Facing Backlash, Newsom Says Fast Food Carveout Doesn't Apply To Donor's Company

Gov. Gavin Newsom’s administration pushed back Thursday on suggestions that he helped a donor get out of paying the state’s new minimum wage for fast-food restaurant workers.

Seeking to contain a backlash that has roiled the Capitol since a Bloomberg News story published, the administration said an exemption for restaurants that produce their own bread on premises doesn’t apply to the Panera restaurant chain owned by donor and former high school classmate Greg Flynn.

“The Governor never met with Flynn about this bill and this story is absurd," spokesman Alex Stack said in a statement. "Our legal team has reviewed and it appears Panera is not exempt from the law.”

The Bloomberg story added further controversy to an already bitter debate over a law that will raise the minimum wage for fast-food workers from $16 to $20 starting in April. The story detailed how the 2023 bill was amended to carve out restaurants that bake bread for sale onsite.

Republicans accused the governor of rank cronyism. Assembly Republican Leader James Gallagher (R-Yuba City) called for an investigation into what his counterpart, Senate Minority Leader Brian Jones (R-San Diego) called “Corrupt and UNACCEPTABLE.”

The bill in question emerged from months of negotiations, presided over by Newsom’s office, between organized labor and the fast food industry. The two sides ultimately forged a truce that averted a ballot fight over a referendum challenging a more sweeping fast food labor law that Newsom had signed in 2022.

The bill was a priority for the Service Employees International International Union, a powerful labor group and stalwart ally to Newsom and other Democrats. Chains spent millions of dollars to qualify the ballot initiative and battle a followup bill.

A compromise law raises wages while stripping out provisions that would have allowed a new industry council to set workplace regulations — and it exempted bread-baking establishments. In earlier remarks to reporters, the governor called the bread rule part of “the sausage making.”

Newsom is facing criticism for that process as conservative foes once again seek to trigger a recall election, reprising an effort that failed overwhelmingly in 2021. That backlash was fueled in part by the revelation Newsom had dined at an opulent restaurant after placing the state under a Covid-19 lockdown that limited public gatherings.