Gov. Gavin Newsom’s office has firmly denied the allegations made in a recent Bloomberg News story that suggested the governor sought to exempt bakeries from California’s fast food wage law to benefit a political donor who owns Panera Bread restaurants. Newsom’s spokesperson called the report “absurd” and stated that the company is not exempt from the law.

The Bloomberg story claimed that Greg Flynn, the CEO of a restaurant group that operates Panera locations, had lobbied Newsom’s top aides to reconsider the classification of fast-casual chains like Panera as fast food establishments. It was also alleged that the Service Employees International Union California State Council agreed to exclude restaurants with bakeries in order to gain the governor’s support for the legislation, citing Newsom’s relationship with a Panera franchisee.

However, Newsom’s spokesperson, Alex Stack, stated that the governor never met with Flynn regarding the bill and that the allegations are baseless. The governor’s legal team reviewed the situation and determined that Panera is not exempt from the law.

The governor’s office emphasized that the legislation in question was the result of extensive negotiations over a two-year period, during which Newsom administration officials engaged with numerous business owners and union representatives. The inclusion of Panera in the law hinges on whether the company produces its own bread on site or sources it from a central facility.

According to a source involved in the discussions, bakeries are exempt from the higher wage requirements if they sell bread as a stand-alone menu item. However, the exemption does not apply if the bread is only available as part of another menu item.

Flynn Holdings, the company led by Greg Flynn, is a prominent restaurant group and real estate investment company that boasts a vast portfolio of franchises, including numerous Panera Bread cafes. Flynn has been a generous donor to Newsom’s political campaigns, contributing significant amounts to support the governor.

Following the allegations, California Senate Republican Leader Brian Jones called for an investigation, stating that campaign contributions should not influence legislative decisions. Jones criticized the perceived connection between donations and legislation as crony capitalism and unacceptable.

Assembly Bill 257, also known as the Fast Food Accountability and Standards Recovery Act, was passed by the California Legislature in 2022 with initial exemptions for bakeries. The law established a fast-food council to set standards for minimum wage, employee hours, and working conditions in the fast food industry.

Fast-food companies successfully qualified a referendum to reverse AB 257, which was set to increase wages for fast-food workers. However, a new agreement between fast-food companies and labor organizations removed the referendum from the ballot and implemented a pay raise for workers, excluding bakeries from the law.