What we know about Panera, Gov. Newsom, California's new fast food worker law and NDAs

Here's what KCRA 3 knows so far.

Here's what KCRA 3 knows so far.

THIS IS KCRA THREE NEWS AT FOUR. AND WE’RE CONTINUING TO FOLLOW NEW DEVELOPMENTS IN CALIFORNIA’S CONTROVERSIAL FAST FOOD MINIMUM WAGE LAW. TODAY, A STATE LAWMAKER INTRODUCED LEGISLATION THAT WOULD OFFICIALLY PROHIBIT THE USE OF NON-DISCLOSURE AGREEMENTS IN THE LEGISLATIVE NEGOTIATIONS. NOW, THIS ALL COMES AFTER WE REPORTED THE FEW INVOLVED IN THE NEGOTIATION OF THE FAST FOOD LAW KNOWN AS THE FAST RECOVERY ACT. THAT LAW IS UNDER FIRE FOR AN EXEMPTION IN THE LAW THAT COULD BENEFIT ONE OF GOVERNOR GAVIN NEWSOM’S BILLION, THEIR DONORS. KCRA THREE CAPITAL CORRESPONDENT ASHLEY ZAVALA JOINS US TO EXPLAIN THIS NEW PROPOSAL TO CONFRONT ALL OF THIS AND HOPEFULLY MAKE SURE IT DOESN’T HAPPEN AGAIN. AND THAT’S THE GOAL THAT THE ASSEMBLYMAN WHO INTRODUCED THIS SAID, NOW, AS WE’VE BEEN REPORTING, WE MAY NEVER KNOW HOW THAT EXEMPTION GOT INTO THE LAW BECAUSE NEGOTIATORS OF THE LAW SIGNED NON-DISCLOSURE AGREEMENTS. BUT NOW, REPUBLICAN ASSEMBLYMAN VINCE FONG TELLS US HE’S TWEAKING ONE OF HIS BILLS TO INCLUDE A PROPOSAL THAT WOULD INVALIDATE ANY STATE LAW THAT USED NON-DISCLOSURE AGREEMENTS THROUGH ITS LEGISLATIVE PROCESS. THAT WOULD INCLUDE THE FAST RECOVERY ACT. SO HERE ARE THE SPECIFICS OF THE BILL. THIS IS AN AB 2.654, WHICH IS RELATED TO PUBLIC CONTRACTS. THIS WOULD PROHIBIT THE USE OF NDAS IN ANY STATE LEGISLATION. IT WOULD ALSO EXPLICITLY PROHIBIT PUBLIC EMPLOYEES FROM SIGNING THEM WHEN NEGOTIATING PROPOSED LAWS. ALL OF THIS COMES AFTER WE REPORTED MULTIPLE SOURCES TOLD US THE POWERFUL LABOR GROUP SEIU REQUIRED THE FEW REPRESENTATIVES FROM THE FAST FOOD INDUSTRY TO SIGN THEM DURING NEGOTIATIONS ON THAT FAST FOOD MINIMUM WAGE LAW. THOSE FAST FOOD REPRESENTATIVES INCLUDED THOSE WITH THE MCDONALD’S CORPORATION, YUM! BRANDS, THE INTERNATIONAL FRANCHISE ASSOCIATION, AND THE NATIONAL RESTAURANT ASSOCIATION. FONG SAYS THIS IS A BIG PROBLEM. AFTER REPORTING AND WHAT WE’RE LEARNING ABOUT THIS PANERA CARVE OUT, WE NEED MORE ACTION AND WE NEED TO DECLARE THAT NDAS HAVE NO ROLE IN LEGISLATIVE NEGOTIATION. YOU, AS AS A LAWMAKER, I MEAN, HAVE YOU EVER HEARD OF THIS BEING USED EVER? I HAVE NEVER HEARD OF NDAS USED DURING LEGISLATIVE NEGOTIATIONS. I’VE WORKED FOR CONGRESS MEMBERS. I’VE CERTAINLY FOR THE PAST EIGHT YEARS HAVE BEEN ELECTED TO THE ASSEMBLY TO REPRESENT MY COMMUNITY. I HAVE NEVER HEARD OF NONDISCLOSURE AGREEMENTS BEING USED TO PREVENT THE PUBLIC FROM UNDERSTAND REDDING WHAT IS BEING DONE IN LEGISLATIVE NEGOTIATIONS. UM, YOU KNOW, THIS, UH, CARVE OUT, IF YOU WANT TO CALL IT THAT. UM, IT WAS CREATED. IT WAS DRAFTED, IT WAS INTRODUCED BY SOMEBODY. THIS DID NOT MAGICALLY APPEAR AND SO THE PUBLIC DESERVES TO KNOW WHAT HAPPENED. GOVERNOR GAVIN NEWSOM HAS SAID HE DID NOT SIGN ANY NDAS IN THE MAKING OF THIS LAW. IN A STATEMENT IN RESPONSE TO FONG’S BILL, GOVERNOR NEWSOM’S OFFICE SAID, QUOTE, THE GOVERNOR’S OFFICE DOES NOT SIGN NDAS FOR LEGISLATION OR ANYTHING ELSE. THIS WOULD NOT CHANGE ANYTHING FOR OUR OFFICE. THE OFFICE ALSO NOTED THE GOVERNOR DOES NOT TYPICALLY COMMENT ON PENDING LEGISLATION, SO I KNOW YOU’VE REPEATEDLY REACHED OUT TO ALL OF THESE GROUPS THAT YOU’VE MENTIONED, INCLUDING THE SEIU. HAVE ANY OF THEM GOTTEN BACK TO YOU? HAS ANYONE SAID ANYTHING? WE HAVE NOT HEARD BACK FROM A SINGLE ONE. THEY HAVE NOT RESPONDED TO US. WE ARE STILL GETTING RADIO SILENCE FROM ALL OF THESE GROUPS. BUT EXPERTS WOULD NOTE THAT’S THE WHOLE PURPOSE OF AN NDA. WE’

