum wage for fast-food restaurant employees.
Republicans have accused Newsom of giving the chain special treatment because a high school classmate and donor to Newsom’s campaigns, Greg Flynn, runs two dozen Panera Bread restaurants in California. Bloomberg News first reported that Panera appeared to be exempt from the new minimum wage law, which takes effect in April and raises the minimum wage for fast-food workers from $16 to $20.
The law carves out an exception for businesses that produce their own bread on the premises. The exemption was added late in the bill’s process, and Newsom’s administration has not explained the reason for it — but now his team contends that Panera won’t be exempt from the law.
“The Governor never met with Flynn about this bill and this story is absurd. Our legal team has reviewed and it appears Panera is not exempt from the law,” Newsom spokesman Alex Stack said.
Previously, Assembly Republican Leader James Gallagher called for an investigation and accused Newsom of setting his special interests up with “favors at the expense of regular Californians.”
“This type of crooked dealmaking is wrong and exactly why our constituents think the government isn’t looking out for them,” Gallagher said.
“Campaign contributions should not buy you exemptions in legislation. The public deserves to know the truth about the allegations of Governor Newsom’s crony capitalism,” Senate Minority Leader Brian Jones (R) said in a statement.
Bloomberg reported that Newsom had fought for Panera’s exemption.
Newsom’s office argued that Panera is not exempt since the restaurants do not technically “produce” their own bread. The law says the minimum wage increase does not apply to businesses with a bakery that “produces for sale on the establishment’s premises bread.”
Panera locations do not make their own dough on the premises, although they do bake their own bread.
Bloomberg’s reporting also named Paris Baguette and Great Harvest Bread Co. as exempt from the minimum wage hike. It is unclear whether those companies produce their own bread entirely on the premises.
Flynn reportedly donated $100,000 to Newsom in 2021 to help him fight a recall effort, as well as $64,800 in 2022 for Newsom’s re-election campaign.
Flynn said that while he opposed the minimum wage bill, he never asked for special treatment.
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“To be clear, at no time did I ask for an exemption or special considerations. In fact, the idea never even occurred to me and I was surprised when the exemption appeared in the final legislation. I also never met with Governor Newsom about this bill, though I did meet with his staff in a group meeting with other restaurant owners,” Flynn said.
Thanks to the law, some fast food will become more expensive in California. McDonalds and Chipotle, which are not exempt from the minimum wage increase, have already announced plans to raise prices.