California governor grants new exemptions for minimum wage in state fast food industry

Just a few days before the implementation of California’s $20 fast food minimum wage on April 1, Governor Gavin Newsom signed a series of exemptions that expand beyond the initial exemption supposedly created specifically for Panera Bread. Reports suggest that a prominent Panera franchise owner, who is also a donor to Newsom, played a role in securing the Panera exemption.

Fast food restaurants in airports, hotels, large event centers, theme parks, museums, gambling establishments, corporate campuses, and certain public lands now have new exemptions. These exemptions were backed by the state’s major unions as a way to tidy up the $20 wage and fast food workplace oversight council negotiations that took place behind closed doors under non-disclosure agreements. However, these negotiations left some union groups unaware of the details.

After being promised the cleanup bill, which offers exemptions for the types of facilities their unions have considerable membership in, these groups only supported the $20 wage bill. This move aims to safeguard their existing union agreements, particularly from the fast food council.

The fast food wage and labor council, in conjunction with the exemptions, aims to offer workplace protections and wages for non-unionized fast food employees that are comparable to, albeit not as comprehensive as, those provided by unions. This is done without compromising the existing membership and agreements of the unions.

Assemblymember Chris Holden, D-Pasadena, who authored the state’s $20 fast food minimum wage law, has claimed that he had no knowledge of the exemption for Panera included in last year’s legislation. The exemption specifically applies to major fast food chains that bake bread on-premises and sell it as a standalone item, a category that only includes Panera.

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The Panera exemption sparked widespread criticism when it was revealed that billionaire Greg Flynn, the largest franchise owner in the United States and the second-largest Panera operator globally, had utilized his connections to obtain a special carve-out. Flynn, who is also a significant contributor to the governor’s campaign, faced scrutiny for leveraging his influence in this manner.

Holden took an inactive transportation bill and reworked it to concentrate on the exemptions to his minimum wage law for fast food establishments, before delving into the Panera exemption.

The Service Employees International Union, which is Holden’s largest donor, and Unite Here!, a union representing workers in the hospitality industry, including those in hotels, restaurants, airports, sports arenas, and convention centers, have both endorsed the new cleanup bill.

The unions stated that in many parts of California, workers at fast food establishments are not directly employed by the franchisor, franchisee, or restaurant operator. They emphasized that the compensation for these workers already surpasses what would be mandated under AB 1228 by a significant margin, sometimes exceeding $10 or even $20 per hour.

California will see the implementation of its fast food minimum wage on April 1, leading to significant consequences for some businesses. In response, a Pizza Hut franchise operator in California has made the difficult decision to lay off 1,200 drivers in anticipation of the wage increase. Similarly, Chipotle and McDonald’s have announced that they will be raising prices to offset the impact of the wage hike.

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