Extra dough | California Panera restaurants to raise minimum wage to $20 per hour after scrutiny on law exemption

California Panera restaurants to raise minimum wage to $20 per hour after scrutiny on law exemption

California Panera Bread restaurants will raise the minimum wage for its employees to $20 per hour after owner Greg Flynn faced criticism on the franchise's exception from state-mandated pay hikes.

A new minimum wage state law will come into effect in California on April 1. It requires all fast food employers to increase the minimum pay for workers from $16 per hour to $20 per hour, except for employees working for businesses that bake or sell bread as a standalone product.

Flynn, the billionaire owner of what is considered the world's largest franchisee with more than 2,600 restaurants, including 24 Panera Bread stores in California, has been accused of benefiting from the carveout as a former schoolmate and donor to California Governor Gavin Newsom’s political campaigns.

This development follows a story from Bloomberg News claiming Flynn asked top aides of Gov. Newsom to “reconsider whether fast-casual chains such as Panera should be classified as fast food.”

The article alleges the decision to omit businesses that produce bread as a standalone item was based on “the governor’s longstanding relationship with a Panera franchisee.”

Flynn, Gov. Newsom, and the Service Employees International Union California State Council (SEIU California) all deny this claim.

“The governor never met with Flynn about this bill, and this story is absurd,” says Alex Stack, a spokesperson for Newsom. Stack even confirmed the California Governor’s legal team reviewed the legislation and found the carveout may not even exist. “It appears Panera is not exempt from the law,” he adds.

“There was never an intent to exclude one company, but instead to provide clarity on what constitutes a fast food establishment,” says Tia Orr, executive director of SEIU California.

But actions speak louder than words, and Flynn’s decision to raise the minimum wage for Panera Bread employees irrespective of the carveout appears to clarify his stance. “At Flynn Group, we are in the people business and believe our people are our most valuable assets,” says Flynn. “Our goal is to attract and retain the best team members to deliver the restaurant experience our guests know and love.”

Previous studies have found ties between minimum wage increases and gains in motivation, productivity, and retention.

Flynn’s commitment to raise pay as a means to attract and retain team members may come as positive news to fast food and service employees across the U.S.

According to its website, Flynn Group’s portfolio of 2,600 restaurants includes more than 444 Applebee’s restaurants, more than 280 Taco Bells, 133 Panera Bread cafes, 367 Arby’s restaurants, 937 Pizza Huts, and 194 Wendy’s restaurants.

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The Fast Food Accountability and Standards Recovery Act was signed by Newsom in September 2023, at the time exempting bakeries whilst stakeholders including SEIU California tried to create consensus on which restaurants would fall under the law.

This resulted in the creation of a council comprised of ten labor and employer representatives to collectively set standards on working conditions, employee hours, and minimum wage standards.

Initial plans to increase the minimum wage in California to $22 an hour for employees in restaurants with more than 100 locations were put on hold before an agreement was reached to bump the minimum pay to $20 per hour.

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