Editor’s Note: Andy Puzder officially withdrew himself from consideration as Labor Secretary since this column first published.
President Donald Trump announced his choice for chief of the U.S. Dept. of Labor (DOL), and while the nominee’s name may be relatively unknown, a look at Andrew Puzder’s ideology reveals that his nomination isn’t much of a surprise. Throughout his campaign, Trump criticized President Barack Obama’s regulatory action and has promised to do away with regulations that are stifling economic growth. “On regulations, we’re going to eliminate every single regulation that hurts our farms, our workers and our small businesses,” he pledged in a recent visit to Des Moines, Iowa. In a sign that he’s serious about rolling back the Obama administration’s regulatory actions and streamlining the economy, Trump nominated Puzder, a fast-food executive, to lead the charge.
Puzder, CEO of CKE Restaurants, Inc., which owns Hardee’s and Carl’s Jr., shares Trump’s critical views of Obama’s regulatory actions. He advised Trump during the campaign, and in recent years, was an outspoken critic of the labor-related policies implemented over the last eight years.
Puzder’s appointment could have a significant impact on business owners as it will likely mean a major change in direction from regulators under his direction in the following areas:
Puzder has long been an outspoken critic of the Obama and union push to increase the minimum wage. In a June 2014 op-ed in the Wall Street Journal, he explained that an increase in the federal minimum wage would result in a decrease in employment opportunities for minimum-wage workers. “The bottom line on labor: Make something less expensive and businesses will use more of it. Make something more expensive and businesses will use less of it,” Puzder wrote.
Although President Trump appeared to be open to some minimum-wage increases on the campaign trail, don’t expect a Puzder-led labor department to take the lead in pushing for a significant increase in the federal minimum wage.
Overtime Eligibility Expansion
One of President Obama’s signature regulatory pushes was his plan to more than double the salary threshold of the “white collar” exemption test. Under federal law, most employees are eligible for overtime pay for all hours worked over 40 in a week. “White collar” employees (executive, professional, and administrative) are exempt from the overtime requirements and are typically paid a salary, rather than hourly. Under the Obama overtime regulations, the minimum salary threshold was set to more than double from $23,660 to $47,476 a year, making roughly 4 million more workers eligible for overtime pay.
Puzder vocally opposed the Obama administration’s plan to expand overtime eligibility ever since the administration first proposed it. In a September 2016 op-ed piece published in the Wall Street Journal, Puzder stated that the new overtime regulations would hit the “Businesses that need and hire the most employees” the hardest, “Creating a competitive advantage for firms that require fewer employees.” His preferred solution: A free market without onerous federal regulations. “A freer market would do much more to improve worker’s lives than the Labor Department’s new regulation,” he wrote.
The rule was temporarily halted by a federal judge in Texas and the DOL is challenging the ruling to the Fifth Circuit Court of Appeals. Though the government asked for an expedited hearing, if the case is still pending when he takes office, expect Puzder to drop any remaining appeal. He may also order the agency to take a fresh look at the regulations and start the process to overturn or modify them.
In an October 2016 op-ed in the Wall Street Journal, Puzder cited the Affordable Care Act as a cause for the downturn in consumer spending at restaurants, even noting that in the past year, “Eight major restaurant companies, representing at least 12 chains, including Cosi, Logan’s Roadhouse, Old Country Buffet and Zio’s Italian Kitchen, have filed for bankruptcy,” Puzder explained. “One doesn’t need to be an economist to see that Obamacare is reducing consumer spending, resulting in a reduction in restaurant visits.”
Employers can expect Puzder to fully support President Trump and congressional Republicans’ efforts to repeal and replace the Affordable Care Act.
Joint Employer Revisions
Another Obama administration focus has been on revising and broadening the joint-employer standard, which holds host employers responsible for actions by their subcontractors and franchisors. For example, in August 2015, the National Labor Relations Board (NLRB) — the federal agency that oversees federal labor law — completely revamped its joint-employer test, overturning 30 years of settled precedent. Whereas, previously, a finding of joint employer status required some direct control by the host employer over another employer’s employees, the NLRB changed the standard to require only an “indirect relationship” between the two companies. In January 2016, Obama’s DOL followed the NLRB’s lead and issued “guidance” that broadly redefined the joint employer standard as well.
Puzder, who is intimately familiar with how franchises work, has been clear on his opposition to such a change. In a June 2014 hearing before congress, Puzder stated, “If the NLRB were to change that standard so as to hold franchisors responsible as joint employers with their franchisees, it would significantly and negatively impact both the franchise business model and the small businessmen and businesswomen who have invested their time, energy and money in the hopes of becoming successful franchisees. Not only is this impractical and contrary to hundreds of thousands of existing contractual relationships, but it is also detrimental to the franchise model.”
As labor chief, Puzder will have the authority to withdraw the DOL’s “guidance” on the joint employer test. He can also throw the agency’s support behind legislation to codify the “direct-control” standard in place for more than 30 years prior to the Obama administration.
Employers can expect Puzder to fully support President Trump’s promises to roll-back the Obama administration’s regulatory push. For many years, he’s been vocal in his belief that the government needs to ensure that regulations do not stifle growth or needlessly hinder the economy. “Nonetheless, while most government officials recognize that raising taxes has a dampening effect on economic growth, there seems to be no similar acknowledgment with respect to the impact of regulatory costs,” Puzder said in a February 2012 hearing before congress.
Not all moves by President Obama can be immediately rescinded. For example, to overturn finalized regulations, the Trump administration will need to go through the regulatory process. However, executive actions and other agency guidance can, and likely will, be repealed by the new administration. And as for Obama’s formal rulemaking, employers can expect a Puzder-led DOL to get started on revising and streamlining regulations immediately to help ease the burden on employers and kick start the economy.