An attorney with the California Labor Commission earlier this month clarified a controversy surrounding California Gov. Gavin Newsom and a franchisee of Panera Bread, regarding whether the franchisee’s fast-casual restaurants are exempt from the state’s new $20-an-hour wage law for employees.
At issue is an amendment added at the last minute to the minimum wage law in question—Assembly Bill 1228, set to take effect April 1—exempting bakeries.
Bloomberg published a story last month suggesting donations to Mr. Newsom from Greg Flynn, who owns 24 Panera Bread locations in California, had something to do with the late carveout.
But Miles Locker, an attorney for the state’s labor commissioner, confirmed on March 15—during the first meeting of a fast food council created as part of the law—that dough made for Panera is produced off-site, and therefore, the restaurant is not a bakery exempt from the law.
“What we determined is that if you have a company that bakes pre-made dough that did not get produced at the location ... it doesn’t come under the bakery exemption,” Mr. Locker said.
Bread would need to be produced on-site, baked at the location, and sold as loaves, according to the labor commission.
The only business that appears to qualify for the exemption is the Great Harvest Bread Company, which has four locations in the state and about 200 nationwide.
The issue was part of the discussion as hundreds of fast-food workers came together to witness the first meeting of California’s Fast Food Council and voice support for a new minimum wage law while others looked for answers about alleged backroom dealings and secret arrangements during the lawmaking process.
With allegations of pay-to-play schemes and nondisclosure agreements related to new laws regulating the fast-food industry in the state, regulators in the newly formed panel stressed the importance of transparency and committed to following all laws regarding public access to government meetings.
“The only way [issues] get solved is if they’re talked about,” S.G. Ellison, council member, said during the meeting.
Authorities granted to the new council include raising the minimum wage by no more than 3.5 percent annually or the rate of inflation—whichever is less—beginning Jan. 1, 2025.
During the public comment portion of the meeting, dozens of fast-food workers celebrated the incoming pay raises.
One commenter, Cicely Simpson—vice president for global public policy and government affairs for Starbucks—called on councilors to evaluate more than hourly wages, arguing that benefit packages should be considered and incentivized, and she pointed to her employer as an example.
With about 45,000 employees and 2,100 stores in California, the coffee chain offers comprehensive health care coverage to part- and full-time employees, among other benefits, she said.
“We believe that looking at total compensation offers the best perspective for how we fairly compensate our green apron partners in our stores,” Ms. Simpson said. “Any conversation involving benefits and total compensation is absent from these initiatives.”
Another industry insider noted a need to address challenges but did not offer specifics.
“There are a lot of complex issues in this bill,” Matthew Sutton, senior vice president of government affairs and public policy for the California Restaurant Association, told the panel.
He called the council’s authority “unprecedented” and said the opportunity to collaborate with the group was an “experiment” that he looked forward to.
During closing remarks, one council member acknowledged the arduous path to forming the council and promised more progress soon.
“It was a long journey to get to this place, and we’re sitting shoulder-to-shoulder with leaders within the industry,” Council Member Joseph Bryant said.
He said the reaction by some businesses to cut jobs and hours in response to higher minimum wages is challenging.
“In response to workers fighting to lift their wages, we’re seeing employers, in the moment, cutting hours, and it hasn’t even gone into action yet; it’s not even April 1,” Mr. Bryant said. “We’re hearing talk about prices going up based on the fact that workers fought to get what they deserve.”
Citing statistics that show that the cost of living for a single adult with no dependents is $27 per hour in some areas in California, he said more raises are needed.
“And not even totally what they deserve, because if and when we get there, we’ll be able to get to a living standard, not just $20 an hour,” he said.
One of his colleagues on the dais agreed and told the attendees that council members are working to get more accomplished.
“It’s an honor to actually have this council because this is what we’ve been waiting for,” Councilor Anneisha Williams said. “There’s more to come, so just stay tuned.”
The committee will be meeting at locations throughout the state, with the next date and location yet to be determined.
The Fast Food Council and the Department of Industrial Relations did not respond to requests for comment by press time.