What we know about Panera, Gov. Newsom, California's new fast food worker law and NDAs

Here's what KCRA 3 knows so far.

California's new law providing new protections for the state's fast food workers has been under intense scrutiny following allegations that the governor pushed for a special exemption for one of his rich donors. The law has been controversial since its inception, pitting fast food franchisees and corporations against their workers. It first passed in 2022 but faced the threat of an expensive referendum backed by McDonald's and other big brands in 2023. That threat forced labor groups and the fast food industry to negotiate a truce, which resulted in the new law taking effect in April of this year. Here's what KCRA 3 knows so far. What does California's new fast food law do? It's not just about minimum wageAmong many things, the law known as the F.A.S.T. Recovery Act will require giant fast food chains in California to pay their workers at least $20 an hour starting April 1. The law also creates a new council that will bargain the wages and working conditions for those workers moving forward until 2029. Who is Greg Flynn? Greg Flynn is the leader of the world's largest franchisee operator of restaurants and gyms. His group owns several Applebees, Taco Bell, Panera Bread, Arby's, Pizza Hut, Wendy's and Planet Fitness franchises. Experts note the dozens of Panera franchisees his group operates are a sliver of his fortune. Flynn has confirmed he went to the same high school as Newsom but said they didn't know each other until decades later. In 2014, Flynn's company purchased The Carneros Inn and Napa from Newsom's company, PlumpJack, for $60 million, according to the Napa Valley Register. Flynn has also made political contributions to Newsom, including $100,000 to fight his recall and $64,800 to his reelection campaign in 2022. In 2022, Flynn was a vocal opponent of the new fast food worker law as it neared the end of the legislative process. Is Panera Bread exempted from the law?The law states the definition of fast food restaurant does not include those that operate a bakery that produces bread and sells it as a stand-alone menu item, as of September of 2023. Governor Newsom's legal team has said because Panera mixes its dough off-site, the exemption does not apply. Newsom's office has yet to say which specific restaurants the carveout would apply to. Flynn has not said if the law applies to his businesses but has said his California Panera locations will raise the minimum wage to $20 an hour beginning April 1. Flynn does not own all Panera locations in California, only some, and it's not clear if other Panera franchisees will do the same. Why are some calling for an investigation? Republican state lawmakers have called for an investigation into the situation with concerns that the special exemption for bakeries is the result of "pay-to-play" politics. California Attorney General Rob Bonta acknowledged receipt of the request but did not say anything further. Assembly Republican Leader James Gallagher and Senate Minority Leader Brian Jones also called for Newsom to voluntarily release records from his office about negotiations that led to the bakery carve out in the fast food bill, referring to the situation as "PaneraGate." A letter to Newsom called for the release of records related to the exception and communications between his administration and Flynn."While we realize some of the documents requested may be exempt from disclosure, we believe that in the interest of transparency, the public interest would be served by your voluntary disclosure of these records," the letter said. How are non-disclosure agreements involved with the new California fast food law?We may never know what exactly happened in the final negotiations of the new law because groups involved signs non-disclosure agreements, multiple sources on all sides of the issue have confirmed to KCRA 3.Sources close to the negotiations said in the summer