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Gavin Newsom denies Panera minimum-wage carve out, says chain is not exempt from new law

California Gov. Gavin Newsom is now claiming Panera Bread will not be exempt from new fast food worker minimum wage laws as he fights back against allegations suggesting a major Newsom donor and Panera franchise owner received a special carve-out.

At issue is an exemption for bakery restaurants that produce and sell bread in Assembly bills 257 and 1228, which created a fast food council to enact worker protections and set a $20-per-hour minimum wage for employees at qualifying establishments.

Newsom spokesman Alex Stack on Thursday evening called the story “absurd” and said the governor never met with Flynn.

“Our legal team has reviewed and it appears Panera is not exempt from the law,” Stack said in a statement.

Bloomberg on Wednesday reported the bakery exemption came about due to the influence of Newsom donor and Panera franchisee Greg Flynn.

The new minimum wage requirement does not take effect until April, so it is difficult to say which restaurants will ultimately be exempt. It applies to companies with at least 60 locations nationwide. Panera has more than 2,000 restaurants across the country, according to the company website. That includes the two dozen franchises in California run by Flynn’s company, which claims to be the bread chain’s second-largest franchisee.

The governor’s team is hinging its argument on the word “produce,” which AB 1228 does not define. They claim the exemption would apply only to restaurants that make their bread entirely on-site, unlike Panera, which makes dough at central locations to be baked at the company’s retail stores.

Bloomberg also suggested the exemption could apply to restaurants such as Paris Baguette and Great Harvest Bread Co. It is unclear whether those companies, or any others with at least 60 locations, make their bread entirely on-site.

Republican lawmakers on Thursday called the apparent Panera exemption “pay to play.” Senate Minority Leader Brian Jones of Santee, Assembly Republican Leader James Gallagher of Yuba City and Assemblyman Joe Patterson of Rocklin wrote a letter to Attorney General Rob Bonta calling for an investigation into AB 1228.

“As elected representatives, it is our duty to ensure state government serves the people’s interests, not special interests,” they wrote. “The appearance that campaign donations influenced a decision impacting the livelihoods of countless Californians is deeply troubling.”

In a statement late Thursday, Service Employees International Union, which fought for AB 1228, supported the Newsom team’s conclusion about the apparent Panera exemption.

“The conclusion of the governor’s legal team is consistent with our intent as the bill’s sponsors during negotiations,” said Tia Orr, SEIU California executive director, in a statement. “There was never an intent to exclude any one company, but instead to provide clarity on what constitutes a fast food establishment.”

The Flynn Group did not immediately respond to a request for comment.