California GOP calls for investigation into Newsom’s ties to Panera franchisee exempt from minimum wage law
Newsom pushed for the exemption which allows restaurants baking and selling bread as a standalone item to continue paying a lower minimum wage
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California Republican lawmakers are calling on Attorney General Rob Bonta to investigate Gov. Gavin Newsom’s ties to a billionaire Panera Bread franchisee and the restaurant’s exemption from the state’s $20 minimum wage.
The Democratic governor had pushed for the exemption, which allows restaurants baking and selling bread as a standalone item to continue paying the current rate of $16 to its employees. That means Greg Flynn, a longtime donor to Newsom, stands to save hundreds of thousands of dollars a year for each of his company's two-dozen Panera Bread franchise locations in California.
Democrat California Gov. Gavin Newsom and one of his longtime billionaire donors are hitting back at a recent report that suggested the two were mutually benefiting from an exemption to the state's new $20 minimum wage regulation for the fast food in (Getty Images / Getty Images)
On Monday, 16 additional Republican lawmakers joined the call for Attorney General Bonta, requesting that he "initiate an independent and unbiased investigation into the matter."
In a joint letter, the signatories noted that the carveout exemption, "puzzled industry experts, as it appears to lack any justification based on the unique characteristics of such restaurants."
They noted that in the months surrounding the passage of the law, AB 1228, Flynn, "a longtime acquaintance of Gov. Newsom, contributed tens of thousands of dollars to the governor’s reelection campaign."
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Assemblyman Josh Hoover, R-Folsom, said Californians "deserve to know" if Newsom did indeed help "exempt one of his largest political donors from a bill that harms small businesses."
Republican Senator Scott Wilk of Santa Clarita said the "arbitrary carve-out smacks of pay-to-play politics, and should be looked at seriously to determine if that’s indeed what happened."
"The governor has a history of abusing his executive power with backdoor deals like he did with Kaiser. Californians deserve to know the truth," said Republican Senator Brian Dahle of Bieber. "He holds the highest office in this state and should be leading by example, not recusing himself and dismissing it as just ‘sausage-making.’"
California Governor Gavin Newsom attends an event with fellow governors in the East Room of the White House on February 23, 2024, in Washington, DC. (Chip Somodevilla/Getty Images / Getty Images)
The "sausage-making" refers to Newsom’s comments when asked by KCRA 3 why the exemption was in AB1228 when he signed the law in September 2023. The governor said it was "part of the sausage making … part of the negotiations."
Attorney General Bonta told KCRA 3’s Ashley Zavala on Monday that his office received the letter last week and is "reviewing it."
"We receive many letters every day … and we take them seriously. And we review them and we respond appropriately and we’ll do the same thing here," he said.
Gov. Newsom has denied reports that he pushed for the exemption, or that it had anything to do with his ties to Flynn. His office has said Panera Bread is not exempt from the new law and has called the story "absurd."
"Our legal team has reviewed and it appears Panera is not exempt from the law," Alex Stack, a spokesperson for the governor's office said.
Flynn said in a statement last week that he opposed the initial legislation and suggested fast casual restaurants like bakeries, bagel shops and delis be excluded "if the intent of the bill was to address alleged labor code violations in fast food restaurants."
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But he denied asking for "an exemption or special considerations" and said he was surprised when the exemption appeared in the final bill. He said he met with Newsom's staff about the bill alongside other restaurant owners but did not speak to the governor about it.
The Flynn Group and Flynn Properties operate 2,600 restaurants and fitness centers across 44 states, according to the company’s website. Campaign finance records show Flynn Properties and Greg Flynn — the founder, chairman and CEO — have donated more than $220,000 to Newsom’s political campaigns since 2017. That included a $100,000 donation to Newsom’s campaign to defeat a recall attempt in 2021.
The California Restaurant Association said it was "involved in virtually every meeting" on the bill, "including the final negotiations in the governor's office."
The new law goes into effect in April.
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FOX Business has reached out to Bonta’s and Newsom’s office for additional comment.
FOX Business’ Brandon Gillespie, Joe Schoffstall and The Associated Press contributed to this report.