Sacramento, California – California restaurant billionaire Greg Flynn, who was originally thought to be exempt from the state’s new $20 fast-food minimum wage law, has announced that he will now raise the pay of his employees to $20 per hour after all. Flynn, a significant donor to Democratic Governor Gavin Newsom, came under scrutiny when it was reported that his Panera franchises would benefit from a “bread exemption” loophole that would allow them to avoid the higher minimum wage by producing and selling bread on the premises.
Following public backlash, Flynn stated that he never asked for special treatment and expressed surprise that the “bread exemption” was included in the final legislation. He also clarified that he had only met Governor Newsom many years after they both attended the same high school. The governor’s office has dismissed the reporting on the bread exemption as “absurd,” although they did not deny its existence in the law.
The new legislation, set to take effect on April 1, will increase the base salaries at fast-food restaurants with over 60 locations nationwide to $20 an hour from the current $16 an hour. It also allows for the minimum wage to be adjusted annually based on inflation. While labor advocates have praised the law, companies operating franchises in California have raised concerns about the substantial increase in costs due to the higher wages.
Flynn’s decision to raise wages was motivated by the desire to attract and retain talented employees who can provide the exceptional restaurant experience that his customers expect. He also acknowledged that competition from other fast-casual restaurants would likely pressure his company to offer market-value wages even if they were exempt from the minimum wage law.
Despite suggestions that the minimum-wage law should exclude fast-casual restaurants like Panera Bread, Flynn maintains that he did not request a carve-out for his franchises specifically. While the bread exemption was initially seen as important to Governor Newsom, further review clarified that Panera would not qualify for it because their bread isn’t fully produced in-house.
In response to the controversy, Tia Orr, the executive director of SEIU California, expressed support for the legal review of the law conducted by the governor’s office and clarified that there was never an intention to exclude any specific company. Flynn himself downplayed the significance of the bread exemption, stating that it had little practical value for his company.
Flynn’s decision to raise wages aligns with the broader goals of the new minimum-wage law, which aims to provide fair compensation to fast-food workers in California. As the April 1 deadline approaches, many other restaurants in the state will also be adjusting their wages to comply with the legislation.
It remains to be seen how the new law will impact the fast-food industry in California and if it will lead to higher menu prices or changes in the employment landscape. However, the controversy surrounding the bread exemption has shed light on the complexities and potential loopholes in minimum-wage legislation, prompting a closer examination of its provisions.