California Gov. Gavin Newsom is under fire after sparking outrage with his latest bill to help employees. The new bill would raise the state’s minimum wage law to $20 but exempt one of his donors’ fast food chains.
Now, outraged Republican lawmakers in the state are calling for an investigation of the law and its seemingly odd exemption.
Republican Lawmakers Push Back Against Newsom’s Bill
According to Fox Business, Newsom pushed for an exemption that allows restaurants baking and selling bread as a standalone item to pay its employees that current minimum wage of $16 an hour rather than raise the wages for those employees.
This exemption seemed to mean that longtime Newsom donor Greg Flynn could save thousands of dollars at his 34 Panera Bread franchise locations across California.
Why Is Panera Exempt?
The Bloomberg article alleged that Flynn lobbied Newsom’s top aides “to reconsider whether fast-casual chains such as Panera should be classified as fast food.”
The article continued to allege that the Service Employees International Union California State Council agreed to exclude restaurants that operate bakeries “as a means of winning the governor’s support for the legislation,” and that “the rationale was the governor’s long-standing relationship with a Panera franchise.”
Republican Lawmakers Push to Investigate the “Corrupt Deal”
“Can any franchisee receive an exemption from the $20 minimum wage law, or must they donate more than $150k to Newsom first?” California Republican Caucus Chairman James Gallagher questioned in a social media post. “This corrupt deal needs to be investigated.”
Other Republican lawmakers in the state also criticized the exemption, calling it “crony capitalism,” and have advocated for an investigation of the bill.
Republicans Say Panera Couldn’t Afford the New Minimum Wage in California
While a $20 minimum wage is pretty high and seemingly unaffordable for most fast-food restaurants, Panera may have caught a break with the bill.
“Panera couldn’t afford Democrat lawmakers’ $20 minimum wage requirement for fast food restaurants,” Jones said in a statement. “Lucky for them, their franchise owner donated over $160,000 to Governor Newsom, who got them an exemption.”
Bakeries Do Not Fall Under the Definition of “Fast Food”
AB1228, also known as the Fast Food Accountability and Standards Recovery Act, defines a fast-food restaurant as a limited-service restaurant that is part of a national chain with at least 60 locations nationally that all operate under the same brand name or share standardized menus or overall design.
AB257 established the 10-member Fast Food Council of restaurant industry owners and employees. The group is tasked with setting “minimum fast-food restaurant employment standards,” including wages, working conditions, and training.
Who Is Greg Flynn?
Flynn, who is the largest franchisee owner in the U.S., with thousands of Taco Bell, Pizza Hut, Wendy’s, Panera Bread, and Applebee’s locations, donated $8,500 to Newsom’s 2018 campaign, $100,000 toward the governor’s 2021 recall, and $64,800 for his 2022 campaign.
“Campaign contributions should not buy you carve-outs in legislation,” Jones added. “This isn’t ‘sausage making’ as the governor suggests, it’s crony capitalism. Corrupt and UNACCEPTABLE.”
Newsom’s Spokesperson Denies the Allegations
However, Newsom’s spokesperson denied the allegations posed by the Bloomberg article, calling the report “absurd, “ (via The Los Angeles Times).
“The governor never met with Flynn about this bill, and this story is absurd,” said Alex Stack, a spokesperson for Newsom. “Our legal team has reviewed, and it appears Panera is not exempt from the law.”
The Law Does Not Exempted Panera
The governor’s office stated that the legislation to raise the minimum wage for fast food workers was a result of hours of negotiations over the last two years. Newsom administration officials met with dozens of business owners and union representatives to craft the details of the laws.
“There was never an intent to exclude one company, but instead to provide clarity on what constitutes a fast food establishment,” Tia Orr, executive director of SEIU California, said in a statement.
Fast Food Companies Paused the Original Bill
In 2022, the Legislature pushed the bill through. During that time, unions, the governor’s office, and other groups attempted to define what restaurants the bill applied to, exempting bakeries from the law.
Fast-food companies quickly halted the fast food law by launching a successful campaign to reverse the bill.
Flynn Did Suggest an Exemption for Bakeries and Bagel Shops
ABC News cited a statement in which Flynn denied asking for an exemption from the bill, though he admitted to suggesting that bakeries and bagel shops should be excluded.
“Such a narrow exemption has very little practical value. As it applies to all of our peer restaurants in the fast-casual segment, we will almost certainly have to offer market value wages in order to attract and retain employees,” Flynn said.
Again, Flynn Didn’t Buy Panera Out of the New Minimum Wage Bill
Last year, fast-food companies and labor reached a new agreement, and beginning in April, workers at the chains will receive a pay bump of $20 per hour.
Again, bakeries will remain exempt from the law as they do not fit the definition of fast food. However, Newsom’s spokesperson denies that Panera will be exempt from the law as it fits the definition of “fast food” crafted by those involved with the bill.
