SACRAMENTO, California — A wealthy campaign donor to California Gov. Gavin Newsom said the Panera Bread restaurants he owns will start paying workers at least $20 an hour on April 1 after controversy over whether a new minimum wage law for fast-food workers applies to its companies.
California’s statewide minimum wage is $16 per hour. Newsom signed a law last year that says fast-food restaurants that are part of a chain with at least 60 locations nationally must pay their workers at least $20 an hour starting April 1. But the law does not apply to restaurants that have their own bakeries to make bread and sell it as a standalone menu item.
That exception seemed to apply to restaurants like Panera Bread. Last week, Bloomberg News reported that Newsom had pushed for such a divestiture in favor of donor Greg Flynn, whose company owns and operates 24 Panera Bread restaurants in California.
The Democratic governor and Flynn denied the report, with Newsom calling it “absurd.” Newsom spokesman Alex Stack said the administration’s legal team analyzed the law “in response to recent news articles” and concluded that Panera Bread restaurants are likely not exempt because they use bread to be mixed off-site.
Flynn has not said whether he agrees with the Newsom administration’s interpretation. But on Tuesday, he announced that all Panera Bread restaurants his company owns and operates will pay all hourly employees a tipped wage of “$20 per hour or higher.”
“At Flynn Group, we care about people and believe our people are our most valuable assets,” said Flynn. “Our goal is to attract and retain the best team members to deliver the restaurant experience our guests know and love.”
Flynn had previously said the exemption has “very little practical value” because — even if Panera Bread restaurants were exempt — its fast-food competitors were not exempt and Panera would have to pay comparable wages to attract and retain workers .
He declined an interview request through a spokesperson.
There are 188 Panera Bread restaurants in California. Representatives for Panera Bread did not comment Wednesday on whether they believe the minimum wage law applies to all of their restaurants.
Chris Micheli, a California lobbyist and adjunct law professor at McGeorge School of Law, said Flynn likely would have had a good case had he chosen to challenge the Newsom administration’s interpretation of the law. The law defines what a fast food restaurant is, saying it is not an establishment that “operates a bakery that produces bread for sale on the premises of the establishment.”
The law goes on to say that the exemption only applies “when the establishment offers bread for sale as a stand-alone menu item, and does not apply if the bread is for sale solely as part of another menu item.”
“On its face it seems like it would apply, but a court may have to determine what is in the word ‘produce’ before the exemption applies,” Micheli said.
As for which businesses would be exempt from the law, Newsom’s office said the newly created Fast Food Council “can develop regulations and the Labor Commissioner has enforcement authority over individual claims based on the facts of individual cases.”
“Ultimately, the court may have to make the final ruling,” said Newsom spokesman Alex Stack.
Last week, Flynn denied requesting an exemption or “special considerations.” He said he participated in a group meeting with some of Newsom’s staff and other restaurant owners. He said that if the intent of the bill was to address labor law violations in the fast-food industry, he suggested that the bill make a distinction between fast-food restaurants and “fast-casual restaurants.”
In an interview with KNBC in Los Angeles earlier this week, Newsom said negotiations on the bill included “some discussions around bakeries and this and that,” but he said those conversations were only “as it relates to the exceptions and the specifics That This deep coalition, which also included unions and representatives of the fast food industry, has come to an end.
The political fallout from the issue could linger. Republicans in the state legislature have called for an investigation. While Flynn won’t benefit from the bill’s exemption now, that likely won’t stop Newsom’s opponents from using the allegations against him.
“Anyone who wants a shot at Newsom will use this. That’s just politics,” said Kevin Liao, a California-based Democratic political consultant. “When you have someone who many people think has national aspirations, they will pick every scab that exists and try to exploit it.”
