California Governor Gavin Newsom’s administration pushed back against claims that it granted special treatment to a donor, Greg Flynn, exempting his Panera restaurants from the state’s new minimum wage for fast-food workers. The controversy arose after a Bloomberg News story revealed that an exemption for restaurants producing their own bread onsite was added to the legislation, raising the minimum wage for fast-food workers from $16 to $20.
Administration’s Response
Governor Newsom’s spokesperson, Alex Stack, stated that the governor never met with Flynn about the bill and that Panera is not exempt from the law, as reviewed by their legal team. The administration aims to dispel concerns that the exemption was a result of political favoritism.
Bread Production Exemption
The law, set to increase the minimum wage in April, excludes establishments with a bakery producing bread for sale on the premises. While not publicly explaining the rationale behind the exemption, Newsom’s legal team clarified that it does not apply to businesses like Panera, which mix dough at one location and then bake it at stores.
Intent of the Bread Rule
Tia Orr, executive director of the Service Employees International Union (SEIU) and a key figure in the minimum wage deal, stated that the bread rule was designed to distinguish fast-food establishments from other eateries. The intent was not to exclude a specific company but to provide clarity on what constitutes a fast-food establishment.
Political Backlash
Critics of Governor Newsom, particularly in the Legislature, seized on the Bloomberg report, with Assembly Republican Leader James Gallagher calling for an investigation. Senate Minority Leader Brian Jones labeled the situation as “corrupt and unacceptable.” Newsom is facing renewed criticism as opponents attempt to trigger a recall election.
Background
The minimum wage legislation emerged from negotiations between organized labor and the fast-food industry, seeking to avert a ballot fight over a more comprehensive fast-food labor law. The compromise law will increase wages while removing provisions allowing a new industry council to set workplace regulations, in addition to exempting bread-baking establishments.
As the controversy unfolds, Governor Newsom’s administration vehemently denies allegations of providing special treatment to a donor. The exemptions and amendments to the minimum wage legislation are under scrutiny, adding a political dimension to an already contentious issue.
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