California’s labor commissioner has brought some clarity to the bakery exemption in the legislation that will increase the minimum wage for fast food workers next month.
And it appears Panera Bread is not exempt after all.
At issue is a somewhat mysterious exemption in AB 1228, legislation adopted last year. The bill creates a minimum wage for fast-food workers as of April 1 of $20 per hour. That’s a 25% increase from the current state minimum wage. It also creates a Fast Food Council, empowered to set future increases to the fast-food wage, and adopt other standards for working conditions. The council met for the first time last week.
The fast-food wage impacts limited-service chain restaurants with at least 60 units nationally. But tucked into the bill was an exemption for bakeries that produce bread as a standalone menu item as of Sept. 15, 2023—a rule that seemed to specifically benefit Panera Bread—raising questions about favoritism because a prominent franchisee of the fast-casual brand in California has been a political donor to Gov. Gavin Newsom.
The labor commissioner, however, appears to lay the dispute to rest.
In an update of its frequently asked questions about AB 1228, the commissioner offered new details on the exemption and who would qualify.
The clarification also defines what qualifies as “bread,” for example, saying it must be a single, stand-alone menu item that weighs at least half a pound after cooling. That means restaurants that sell muffins, croissants, scones, rolls or buns would not qualify for the exemption.
Further, to qualify for the exemption, the bakery must produce bread from scratch, typically from flour, water and yeast, on the restaurant’s premises and also bake it there.
“Baking pre-made dough, i.e. dough that was mixed and prepared at another location, does not constitute ‘producing’ bread at the establishment where the bread is sold,” the labor commissioner’s office said.
That means Panera Bread would not likely be exempt. The more than 2,000-unit fast-casual chain, which has about 180 units in California, sells bread that is typically mixed in regional manufacturing facilities and distributed to restaurants, where the dough is proofed (if needed) and baked.
Panera Bread did not respond to requests for comment.
The clarification, however, did not give a reason why the exemption exists or what companies might benefit.
Restaurants located in grocery stores are also exempt from AB1228, if the grocery store is more than 15,000-square-feet in size and if the retailer employs the restaurant workers.
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