Puzder Nomination Likely Signals New Frontier for Employers

Kollman & Saucier
Kollman & Saucier

Toward the end of last week, President-elect Trump nominated Andrew Puzder, the longtime President and CEO of the company behind Carl’s Jr. and Hardee’s restaurants, to be his Secretary of Labor.  With Mr. Puzder expected to be confirmed next month, a review of his record suggests that the Labor Department will take a decidedly pro-employer turn in the incoming administration.  (Meanwhile, outgoing Labor Secretary Tom Perez is rumored to be running for the Chair of the Democratic National Committee and is considered a possible candidate for the Maryland governorship in 2018.)

According to his recent Congressional testimony, Puzder first worked as an ice cream scooper at Baskin-Robbins for minimum wage (then $1.00 or $1.25/hour), then supported his family while getting an education, including painting houses, mowing lawns, and doing a variety of other construction jobs.

In 2000, after working for years as a commercial trial lawyer, Puzder became CEO of CKE Restaurants Holdings, Inc. (CKE), owner of the Carl’s Jr. and Hardee’s brands.  There are now roughly 3,500 Carl’s Jr. and Hardee’s restaurants across 42 states and at least 31 foreign countries, over 2,900 of which are in the U.S.  According to Puzder, 62% of the company’s employees are racial minorities, and roughly the same percentage are women.  Each restaurant employs approximately 25 people and has sales averaging between $1.2-1.3 million per year.  The average employee wage is $8.96/hour, with 13% of employees earning minimum wage.  There is one General Manager at each restaurant, who is, on average, 41 years old and earns roughly $45,000 per year.

Nearly 75% of CKE’s restaurants are franchises owned by franchisees, rather than by CKE.  The company has approximately 230 franchisees nationwide who own, on average, roughly 10 franchises each.  Individuals and small businesses seeking to start a franchise pay a startup fee (typically $25,000) and pay CKE a royalty of 4% of annual sales (i.e., approximately $50,000 per year) in exchange for use of the Carl Jr.’s/Hardee’s logo and brand.

Here is what we know so far about his stances on a number of significant issues facing employers:

  • Minimum wage and overtime: Puzder has publicly opposed increasing the federal minimum wage from $7.25/hour to $10.10, as in a 2014 Wall Street Journal editorial (subscription required) he authored. The so-called “Fight for 15” that has swept a number of major cities pushing for a $15.00/hour minimum wage would likely not find support in the Trump Labor Department under Puzder’s watch.  For similar reasons, Puzder is not expected to carry on the Obama Administration’s regulatory push for an increase in the salary level threshold that would have made roughly 4.1 million employees nationwide newly eligible for overtime.
  • Joint employment: Puzder has long been an outspoken critic of the NLRB’s 3-2 decision last year in Browning-Ferris Industries of California, Inc., 362 N.L.R.B. No. 186, 204 LRRM 1154 (2015) holding that even entities who maintain indirect control of other entities (much like the relationship between CKE and its franchisees) could be sued as joint employers of employees bringing claims.  Testifying before the House Education and the Workforce Committee’s Subcommittee on Health, Employment, Labor, and Pensions, Puzder cautioned that there were roughly 750,000 franchises in the U.S., which employ a combined 8.1 million people and contribute roughly $769 billion to the global economy that he feared would be negatively affected by a broad application of the joint employment standard.  At a minimum, Puzder is not expected to incorporate any similar joint employment provisions beyond what already exists in Fair Labor Standards Act (FLSA) regulations.
  • Affordable Care Act: Puzder is a staunch advocate of regulatory reform, particularly in the realm of the ACA (aka Obamacare).  He has firmly opposed the ACA’s definition of “full-time” work as 30 (rather than 40) hours per week and supports replacing the law with a market-based alternative.

In short, though Puzder cannot personally roll back regulations that have taken hold in recent years, it is widely expected that his enforcement priorities will trend away from government oversight of businesses in a manner that many employers will welcome.

No Comments
prev next
Email Updates

Enter your email address to subscribe to this blog and receive notifications of new posts by email.