Labor agency says Panera not exempt from new wage law

Only a very limited number of California bakery restaurants if any will be exempt from the state's fast food minimum wage law starting next month, according to standards the Labor Commissioner's Office released on Friday.

The regulations stipulate a restaurant can avoid paying the new $20-perhour minimum wage only if they prepare and bake bread on-site to be sold as a standalone menu item.

This means the controversial carve-out will likely not apply to Panera Bread, which bakes premade bread dough at its restaurants.

It remains unclear whether the state's new fast food council which met for the first time on Friday in Oakland will weigh in on this interpretation, which establishments can take advantage of the exemption and why it exists.

The exemption came under fire after Bloomberg reported it may have come about because of Panera franchisee Gregg Flynn's relationship with Gov. Gavin Newsom.

Flynn, who owns 24 Paneras in California, has said he will pay his workers the new minimum wage starting next month. But confusion remains for the more than 160 other Panera locations in the state.

Miles Locker, an attorney for the Labor Commissioner's Office, explained to council members and an audience full of fast food workers that the agency agrees with the Newsom administration's interpretation of the law, which hinges on the word “produce.”

“Here's the thing about statutes,” Locker said. “Sometimes a word that's used in it is (of) enormous significance.”

Neither of the two bills related to the fast food council and the minimum wage include a clear definition of what it means to “produce” bread. The governor's administration responded to the Bloomberg story by saying their attorneys did not believe the narrow bakery exemption applied to Panera.

“The bread exemption talks about an establishment that produces bread,” Locker said.

“Doesn't say `baking' bread, that `produces' bread. And as Code of Federal Regulations says, that the production of bread process includes the production of the dough.”

Council member Joseph Bryant, a vice president for Service Employees International Union, asked Locker whether the group would be able to provide exemptions.

Locker did not answer the question directly, saying the council members will need to consult with their legal counsel and executive secretary.

Locker told the Sacramento Bee he did not want to “say yes or no” in regard to whether the council could interpret exemptions.

“Whether it covers anyone or not, I have no idea,” he said.

Chair Nick Hardeman, a member unaffiliated with the fast food industry or labor, said the council will need to hire staff before delving into exemptions. The group's primary duties will be determining additional wage increases and making and developing “minimum working standards.”

“There's some ambiguity there on the council's role,” Hardeman said of the exemptions. “So I think once we get that staff person hired, we'll dig in to see if that's another issue that we might have to take a look at.”