Did California Gov. Gavin Newsom Give Panera Bread a Special Exemption From His Minimum Wage Law?

Last year, California Governor Gavin Newsom took steps to provide better pay for the state’s many minimum-wage fast food workers. However, he is now facing scrutiny amid claims that he gave Panera Bread an exception to the law to please one of his campaign sponsors.

The minimum wage for fast food workers in California is currently $16/hr, but it will rise to $20/hr when a law Newsom signed last year goes into effect on April 1st, 2024. He signed the legislation, AB 1228, into law in September and it was hailed as a major victory for the state’s half a million fast-food employees who have been fighting for better wages. The fight for minimum wage increases is a nationwide one, as fast-food, retail workers, and more highlight their right to earn a livable wage. Hence, Newsom’s law raised hope that it would set a precedent for other states to follow. Additionally, it allows California to increase the minimum wage annually from 2025 to 2029, meaning working conditions could continue improving in the state.

However, there was something unusual about the law: It included an exemption for bakeries. When defining “fast food restaurant” for the purpose of the bill, the legislation states, “‘Fast food restaurant’ shall not include an establishment that on September 15, 2023, operates a bakery that produces for sale on the establishment’s premises bread … so long as it continues to operate such a bakery. This exemption applies only where the establishment produces for sale bread as a stand-alone menu item and does not apply if the bread is available for sale solely as part of another menu item.” Now, allegations have arisen that this exception was made to benefit Panera Bread.

Gov. Gavin Newsom denies Panera Bread exemption

Recently, Bloomberg News published a report alleging that Newsom’s exemption was made to benefit Panera Bread due to billionaire franchisee Greg Flynn being a prominent donor to the governor’s campaigns. Flynn and Flynn Properties have reportedly donated over $220,000 to Newsom’s campaigns since 2017. Flynn provided a statement to AP News claiming that he had made the suggestion that restaurants like bakeries and bagel shops be excluded if the bill was only trying to “address alleged labor code violation in fast food restaurants.” However, he denied pushing for the exemption or personally discussing it with Newsom.

A spokesperson for Newsom denied the allegations and stated, “This story is absurd.” Additionally, the governor’s office is claiming that Panera is actually not an exception to the law. Although Panera Bread sells bread as a “stand-alone menu item,” it is not produced “on the establishment’s premises” because the franchise makes its bread off-site. However, in the past, when questioned about the exemption, the governor did not deny it. For now, it remains unclear whether the franchise is or is not required to raise its minimum wage. Flynn explained to AP that it’s not very consequential as the restaurant will likely have to raise wages anyway to compete with other fast food restaurants.

Although Newsom’s representatives denied the claim, the governor has yet to explain the exemption. Other exemptions have been proposed, but only for fast food restaurants within larger venues, like airports and hotels, because these locations are trying to negotiate even higher minimum wages for themselves, and the law doesn’t want to introduce a new wage for them. However, there’s no explanation why bakeries are being left out of the bill, especially when there are instances, such as with Big Apple Bagels or Panera, where restaurants may double as a bakery and fast food restaurant.

If Newsom did give Panera an exemption due to Flynn’s donations, it certainly would be unethical. Despite Republicans long having advocated against raising the minimum wage, several GOP leaders have slammed Panera’s alleged exemption and demanded an investigation into the matter. For now, though, it remains unconfirmed what the exemption means and if Panera is or ever was even exempt from the law.

(featured image: Gado / Getty)