SACRAMENTO — Loaves of bread may save Panera some dough when California’s $20 minimum wage goes into effect in April. But those savings depend on whether the fast-casual eatery falls within the legal definition of a bakery thanks to a controversial exception baked into the new minimum wage law.
As of Thursday, Gov. Gavin Newsom’s office says it doesn’t.
Approved in September by Newsom, the law states that restaurants with an on-site bakery that sell bread as a standalone item are not considered fast food establishments and are exempt from the wage hike, up $4 from the current hourly rate of $16.
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A recent Bloomberg piece examined how Newsom’s relationship with fast food billionaire Greg Flynn — who owns two dozen Panera locations in California — may have played a role in establishing the exception.
Flynn, a vocal critic of the fast food law who has made donations of $64,800 to at least as high as $100,000 to Newsom over the years, told Bloomberg he had no role in creating the exemption. But people familiar with the situation said Flynn urged Newsom’s aides to revisit whether fast-casual chains should count as fast food.
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Panera representatives did not reply to Bloomberg’s requests for comment.
The governor himself was a proponent of the bread exemption, people familiar with the issue told Bloomberg, and the Service Employees International Union accepted the rule to win Newsom’s support due to his long relationship with “a Panera franchisee,” a person with knowledge of the talks told Bloomberg.
Newsom in the past told reporters the bread exception was “part of the sausage-making” process.
But on Thursday, officials with the governor’s office pushed back on the Bloomberg report, claiming it was half-baked and that Panera doesn’t even qualify for the exemption.
“The Governor never met with Flynn about this bill and this story is absurd,” Alex Stack, a spokesperson for Newsom’s office, said in a prepared statement. “Our legal team has reviewed, and it appears Panera is not exempt from the law.”
To qualify for the exemption, the business must run a bakery that “produces” bread “for sale on the establishment’s premises,” according to the governor’s legal team.
“This distinction is relevant because we understand many chain bakeries (such as Panera Bread) mix dough at centralized off-site locations and then ship that dough to their retail locations for baking and sale,” a legal analysis provided by Newsom’s office stated.
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