Advocates Attack Labor Nominee Andy Puzder Over Fast-Food Wage Violations
UPDATE – Puzder Withdraws Nomination
Just one day before his scheduled confirmation hearings, Andy Puzder withdrew himself from the running to head the Department of Labor. In a tweet on February 15, 2017, Puzder wrote, “I am withdrawing my nomination for Secretary of labor. I’m honored to have been considered and am grateful to all who have supported me.”
I am withdrawing my nomination for Secretary of Labor. I’m honored to have been considered and am grateful to all who have supported me.
— Andy Puzder (@AndyPuzder) February 15, 2017
It was widely-reported that Puzder lacked the requisite votes – both among Democrats and Republicans – to secure a confirmation.
President Trump has nominated Andrew Puzder, a fast food mogul, to head up the Department of Labor. Puzder served as the Chief Executive Officer for CKE Restaurants, a company that owns, operates and franchises several notable “quick-service” restaurants, including Hardee’s and Carl’s Jr. He stepped down as the firm’s exec around two months after being nominated for Labor Secretary.
Like all of President Trump’s Cabinet nominees, Puzder has courted controversy, coming under fire from Democrats and liberal advocates over his corporation’s long history of labor violations. If confirmed, Puzder will lead the very department tasked with enforcing America’s wage and hour laws, worker protections that the nominee’s own companies have been caught violating on numerous occasions.
Wage Violations Trouble Unions, Labor Advocates
Wage and hour violations are a problem throughout the fast food industry, where workers at restaurants across the country are routinely cheated out of their wages. In fact, food services has become the Labor Department’s Wage and Hour division’s “top target for enforcement actions,” Politico reports. In 2015, nearly 43% of the federal agency’s minimum wage and overtime cases were filed against players in the restaurant industry. Health care employers trailed at second place, facing around 14% of the agency’s total wage enforcement caseload.
Andrew Puzder is a leading figure in this space. He’s also a vocal critic of minimum wage increases and has blamed the Affordable Care Act for driving a “government-mandated restaurant recession,” the New York Times reports, arguing that rising insurance premiums have left diners with fewer dollars to eat out. Automation, on the other hand, will be a boon for the United States, Puzder says, because machines, unlike human workers, are “always polite, they always upsell, they never take a vacation, they never show up late, there’s never a slip-and-fall or an age, sex or race discrimination case.”
Love For Franchises Would Clash With DOL Duties, Critics Say
Puzder is also a leading advocate for the franchise model, which makes legal liability for federal wage and hour violations a murky subject. Franchises are fairly simple to understand, but have troubled progressive-minded labor department officials for years. A parent company, or franchisor, licenses its trademarks and business operation methods to franchisees, who become individual business owners operating “clone” establishments modeled after the franchisor’s respected, and often nationally-known, brand.
Most aspects of the franchise are controlled by the parent organization, according to HowStuffWorks Money, from the standards of service to methods of operation and inventory control techniques. A complex legal dance, however, has left courts and regulators unable to hold parent organizations liable for the wage violations that so often take place in franchise restaurants – despite the considerable control those parent companies exert over how franchises do their business. Over 90% of Hardee’s and Carl’s Jr. restaurants, which comprise the most-established brands controlled by CKE Restaurants, are owned by franchisees. Andrew Puzder has served as CEO for the parent organization for the last 17 years.
75% Of Fast-Food Employers Violate Wage & Hour Laws
Professor David Weil, who served as the Wage and Hour Division’s Administrator under President Obama, says that franchise models may even encourage violations of federal labor law. “In an industry like eating and drinking, which is a very competitive industry,” Weil told Bloomberg BNA, “the franchisee’s incentive is obviously to manage its costs. And where we get into problems, particularly with […] less-experienced franchisees, is where they reduce their costs by playing games with compliance with the labor laws.”
Weil’s own research has found that wage violations are far more likely to occur at franchisee-operated restaurants than stores run by a brand’s parent organization. During its tenure in the White House, the Obama Administration directed nearly 4,000 wage and hour investigations at the nation’s 20 largest fast food companies. 3 out of every 4 of these investigations discovered at least one violation of the Fair Labor Standards Act, a federal law governing minimum wage and overtime requirements. Fewer than half of the Hardee’s and Carl’s Jr. locations were cleared of wage violations during the 8-year period under Obama. Federal officials found wage violations in around 59% of the restaurants operating under either brand.
