Gov. spokesman Gavin Newsom refuted a Bloomberg News story that claimed the governor pushed to exempt bakeries from the state's fast-food wage law to benefit a political donor who owns Panera Bread restaurants, calling the report “ridiculous.”
A Bloomberg story published this week claimed that Greg Flynn, the billionaire CEO of the restaurant group that operates Panera locations, pressured Newsom's top aides to “reconsider whether fast food chains like Panera should be classified as fast food.”
The story claimed that the California State Council of the Service Employees International Union agreed to exclude restaurants that operate bakeries “as a way to gain the governor's support for the legislation.” “The rationale was the governor’s long-standing relationship with a Panera franchisee,” the story said.
“The governor never met with Flynn about this bill and this story is ridiculous,” Newsom spokesman Alex Stack said. “Our legal team has reviewed the matter and it appears that Panera is not exempt from the law.”
Bloomberg did not immediately respond to a request for comment in response to the statement issued by the governor's office.
The governor's office said the legislation was the result of countless hours of negotiations over two years, and Newsom administration officials met with dozens of business owners as well as union representatives.
A source involved in the discussions said Panera's inclusion in the law comes down to whether the company produces bread on site, or brings in dough made at a central facility.
The law says that bakeries are exempt from the obligation to pay higher wages.
“This exemption applies only when the establishment produces the bread for sale as a stand-alone item, and does not apply if the bread is available for sale only as part of another menu item,” the law states.
Flynn Holdings is a restaurant group and real estate investment firm that claims to be the largest restaurant franchisor in the country. The company's restaurant portfolio is extensive and includes more than 444 Applebee's restaurants, more than 280 Taco Bell locations, more than 133 Panera Bread cafes, 367 Arby's restaurants, 937 Pizza Huts and 194 Wendy's restaurants, according to its website.
Flynn has been a generous donor to Newsom's political campaigns, including contributing $100,000 to fight the failed recall effort against the governor.
Newsom's statement comes after California Senate Republican Leader Brian Jones called for an investigation into the allegations on Thursday.
“Simply put, campaign contributions should not buy you exceptions to legislation,” Jones said. “This is crony capitalism. It is corrupt and unacceptable.”
Labor unions successfully pushed Assembly Bill 257, also known as the Fast Food Accountability and Standards Restoration Act, through the state Legislature in 2022. At the time, bakeries were exempt from the law as unions, the governor's office and other groups sought to determine what restaurants To which the bill applies.
The initial fast food law, which Newsom signed last September, created a 10-member statewide fast food board and regional boards made up of worker and employer representatives to set California's minimum wages, hours and working condition standards. Under the law, the council could have increased the minimum wage to $22 an hour in 2024 for employees of chains with more than 100 restaurants.
Fast food companies quickly launched a successful campaign to qualify a ballot referendum to repeal AB 257, which temporarily halted the law from taking effect until a statewide vote in November 2024.
Under a new agreement reached between fast food companies and workers last year, the referendum will be removed from the ballot and workers will receive a pay increase of up to $20 an hour starting this year. Bakeries are still exempt from the law.
