California Gov. Gavin Newsom (D) ratified a law in September increasing the hourly minimum wage for fast-food restaurant employees from $16 to $20 per hour, effective April 1, 2024. This legal requirement was not, however, imposed equally.

Insiders recently revealed to Bloomberg that Newsom personally fought for an exemption that would ultimately benefit his longtime donor and billionaire pal Greg Flynn, one of America's largest restaurant operators.

Assembly Bill 1228 defines "fast food restaurant" as a "limited-service restaurant in the state that is part of a national fast food chain."

While Flynn's two dozen Panera Bread locations in California — which serve soups, pizza, salad, sandwiches, milkshakes, desserts, and other meal items — would ostensibly satisfy this definition, Newsom apparently secured an exception to the rule for "an establishment that on September 15, 2023, operates a bakery that produces for sale on the establishment's premises bread" as a stand-alone menu item.

When a KCRA-TV reporter pressed Newsom on the apparent carve-out for Panera on Sept. 28, the Democratic governor said, "That's part of the sausage-making that was part of 257, the original bill, and we went back and forth and [it] was part of the negotiation. It's the nature of negotiation."

Newsom stressed further that it was the decision was the result of "give and take."

Flynn, who also owns thousands of Taco Bell, Pizza Hut, Applebee's, and Wendy's locations, reportedly opposed AB 257, the so-called "California Fast Food Restaurant Minimum Wage and Labor Regulations Referendum" in 2022, which included the bread exemption but would have increased the minimum wage to $22.

Flynn evidently got his way. AB 257 was repealed and replaced with AB 1228, which still contains the favorable exemption benefitting Panera Bread.

Flynn told Bloomberg he did not play a role in crafting the bread exemption and declined to comment on his connections to the governor.

The duo went to the same high school and apparently did some business together. Bloomberg highlighted that Newsom even drew an undisclosed amount of income from Flynn's company while California's lieutenant governor.

Flynn has donated a great deal to Newsom in the years since.

For instance, he donated $50,000 in April 2017 in support of Newsom's gubernatorial bid the next year. In 2018, Flynn kept shelling out cash in support of Newsom's race for the governor's mansion.

In 2021, Flynn donated $100,000 to Newsom's campaign to stave off a Republican recall effort. He also threw $64,800 Newsom's way in 2022 in support of his re-election.

The billionaire's donations to Newsom pale in comparison to the amount of money restaurants exempted from the new wage hike could potentially save. In the hypothetical case of a full-time employee paid the straight hourly for 52 40-hour weeks, the delta is over $8,000.

Bloomberg noted that McDonald's Corporation franchisees are expecting an additional annual cost of $250,000 due to the law, which some have deemed a "devastating financial blow." Businesses unwilling to eat the the whole of the cost will offload it onto customers. Chipotle Mexican Grill Inc., for instance, is reportedly considering increasing prices to offset the boosted expense.

Despite the potential savings, some of Flynn's Panera establishments have reportedly advertised that they will pay $20 hourly wages for select non-management roles. However, the Flynn-owned Panera near the California capitol in Sacramento still appears to be advertising $16 and $18 hourly wages.

Bloomberg indicated that neither Newsom nor Panera Bread representatives responded to their requests for comment.

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