Over the years, Hardee’s and Carl’s Jr. locations have been repeatedly slammed for withholding earned wages, paying workers below the minimum wage and failing to pay required overtime. At least one Iowa franchisee was hit with 17 violations of child labor laws, including asking a 15-year-old girl to work until 1 a.m. on some shifts. To see an interactive map of wage and hour violations at CKE Restaurant locations, visit the Century Foundation.
Labor Advocates Oppose Puzder Nomination
After Puzder was announced as President Trump’s nominee, organizing director of Fight for $15 Kendall Fells said, “Puzder as labor secretary is like putting Bernie Madoff in charge of the Treasury.” In a similar vein, labor researchers have come down hard against President Trump’s choice. “Puzder will be there for his low-wage industry CEO buddies,” says Christine Owens, director of the National Employment Law Project. Those “buddies,” Owens told the Huffington Post, “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.”
Critics have also taken aim at Puzder and his restaurant chains for advertisements widely considered demeaning to women. In fact, Puzder himself has admitted to making the ads, which often feature scantily-clad women and sexually-suggestive imagery, as offensive as possible. In an interview with Entrepreneur, the CEO said “if you don’t complain, I go to the head of marketing and say, ‘What’s wrong with our ads?’ “
Will Undocumented Worker Undermine Puzder?
Puzder recently admitted to having employed an undocumented worker as his housekeeper. In a statement provided to the Washington Post, the Labor nominee told reporters that he had been unaware of the worker’s immigration status when she was hired, but “immediately ended her employment” after learning about it. Puzder says he offered the worker assistance in getting legal status, an offer the woman declined, the Huffington Post reports, out of fear that she would be detained and deported.
Hiring undocumented workers has wrecked the aspirations of Cabinet nominees in the past. Zoe Baird, nominated by President Bill Clinton to be the nation’s attorney general in 1993, withdrew her nomination after it was revealed that she and her husband had hired undocumented workers from Peru to serve as their child’s nanny and chauffeur. The couple had also failed to pay Social Security taxes for the workers, the New York Times reported. Baird’s oversights led to her declining popularity in the US Congress and eventual withdrawal.
Clinton’s second choice for the position, New York federal judge Kimba Wood, was soon leaked to the press, but only one day later, news broke that Wood, too, had employed an undocumented worker to care for her child. While she had hired the worker at a time when doing so was legal, and had paid Social Security taxes in compliance with federal law, Wood soon withdrew her own name from the running.
Dubbed “Nannygate” in the press, the incidents drew attention away from President Clinton’s first major legislative achievement, the Family and Medical Leave Act of 1993, which continues to provide covered employees the right to job protection and unpaid leave for qualifying medical and personal reasons.
Puzder Supports “Rational” Immigration Reform
In his work as CEO of CKE Restaurants, Puzder has called for rational reforms of the US immigration system. In 2014, the nominee signed on to a letter to Congress, asking for a “practical solution for the millions of immigrants living in the U.S. illegally.” Along with Puzder, the letter was endorsed by executives at Coca-Cola, Tyson Foods, McDonald’s and other leading employers.
As the executives wrote, numerous companies that have become emblems of American economic activity rely fundamentally on immigrants, in part because the share of “native” workers willing to perform physically demanding, low-skilled labor continues to fall. Congress has an “obligation” to create a visa program specifically for low-skilled immigrants, the letter concludes, or face a recurring crisis of illegal immigration in the future.
Nomination Moves Forward After Multiple Delays
Puzder’s confirmation hearings have been postponed at least four times, according to NBC News, because the nominee has taken longer than expected to submit ethics disclosures and financial documents required by the Senate Health, Education, Labor and Pensions Committee. With the necessary paperwork now filed, hearings have been scheduled to begin on February 16, 2017.
Sources on Capitol Hill, however, suggest that Puzder’s nomination could be in real trouble. Conservative news outlet The Weekly Standard says that even Republican senators have begun to shy away from endorsing the nominee, apprehensions that could leave Senate majority leader Mitch McConnell without the votes needed to see Puzder confirmed. Conservative policymakers aren’t hesitant about Puzder for his views on the minimum wage or workplace regulations, though. It seems that the CEO’s moderate stance on immigration, an issue where Republicans generally want to get tough, has given some GOP senators pause.
