United States: Restaurant And Business Leader Andy Puzder Picked To Lead The DOL

Last Updated: December 15 2016
Article by Michael J. Lotito and Ilyse W. Schuman

President-elect Donald Trump has formally named Andy Puzder as his choice to be the next Secretary of Labor. Currently the CEO of CKE Restaurants, the parent company to several fast-food chains, Puzder is a long-time advocate for job creation. His nomination is being hailed as a positive step by members of the business community, who have expressed concern that current DOL policies are administratively burdensome, have hindered employment expansion, and have not kept pace with the changing nature of the modern workforce. Some labor advocates, on the other hand, have seized upon statements Puzder has made regarding the minimum wage and the Affordable Care Act, to criticize his selection. When viewed in context, however, Puzder's positions on various DOL developments paint a more nuanced picture of how he would lead the agency in the coming years.

Background and Stated Positions

Although Puzder began his career as a trial attorney, in 1995 he became the Executive Vice President and General Counsel for Fidelity National Financial Inc. Two years later, he was named Executive Vice President and General Counsel for CKE Restaurants. By the year 2000, he became CKE's President, and is credited with expanding the business that operates more than 3,750 restaurants in the United States and abroad. In 2010, Puzder co-authored a book, Job Creation: How It Really Works and Why Government Doesn't Understand It.

While many media outlets are suggesting Puzder opposed an increase in the minimum wage, he has expressed support for an increase so long as the increase does not result in disproportionate job loss. Puzder has supported a "rational" increase in the minimum wage that is indexed to inflation and buttressed by a corresponding expansion of the Earned Income Tax Credit. He has also publically stated that a minimum wage increase should take geographic costs of living into consideration.

As for his reported criticism of the DOL's currently enjoined white collar overtime rule, Puzder took issue with how the rule, if implemented in its current form, would reclassify several management-level, salaried employees as hourly. Drawing on his experience in the restaurant industry, Puzder believed that many salaried employees would prefer to remain as such for prestige and flexibility reasons. In a Forbes op ed, Puzder explained:

Most salaried employees recognize that in exchange for the opportunity, prestige and financial benefits that come with a salaried position and a performance-based bonus, they're expected to have an increased sense of ownership and stay until the job gets done, to run the business like they own it. Many, like [our Company's COO], achieve the American Dream because of it, going on to upper management or owning their own businesses. The overtime rule devalues this career progression and forces some businesses to turn entry-level management careers with salaries and performance-based bonuses into hourly jobs to ensure they don't get dinged with unexpected and excessive overtime costs.

Given this position, it is expected that if Puzder is confirmed as the next Secretary of Labor, he would not support the overtime rule in its current form.

Puzder's criticism of the Affordable Care Act focused on its lack of sustainability. Puzder has commented that the way the ACA is structured, it was doomed to fail, as not enough healthy, young workers would participate to offset costs of insurer older and sicker participants.

DOL Under Puzder

While it is impossible to know for sure which policies Puzder would support as Labor Secretary, his experience in the restaurant and franchise industries provides some clues. The current DOL has pushed the "fissured workforce" narrative, whereby certain workforce structures, such as franchising, independent contracting, and other forms of non-traditional employment, have allegedly contributed to wage and hour law violations. The agency has placed particular emphasis on independent contractor misclassification and theories of expanded joint-employer liability. As a long-time member of the restaurant industry, Puzder would likely take a more softened stance on such issues.

Because Puzder has been an advocate for employer hiring incentives, the Employment Training Administration (ETA), the DOL sub-agency charged with job training initiatives, could play a more active role under the new Administration.

In addition, as an employer, Puzder is expected to promote a more carrot than stick approach to employer compliance with workplace laws. For example, the Occupational Safety and Health Administration's voluntary protection program (VPP), in which employers that have instituted and demonstrated compliance with safety and health management programs are exempted from OSHA programmed inspections, could receive more attention under Puzder than would increased citation penalties.

It is less clear how other controversial rules and policies will fare under Puzder's potential leadership. Generally, Puzder is expected to take steps to ease the regulatory burdens employers have endured under the current Administration. How and when such change would occur, however, is unknown this early in the process.

The timing of Puzder's confirmation is also uncertain. It is unclear when the Senate will act on the nomination, but Senate leaders have said publicly and privately they are committed to an expedited process. In the meantime, employers can look forward to a future DOL that is expected to be more understanding of—and welcoming to—the business community.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael J. Lotito
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