Newsom faces questions about ‘sausage making’ in wage legislation

California Governor Gavin Newsom has increasingly become a national presence. He flew to Washington to meet with President Biden, appeared on Sunday news shows and targeted conservative states with ads for reproductive rights.

This week, however, a more local concern abruptly turned its attention to Sacramento: allegations that the Democratic governor favored a campaign donor who owns two dozen Panera Bread franchises by pushing for an exception in a new minimum wage law.

The controversy, caused by a report in Bloomberg, has unleashed a barrage of accusations and counterattacks. Republican leaders in the state legislature have written to California’s attorney general demanding an investigation. Editors have done their part. (“Californians knead answers,” according to the Los Angeles Times op-ed page.) A spokesperson for the governor’s office dismissed the allegation of cronyism as “absurd.”

Political analysts likened the furor to another restaurant-related pickle involving Mr. Newsom.

“It’s hard not to think about the French Laundry,” said Dan Schnur, who teaches political communications at the University of Southern California and the University of California, Berkeley, referring to the 2020 haute cuisine dinner the governor had during the pandemic shutdown that prompted a failed but still troublesome recall attempt against Mr. Newsom.

“It’s déjà vu all over again, although this time Newsom seems to be trying to address it before a small problem turns into a big problem,” Mr. Schnur said. “Yet his office has still not provided a credible explanation for why the bill was drafted the way it was.”

At issue is legislation the governor signed in September that will raise the minimum wage for more than half a million fast-food workers to $20 an hour starting next month.

The legislation codified years of negotiations that had fended off an election battle between the state’s powerful labor lobby and fast-food giants, granting major concessions to both sides. California’s $16 minimum wage would rise to $20 for fast-food workers this year. Lawmakers would abandon a plan to hold fast-food companies legally liable for labor violations at their franchise locations.

At a news conference celebrating the hard-fought deal, the governor said Was asked why the language included an unusually specific exemption for restaurants with on-site bakeries that sold bread as a menu item. “That’s part of making sausage,” he said, attributing the language to “the nature of negotiation.”

“There are a lot of parts to the industry,” he said. “It’s not just Jack in the Box, it’s not just McDonald’s.”

On Wednesday, in a look at the new rules, Bloomberg reported that at least one sector component – ​​Panera – had benefited from the unusual exemption. The report essentially suggested that Greg Flynn, a Bay Area billionaire who has done business with the governor and is a longtime campaign donor, was a driving force behind the split.

Mr. Flynn’s company, which generates billions of dollars in sales from an assortment of franchises, owns two dozen Panera franchises in California, the report said, and Mr. Flynn and Mr. Newsom attended the same high school in the Bay Area. Mr. Flynn has donated just over $200,000 to Mr. Newsom’s campaigns over the past seven years, campaign records show.

Republican legislative leaders lashed out, calling the report “the latest example” of California’s ambitious governor’s favoritism toward campaign supporters.

“It’s not, ‘Oh, hey, this is just politics,’” said James Gallagher, the Republican leader in the Assembly who represents the rural northern Sacramento Valley. “This is not how our government should function.”

Conservative activists launched a new recall campaign against Mr. Newsom on Monday, though political advisers from both parties said the bid has virtually no chance of passing. It is the seventh attempt against Mr. Newsom; the only one that reached the ballot was decisively rejected by voters in 2021.

In contrast to his slow response to the fallout from the French Laundromat, which boosted recall signatures during the pandemic, the governor’s response to the Panera riot was swift and strong.

“The Governor never met with Flynn about this bill and this story is absurd,” Alex Stack, an administration spokesman, said in a statement. Mr. Newsom has raised tens of millions of dollars in campaign donations from thousands of donors and has met with dozens of business owners during negotiations over the bill, administration officials said.

In addition, Mr. Stack said that under the bakery exemption, the “establishment” must operate a bakery that “produces” bread for sale on the premises of the establishment. Many chain bakeries, such as Panera Bread, mix dough at centralized off-site locations and then ship that dough to retail locations to bake and sell.

“Our legal team has reviewed it,” Mr. Stack said, “and it appears that Panera is not exempt from the law.”

Tia Orr, executive director of SEIU California, a service workers union that was instrumental in negotiating the law, issued a statement saying that “the intention was never to single out any one company, but instead of this to provide clarity about what a fast food restaurant entails. .”

Similarly, a memo on Friday from Jot Condie, the president and chief executive of the California Restaurant Association, to the group’s board of directors claimed that the group was “involved in virtually every meeting” on the bill, “including the last negotiations in the governor’s office.” It added that “there was never any discussion – or even mention – of any restaurant brand seeking relief from the law, including Panera Bread.”

In a statement to television station KCRA, Mr. Flynn said that while he opposed the initial fast-food law, so did “thousands of other restaurant owners in California” and that “at no time did I request an exemption or special considerations asked. ”

Mr. Flynn said he had met with the governor’s office, but not with the governor himself. He hadn’t tried to exclude his own restaurants, but the entire category of “fast-casual” sit-down restaurants. He said he was “surprised” to see the special bakery exemption because it was too narrow to have much practical value. As wages rise in the fast-food sector, fast-casual restaurants will need to raise wages to compete for workers.

Moreover, he said he did not meet the governor in person until he was an adult. Although they attended the same high school, he said in the statement, “I never met him there.”

Keith Miller, a Subway franchisee in Northern California who staunchly opposed the fast-food legislation, said that while the bread exemption had always struck him as strange, it is far from his biggest concern about the new law.

Mr. Miller, an advocate for fellow restaurant owners, said too few franchisees were involved in discussions about shaping the legislation with Mr. Newsom’s team and union leaders.

In recent months, Mr. Miller said, he has received calls from several other franchisees about next steps and how to prepare financially for when the law takes effect on April 1.

“Our opposition is not just based on wages,” he said. “Why is the law separated and only going after fast food restaurant franchisees? People who work in big stores or hotels don’t need fair wages?”

Willie Armstrong, chief of staff for Chris Holden, the Democratic Rep. from Pasadena who sponsored the legislation, said the Legislature would offer no insight Friday into the exemption for bread bakeries.

“However, half a million fast food workers in our state now have the power to improve their workplace,” Mr. Armstrong said in a statement.