Amid bread-based backlash, Newsom says Panera Bread not exempt from minimum wage law

The Governor has faced backlash for the law after a report from Bloomberg this week tying him to one of the chain’s largest franchisees.

California Gov. Gavin Newsom is pushing back against a story that he pushed for an exemption for Panera Bread under the state’s new $20 minimum wage for fast food law. 

A statement from Newsom’s office called the story “absurd.” 


The backstory: Bloomberg reported this week that Newsom pushed for an exemption in the new law, which takes effect on April 1, to allow bakeries that sell bread as a standalone item to not have to pay $20 per hour. 

  • The story connected Newsom to billionaire Greg Flynn, who is a franchisee of Panera Bread. 
  • Flynn has donated to Newsom’s campaigns in the past, and the two overlapped for one year at Redwood High School in Marin County. 
  • Bloomberg reported that Flynn urged Newsom’s aides to reconsider whether fast-casual chains should be classified as fast food, and Newsom ended up supporting the standalone bread selling provision. 

What they’re saying: “The Governor never met with Flynn about this bill and this story is absurd. Our legal team has reviewed and it appears Panera is not exempt from the law,” Newsom spokesperson Alex Stack said in an emailed statement Thursday afternoon. 

State of play: Assembly Bill 1228, which Newsom signed last year, ups fast food minimum wage to $20 on April 1. 

  • The bill carves out an exemption for chain restaurants that operate as a bakery and bakes and sells its own bread. 
  • The law reads as follows: “‘Fast food restaurant’ shall not include an establishment that on September 15, 2023, operates a bakery that produces for sale on the establishment’s premises bread, as defined under Part 136 of Subchapter B of Chapter I of Title 21 of the Code of Federal Regulations, so long as it continues to operate such a bakery. This exemption applies only where the establishment produces for sale bread as a stand-alone menu item, and does not apply if the bread is available for sale solely as part of another menu item.” 
  • According to Panera Bread’s menu, the restaurant chain sells bread as a standalone item. 
  • Patrons can purchase bread from the Panera Bread bakery, which includes French baguette loaves, sourdough loaves, white whole grain bread, focaccia bread, brioche rolls, artisan ciabatta loaves and others.
  • According to KCRA’s Ashley Zavala, Newsom’s attorneys make a distinction in that chain bakeries, such as Panera Bread, mix dough at off-site locations and then ship the dough to the bakeries.
  • AB 1228 does not provide a definition for what it means to produce bread.

The other side: Legislative Republicans called on California Attorney Rob Bonta to launch an investigation into the crafting of AB 1228 on Thursday. 

  • Assembly Republican Leader James Gallagher (R–Yuba City), Senate Minority Leader Brian Jones (R–San Diego) and Asm. Joe Patterson (R–Rocklin) made the official request to Bonta. 
  • They urged Bonta to determine if there was any quid pro quo or impropriety in the decision-making process behind the fast food bill. 
  • “Time after time, Newsom shakes down special interests, then uses his office to set them up with favors at the expense of regular Californians,” Gallagher said. “This type of crooked dealmaking is wrong and exactly why our constituents think the government isn’t looking out for them.” 
  • Patterson added, “California restaurants are getting ready to be crushed by this minimum wage hike, but Newsom’s pal is going to come out doing just fine. Something stinks. We need an independent look at these allegations to restore Californians’ faith in their government.”
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