California Lawmakers Scramble To Carve Out Exemptions for New Minimum Wage Law Following ‘Panera-Gate’ Scandal Implicating Governor Newsom

California businesses are planning to cut hundreds of jobs in an effort to reduce costs ahead of the state’s new $20 fast food minimum wage standards going into effect on April 1. The restaurants, especially pizza shops, are employing a variety of tactics to be able to afford the new wage hikes by reducing other operating costs — including letting go of drivers, raising prices, and reducing hours, the Wall Street Journal reports. Franchisees for Pizza Hut and Round Table Pizza plan to lay off more than 1,000 delivery drivers this year, the outlet notes, and other franchise owners are looking to expand in new states in lieu of California. Some chains, like Jack in the Box, are turning to technology to offset human labor costs and are testing machines to make fried food and dispense drinks. Governor Newsom on Monday signed into law several additional exemptions to the new minimum wage law after facing backlash for a scandal dubbed “Paneragate.”Assembly Bill 1228, the original law raising fast food minimum wages to $20 an hour from $16 an hour, had an exemption for chains that bake and sell bread as standalone items. The seemingly-random carveout sparked confusion and backlash as it appeared to give Panera Bread a free pass on the new standards.A top beneficiary of the exemption, as Bloomberg reported, was billionaire Greg Flynn, who owns two dozen Panera franchises in California and has donated tens of thousands of dollars to Mr. Newsom. California Republicans demanded an investigation into the carveout, calling it “pay-to-play politics” in a letter to the state’s attorney general, Rob Bonta. “The carveout, which was demanded by the Newsom administration, puzzled industry experts, as it appears to lack any justification based on the unique characteristics of such restaurants,” the letter from several state Republican lawmakers reads.“The public deserves to know if this exemption was granted based on Mr. Flynn’s bankrolling of Gov. Newsom’s reelection campaign,” the letter notes, adding that equal treatment under the law is fundamental and that “even the appearance of corruption undermines our constituents’ trust in their leaders.”Mr. Newsom has since said that Panera is not exempt from the law and has called the Bloomberg report and subsequent scandal “absurd.” On Monday, Mr. Newsom signed into law Assembly Bill 610, which amends the original law to add new exemptions. The new law expands the scope of restaurants that are excluded from the definition of “fast food restaurant” to include restaurants in “airports, hotels, event centers, theme parks, museums, and certain other locations.” These locations, the legislation notes, “generally do not share the same characteristics as traditional fast food restaurants that are part of national fast food chains,” because larger chains typically have “distinct economics and a captive customer base, are often operated subject to concession or food service contracts, and have different employment structures.”The exemptions were authored by a state assembly member, Chris Holden, who noted that many of the exempted enterprises “have historically established compensation and working conditions in excess of the new standards set by AB 1228” and “do not fall within the fast food industry covered by the law.”Yet some of the Republicans who demanded an investigation into the Panera scandal appear skeptical of the added exemptions. One assembly member, James Gallagher, voted no in what he called a “protest vote” because of how “shady” the process around the legislation has been, including the Panera exemption.

California Lawmakers Scramble To Carve Out Exemptions for New Minimum Wage Law Following ‘Panera-Gate’ Scandal Implicating Governor Newsom

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