Newsom Donor Greg Flynn Agrees to Pay $20 Minimum Wage Amid ‘PaneraGate’ Scandal

Panera Bread franchisee and Newsom donor Greg Flynn announced on Wednesday that he would be complying with the AB 1228 $20 per hour wage law for fast food companies when it begins next month following over a week of backlash against him and Governor Gavin Newsom over allegations that he had originally been exempt to the law because of his donor ties with Newsom.

When AB 1228 was passed last year, all fast food companies were covered under the bill, directing them to make the new minimum wage for their industry only from $16 an hour to $20 an hour. Initially there were only a few exemptions: certain restaurants in grocery stores, and restaurants with on-site bakeries, with Panera Bread being the largest one exempted. For months, this went without question, as the reasoning behind it seemed reasonable. The argument that an on-site bakery and selling bread as a stand-alone item was more of a bakery than a fast food restaurant withstood early questioning. As fast food franchise owners continued to struggle with firing employees, raising prices, or adding expensive new technology to cut down on costs in the lead up to the raise, stories just off-handedly mentioned the exemption in passing.

However, the backlash against AB 1228 with more and more Californians calling for AB 1228 to be repealled or voted on by the people, caused Assemblyman Chris Holden (D-Pasadena) to introduce bills for additional exemptions last month to help soften the blow. This caused some to look back into his initial exemptions and why they were there in the first place.

News outlets began looking into who owned these Panera Bread locations. That’s when it was discovered that Flynn, who owns well over a third of the exempted Panera Bread locations in the state, is a major donor of Governor Newsom, as well as a high school friend.

According to Bloomberg and the Globe in late February, Flynn donated at least $164,800 to Newsom’s political campaigns. Even more, the billionaire went to the same high school as Newsom (Redwood High School in Larkspur) and was involved in many business dealings with him. Following the latest articles exposing the deal, the Governor’s office went into defense mode and denied that Newsom and Flynn’s relationship had anything to do with the exemptions. They also defended their position that the law doesn’t apply to restaurants like Panera Bread. However, public and political responses came in swiftly, with most also finding something troubling about the exemption and how the main beneficiary was a donor of Newsom.

“AB 610’s additional exemptions from this wage-hike law come after a carve-out was provided to bakeries like Panera Bread last year. News reports link this special treatment to an individual Panera franchisee’s relationship – and campaign contributions – to Governor Newsom,” said Senate Minority Leader Brian W. Jones (R-San Diego) and Senate Republicans.

PaneraGate continued on into March, managing to break the regular news cycle and garnering national attention. This led to the announcement on Wednesday by Flynn that Panera would, regardless of the exemption, be raising their minimum wage to $20 an hour beginning April 1st. However, the stated reason was to stay competitive with other restaurants because of the wage change, and not because of “PaneraGate.”

“At Flynn Group, we are in the people business and believe our people are our most valuable assets. Our goal is to attract and retain the best team members to deliver the restaurant experience our guests know and love,” said Flynn on Wednesday. “Regardless of whether the bakery exemption in AB1228 applies to our bakery-cafes, California locations owned and operated by Flynn Group will increase all hourly pre-tip wages to $20 per hour or higher effective April 1.”

Questions around exemptions, allegations remain open following AB 1228 compliance

Despite this, questions continued on Thursday if the exemption was specifically for Flynn. Political experts told the Globe that the timing of the announcement couldn’t have come at a better time.

“You know, Tuesday night and Wednesday. All the stories, all the media focus, was on the elections,” explained Madeline Sawyer, a political media advisor, to the Globe on Thursday. “So Flynn had so many days before and after to release the story, but he put it out when everyone was covering everything else. Suddenly, PaneraGate isn’t as important, and everyone just gives a collective ‘Oh, so they fixed that’ and moves on. But there are still unanswered questions.”

“Like, who specifically put in the exemption? Why didn’t Flynn specifically deny it and just comply? There were just too many ties in this to let it go. However, Flynn’s compliance did make national news the day after, so it wasn’t as quiet as they hoped it probably would be. The last thing Newsom needed was a scandal, or at the very least, an incident like this making him look like he was complicit in something scandalous. He’s likely running for President in 4 years time and he doesn’t need more things like this or LaundryGate or any other scandal with a ‘gate’ as a suffix.”

“His team didn’t handle this correctly, that’s for sure. No matter where you stand on his allegations, his team fumbled here. They tried to laugh off the allegations when instead they should have played it cool and given facts showing how this was just a coincidence. But they didn’t, and now a lot of people are questioning them. And you know, an exemption really benefitting a buddy of his who donates to him? That is worth investigating. It’s very suspicious. Newsom’s team only made it more suspicious and made it into a scandal. Great job guys. Really, all around.”

“What needs to happen now is a more formal investigation into if this was just a coincidence or if there is something going on here. Yes, kudos for Flynn for bumping up the wage to comply. But that isn’t the story. It’s if he and Newsom had originally planned to make it an exemption. That is what needs to be looked at still, and thankfully, it looks like his announcement didn’t kill it.”