of 2023, the powerful Service Employees International Union required the other groups at the negotiating table to sign non-disclosure agreements, also known as NDAs. An NDA is a legally binding agreement that forces those involved to keep discussions confidential. SEIU has not responded to repeated requests for comment.Sources within the fast food industry told KCRA 3 that when they sought information from the industry's leaders at the negotiating table in 2023, they were told the information could not be disclosed because of the NDAs.Along with SEIU, sources told KCRA 3 the final negotiators included representatives from McDonald's, YUM! Brands, the International Franchise Association, and the National Restaurant Association.Matthew Haller, the president of the IFA, declined to comment. The other groups did not respond to repeated requests for comment over the course of several days.Newsom's office, which oversaw the negotiations, said the governor never signed an NDA and did not direct anyone to sign one. KCRA 3 asked Newsom's office if he was aware an NDA was used during the negotiations of the bill, and if he condones their use in the crafting of public policy. He had not responded as of Wednesday night.Multiple sources close to the labor side of the negotiations who spoke on the condition of anonymity told KCRA 3 that SEIU uses non-disclosure agreements "routinely" in high-stakes negotiations to build trust with its opponents.Long-time Capitol observer and McGeorge School of Law Professor Chris Micheli said the development is surprising but noted the use of NDAs between interest groups is not illegal."I think the concern we should have is a potential lack of transparency and disclosure. Remember, the lawmaking process is being done on behalf of the people of California," Micheli said. In response to our reporting, California Republican Assemblyman Vince Fong introduced legislation that would invalidate any state legislation involving non-disclosure agreements.Read up on our coverage of the law and the controversy that has followedCalifornia fast food workers to get $20 minimum wage under new deal between labor and the industryReport: California's fast food law exempts Panera because of Gov. Newsom's relationship with billionaire franchiseeCalifornia Republicans want investigation into Newsom's ties to Panera franchisee, new fast food lawCalifornia's top prosecutor responds to accusations involving Newsom, Panera franchisee Panera franchisee Greg Flynn says his California restaurants will pay a minimum of $20 an hourNon-disclosure agreements were used in negotiations of California's landmark fast food worker law 'I think everyone's concerned': California lawmakers react to use of NDAs in fast food minimum wage law California lawmaker introduces bill to prohibit NDAs in legislative negotiations

SACRAMENTO, Calif. —

The law has been controversial since its inception, pitting fast food franchisees and corporations against their workers. It first passed in 2022 but faced the threat of an expensive referendum backed by McDonald's and other big brands in 2023. That threat forced labor groups and the fast food industry to negotiate a truce, which resulted in the new law taking effect in April of this year.

Here's what KCRA 3 knows so far.

What does California's new fast food law do? It's not just about minimum wage

Among many things, the law known as the F.A.S.T. Recovery Act will require giant fast food chains in California to pay their workers at least $20 an hour starting April 1. The law also creates a new council that will bargain the wages and working conditions for those workers moving forward until 2029.

Who is Greg Flynn?

Greg Flynn is the leader of the world's largest franchisee operator of restaurants and gyms. His group owns several Applebees, Taco Bell, Panera Bread, Arby's, Pizza Hut, Wendy's and Planet Fitness franchises. Experts note the dozens of Panera franchisees his group operates are a sliver of his fortune.

