On February 28, Bloomberg reported that bakery chain Panera would be exempt from California’s AB1228, a law that raises the minimum wage for fast-food workers from $16 to $20 starting April 1. But now it looks like that may not be the case. On February 29, a spokesperson for Gov. Gavin Newsom told the Los Angeles Times that Panera would not be exempt from the law. The spokesperson also denied a claim in the Bloomberg piece, which cited sources “close to the matter,” that Newsom pushed for an exemption that applies to businesses that bake bread and sell it as a standalone item — calling the report “absurd.”
Bloomberg insinuated that Panera’s inclusion in this exemption would allegedly benefit billionaire Greg Flynn, who controls over two dozen Panera restaurants across California and is a longtime donor to the Newsom campaign. In a press conference held on September 28, 2023, Newsom referred to carving out bakeries’ exemption to the law as being part of the “sausage making” of politics. Newsom did not reply to a request for comment from Eater.
In the Los Angeles Times, a spokesperson for Newsom said that Flynn was never involved in conversations around the bill and that their “legal team has reviewed, and it appears Panera is not exempt from the law.” An unnamed source in the story also clarified that the exemption is meant to apply only to bakeries, classified by whether or not the business produces bread and dough on site, or if they bring it in. Under this classification, Panera would not be exempt. Tia Orr, the executive director of Service Employees International Union, said in a statement that, “There was never an intent to exclude one company, but instead to provide clarity on what constitutes a fast-food establishment.” Panera has not commented on the story and did not reply to a request for comment from Eater.
In a February 29 statement cited by ABC News, Flynn denied asking for an exemption, though he did admit to suggesting that businesses like bakeries and bagel shops should be excluded. In the same statement, he also said, “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.”
AB1228 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. AB1228 replaces AB257, a 2022 bill (also known as the FAST Recovery Act) focused on expanding fast-food worker protections. AB257 also established the 10-member Fast Food Council, made up of representatives from both the employee and owner side of the restaurant industry and charged with setting “minimum fast-food restaurant employment standards,” including wages, working conditions, and training. The council will continue to operate under AB1228. The same minimum wage exemption for businesses that bake and sell bread is also included in AB257.
California Assemblyman James Gallagher called for an investigation into Panera’s alleged exemption in a post on X on February 28, calling it a “crooked deal.” According to Bloomberg, Flynn said that he didn’t play a part in building the exemption into the bill, but didn’t reply to further requests for comment regarding his relationship with Newsom. However, Bloomberg reported that Flynn is known to “tout his relationship with Newsom” and in 2014, acquired a Napa Valley resort managed by Newsom’s hospitality company. Eater has reached out to the Flynn Group for comment but has not heard back.
Though AB1228 affects California as a whole, Los Angeles minimum wage is set to rise to $17.28 an hour on July 1, 2024, superseding the stateside $16 minimum.
