Panera Bread has been exempted from following California's new minimum wage law due to the alleged relationship between its owner and Gov. Gavin Newsom, D-CA, according to several reports.
On April 1, a new California law will take effect. Under the new law, fast-food workers will begin earning $20 per hour, up from the current $16.21. However, establishments that operate "a bakery that produces for sale on the establishment's premises bread" as fast food are exempted from the law.
"This exemption applies only where the establishment produces for sale bread as a standalone menu item and does not apply if the bread is available for sale solely as part of another menu item," the law's text said.
What Is Behind the Exemption?
It is unclear why the line was drawn at bread, but Gov. Newsom allegedly pushed for the exemption that would allow restaurants baking and selling bread as a standalone item to continue paying their employees the current rate, Bloomberg reported, citing people familiar with the matter. The sources claimed Newsom pushed for the exemption because Greg Flynn, a billionaire and longtime donor to his campaign, has two dozen Panera Bread locations in California.
In 2021, Flynn donated $100,000 to help Newsom fight a recall. He later donated over $64,800 in 2022 for Newsom's reelection campaign, per The Sun.
Flynn denied he played a role in the bread exemption, but people who spoke to Bloomberg claimed the billionaire "urged the governor's top aides to reconsider whether fast-casual chains such as Panera should be classified as fast food."
Newsom, on the other hand, said Panera's exemption was "part of the original bill" and "the negotiation."
"[The Panera exemption was part of the] original bill, and we went back and forth, and that was part of the negotiation. It's the nature of negotiation trying to get a referendum off the ballot," he said, as quoted by Business Insider.
Alex Stack, a spokesperson in the Governor's Office, also echoed Newsom's statement in an emailed letter to KTLA 5.
"This legislation was the result of countless hours of negotiations with dozens of stakeholders over two years. Staff in the governor's office met with dozens of business owners as well as union representatives, as is expected when policies of this consequence are moving through the Legislature," the letter read.
