California fast food council to meet after Panera scandal. Who will get minimum wage exemption?

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California’s fast food council will convene this week with a major question in play: Who is actually eligible for a mysterious exemption to the new minimum wage law that takes effect next month?

The council is preparing to meet for the first time just weeks after Bloomberg reported Panera Bread franchisee and Gov. Gavin Newsom donor Greg Flynn may have been behind a carve-out for bakery restaurants that produce and sell bread as a standalone menu item.

In response, the Newsom administration said its own legal experts did not believe Panera is exempt from the wage hike. The governor’s office suggested the word “produce” — which the Assembly bills creating the council and establishing the minimum wage do not define — means restaurants must bake their bread entirely on-site for the carve-out to apply. Panera makes its dough at central locations and delivers it to retailers for baking.

Flynn, who owns 24 Paneras in California, has said he will abide by the new $20-per-hour wage. But it is unclear what will happen at the more than 160 remaining Panera locations throughout the state.

And no one, including bill author Assemblyman Chris Holden, D-Pasadena, has been willing to pinpoint who asked for the very specific bakery exemption. None of the parties involved in the measure have explained which establishments it might apply to or why bakeries should not have to pay workers the new higher wages.

John Logan, a professor of labor and employment at San Francisco State, called the bakery exemption “bizarre” because it is so narrow without specifying why it is necessary or explaining which restaurants it does and does not cover.

“I’ve not heard any big reasons why they should be exempt,” Logan said. “If the purpose is to deal with poverty-level wages, poor benefits and poor working conditions amongst a specific group of workers, Panera Bread workers have just as bad conditions, just as low wages as many of the fast food workers who clearly will benefit from this legislation.”

Newsom spokesman Alex Stack suggested the council, along with California Labor Commissioner Lilia García-Brower, may have a role in determining who will need to abide by the new minimum wage. He said the group does have the authority to develop recommendations clarifying which kinds of restaurants are subject to the new law. Stack cited another exemption, related to restaurants located inside grocery stores, as one that could also require some clarification.

But a member of the council, who spoke to The Sacramento Bee on the condition of anonymity because of the sensitive nature of the talks, said they do not anticipate the council will determine who is party to the exemption.

Workers who do not think they are being paid enough after the new minimum wage law takes effect on April 1 will be able to file lawsuits under the Private Attorney General Act, which allows employees to receive civil penalties for labor code violations. Workers could also report labor law violations to the Labor Commissioner’s Office.

Inaugural fast food council meeting

The nine-member council — made up of fast food franchise and industry representatives, employees and worker advocates — will gather in Oakland on Friday, the legal deadline for members to come together.

Newsom appointed seven members of the council, and the Senate Rules Committee and Assembly Speaker Robert Rivas, D-Hollister, selected two labor leaders. There are two additional non-voting members from the California Governor’s Office of Business and Economic Development and the California Department of Industrial Relations.

The governor signed Assembly Bill 257 in 2022 to create the the council, and fast food companies and franchise owners quickly moved to challenge it with a 2024 ballot measure campaign. Labor advocates, mostly represented by Service Employees International Union, and industry leaders in 2023 brokered a compromise that led fast food companies to drop the initiative to repeal AB 257.

Holden picked up AB 257 in 2022 from former San Diego Assemblywoman Lorena Gonzalez Fletcher after an earlier version died in 2021. Last year’s deal required him to revise his 2023 follow-up measure, Assembly Bill 1228.

The bill would have held fast food companies and franchise owners jointly liable for workplace abuses. Holden and labor advocates agreed to remove joint liability in exchange for a $20-per-hour fast food worker minimum wage and allowing a weakened version of the council to move forward.

Members can develop pay standards, but direction around other issues needs to go through the administrative rule-making process, subject to approval by state labor agencies and the labor commissioner.

The minimum wage and council recommendations apply only to fast food restaurants with 60 or more locations nationwide.

The agenda for the first meeting includes a swearing-in ceremony, a discussion of the council’s function and time for public comments. Nick Hardeman, chief of staff to former Senate President Pro Tem Toni Atkins of San Diego, will chair the council as a member unaffiliated with the fast food industry or labor.

“We’re looking forward to the first convening of the fast food council and getting to work on fulfilling the duties as outlined in the bill,” Hardeman said in a statement. “That work will include bringing together diverse sectors of the fast-food industry, listening to stakeholders, and establishing a process for making decisions.”