Regulatory Reform Likely Under Puzder

By Allen Smith, J.D. Dec 12, 2016
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Despite worker groups' opposition, wage and hour attorneys predict that Andrew Puzder, CEO of CKE Restaurants—the parent company of the Carl's Jr. and Hardee's burger chains—will be confirmed by the Senate as the next secretary of labor. Employers can then expect Department of Labor (DOL) regulations implemented under the Obama administration to be re-examined or repealed.

Puzder has been a firm opponent of the overtime rule, for example. However, congressional action could nullify the overtime regulations more swiftly than DOL rulemaking.

Criticism of Selection

Worker groups were outraged at President-elect Donald Trump's announcement that he would nominate Puzder to the cabinet position. "Andrew Puzder is an appalling choice to serve as U.S. secretary of labor—a stunning and unwelcome departure from the dedicated and powerful champions who have held that post in recent years and who have helped advance policies like fair pay, paid sick days, and paid family and medical leave," said Debra Ness, president of the National Partnership for Women & Families in Washington, D.C.

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Christine Owens, executive director of the National Employment Law Project in New York City, said, "This much is clear: Puzder will be there for his low-wage-industry CEO buddies, who are now salivating over the prospect of rolling back the Obama administration's efforts to raise pay for low-wage workers, improve workplace safety, and increase corporate accountability for wage theft and other violations."

Congressional Democrats have voiced their concerns about Puzder's selection as well.

"Throughout his entire career, Andrew Puzder has looked down on working people. At Hardee's and Carl's Jr., he got rich squeezing front-line workers on wages, overtime and benefits, all while plotting to replace them with machines that are so much better than workers because they are 'always polite' and 'never take a vacation,' " said Sen. Elizabeth Warren, D-Mass. "Appointing Puzder to run the federal agency responsible for protecting workers is a slap in the face for every hardworking American family."

"The secretary of labor is assigned the critical role of advocating for American workers and protecting working families from injustice and abuse. Nothing in Andy Puzder's record suggests that he is prepared to fulfill that responsibility," said Rep. Mark Takano, D-Calif.

Business Support

But all that is required for the Senate to confirm a nomination is a simple majority, noted Carol Barnett, an attorney with Polsinelli in St. Joseph, Mo. And Puzder is likely to have that support in the Republican-controlled Senate.

Senate Labor Committee Chairman Lamar Alexander, R-Tenn., said, "Puzder is a respected Tennessee business leader who understands how excessive regulation can destroy jobs and make it harder for family incomes to rise."

And Chairwoman-designate of the House Committee on Education and the Workforce Rep. Virginia Foxx, R-N.C., said, "Andrew Puzder is a terrific choice to serve as the next secretary of labor. Through a long, distinguished career in the private sector, Mr. Puzder has a deep understanding of what it takes to create good-paying jobs and how federal policies can affect the ability of workers and employers to succeed. Mr. Puzder will play a key role in delivering reforms that will help more Americans climb the ladder of opportunity after years of extreme regulations and sluggish economic growth."

The National Retail Federation also voiced its support for the nomination. David French, senior vice president for government relations at the federation said, "Puzder has been an ally in our efforts to emphasize the dynamic careers available in the retail and restaurant industries, and he would bring to the job his experience in balancing the needs of all stakeholders in the American workforce." He said the organization looked forward to working with Puzder "to advance a strong pro-jobs agenda."

Deregulation

"The appointment is great news for employers," said John Alan Doran, an attorney with Sherman & Howard in Phoenix. "While the Obama administration pushed a decidedly pro-labor agenda, we can expect Mr. Puzder to roll back as much of that agenda as feasible."

Lori Armstrong Halber, an attorney with Fisher Phillips in Philadelphia, said, "We'll see a more pro-business approach [and] less-onerous regulations, and we'll not see the continued level of enforcement under the Obama administration."

"The nominee has been outspoken in his criticism of the changes to the white-collar exemptions" in the overtime rule, noted Steven Suflas, an attorney with Ballard Spahr in Denver. But "these changes were the result of formal rulemaking, and withdrawing the changes through the rulemaking process would be time-consuming. Congressional action could void the changes. And it is possible that the new administration could simply consent to the continuation of the recent nationwide court injunction against the new rule. However, the current administration has put on the fast track an appeal to the 5th Circuit of the district court's ruling."

[SHRM members-only toolkit: Calculating Overtime Pay in the United States]

Suflas noted that Puzder might change the DOL's interpretation of the law as it pertains to joint employers, which the Obama administration has expanded to make it easier for two employers to be liable for the labor law violations of one. "The DOL recently announced an unprecedented agreement with Subway regarding wage and hour issues among its franchisees," he said. "This initiative may also be scaled back."

An Unusual or Bold Choice?

Suflas called the selection of Puzder "an unusual choice—a wealthy businessman with no governmental or political experience." He compared the choice to the Reagan administration's nomination of construction company executive Raymond Donovan to secretary of labor.

Brett Bartlett, an attorney with Seyfarth Shaw in Atlanta, called Puzder's nomination "a bold choice." He added, "Depending on whom else comprises his team in the solicitor of labor, deputy secretary of labor, and Wage and Hour administrator roles, among others, we could see decisive actions taken to rescind the measures influenced by what Puzder perceives to be the current administration's overreaches."

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