Flynn has confirmed he went to the same high school as Newsom but said they didn't know each other until decades later. In 2014, Flynn's company purchased The Carneros Inn and Napa from Newsom's company, PlumpJack, for $60 million, according to the Napa Valley Register. Flynn has also made political contributions to Newsom, including $100,000 to fight his recall and $64,800 to his reelection campaign in 2022.

In 2022, Flynn was a vocal opponent of the new fast food worker law as it neared the end of the legislative process.

Is Panera Bread exempted from the law?

The law states the definition of fast food restaurant does not include those that operate a bakery that produces bread and sells it as a stand-alone menu item, as of September of 2023. Governor Newsom's legal team has said because Panera mixes its dough off-site, the exemption does not apply. Newsom's office has yet to say which specific restaurants the carveout would apply to. Flynn has not said if the law applies to his businesses but has said his California Panera locations will raise the minimum wage to $20 an hour beginning April 1. Flynn does not own all Panera locations in California, only some, and it's not clear if other Panera franchisees will do the same.

Why are some calling for an investigation?

Republican state lawmakers have called for an investigation into the situation with concerns that the special exemption for bakeries is the result of "pay-to-play" politics. California Attorney General Rob Bonta acknowledged receipt of the request but did not say anything further.

Assembly Republican Leader James Gallagher and Senate Minority Leader Brian Jones also called for Newsom to voluntarily release records from his office about negotiations that led to the bakery carve out in the fast food bill, referring to the situation as "PaneraGate."

A letter to Newsom called for the release of records related to the exception and communications between his administration and Flynn.

"While we realize some of the documents requested may be exempt from disclosure, we believe that in the interest of transparency, the public interest would be served by your voluntary disclosure of these records," the letter said.

How are non-disclosure agreements involved with the new California fast food law?

We may never know what exactly happened in the final negotiations of the new law because groups involved signs non-disclosure agreements, multiple sources on all sides of the issue have confirmed to KCRA 3.

Sources close to the negotiations said in the summer of 2023, the powerful Service Employees International Union required the other groups at the negotiating table to sign non-disclosure agreements, also known as NDAs. An NDA is a legally binding agreement that forces those involved to keep discussions confidential. SEIU has not responded to repeated requests for comment.

Sources within the fast food industry told KCRA 3 that when they sought information from the industry's leaders at the negotiating table in 2023, they were told the information could not be disclosed because of the NDAs.

Along with SEIU, sources told KCRA 3 the final negotiators included representatives from McDonald's, YUM! Brands, the International Franchise Association, and the National Restaurant Association.

Matthew Haller, the president of the IFA, declined to comment. The other groups did not respond to repeated requests for comment over the course of several days.

Newsom's office, which oversaw the negotiations, said the governor never signed an NDA and did not direct anyone to sign one. KCRA 3 asked Newsom's office if he was aware an NDA was used during the negotiations of the bill, and if he condones their use in the crafting of public policy. He had not responded as of Wednesday night.

Multiple sources close to the labor side of the negotiations who spoke on the condition of anonymity told KCRA 3 that SEIU uses non-disclosure agreements "routinely" in high-stakes negotiations to build trust with its opponents.

Long-time Capitol observer and McGeorge School of Law Professor Chris Micheli said the development is surprising but noted the use of NDAs between interest groups is not illegal.

"I think the concern we should have is a potential lack of transparency and disclosure. Remember, the lawmaking process is being done on behalf of the people of California," Micheli said.

In response to our reporting, California Republican Assemblyman Vince Fong introduced legislation that would invalidate any state legislation involving non-disclosure agreements.

What we know about Panera, Gov. Newsom, California's new fast food worker law and NDAs

Here's what KCRA 3 knows so far.

GET OUR POLITICS NEWSLETTER

What does California's new fast food law do? It's not just about minimum wage

Who is Greg Flynn?

Is Panera Bread exempted from the law?

Why are some calling for an investigation?

How are non-disclosure agreements involved with the new California fast food law?

Read up on our coverage of the law and the controversy that has followed

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