Newsom told the story moments before a Wednesday press conference involving the mayors of California's big cities.
He said he had the encounter with the Target employee after seeing a shoplifter.
"He picks it up and keeps walking out as we're checking out," Newsom said of the shoplifter he said he witnessed, he then went on to what the employee said, "The woman says, 'Oh, he's just walking out,' 'He didn't pay for that' I said, 'Well, why don't you stop him?' She goes, 'Oh, the governor.'"