Trump Picks Fast Food Restaurant CEO Andrew Puzder as Labor Secretary: Seismic Shift Is Anticipated in Agency’s Rulemaking and Enforcement

By: Andrew J. Sommer

President-elect Donald Trump has chosen Andrew Puzder as his Secretary of Labor, according to Trump’s transition team. Puzder is the CEO of CKE Holdings, the parent company of Carl’s Jr. and Hardee’s, and has been a vocal critic of the Obama Labor Department’s overtime regulations and efforts to increase the federal minimum wage. As labor secretary, Puzder will oversee the federal apparatus that investigates violations of minimum wage, overtime and workplace safety laws and regulations.

An increase in the federal minimum wage and an expansion in overtime eligibility have been priorities for the outgoing Secretary of Labor Thomas Perez. On Perez’s watch, the DOL has issued new overtime regulations increasing the minimum salary threshold level in order to qualify an employee as exempt from overtime. Puzder has denounced this new overtime rule, the status of which is presently uncertain after a Texas federal court temporarily blocked the rule from taking effect. The U.S. Court of Appeals for the Fifth Circuit has just granted the DOL’s request to expedite its appeal from the preliminary injunction order. The appeal is unlikely to be decided before Donald Trump is inaugurated as the next president on January 20, 2017.

Accordingly, under Puzder’s leadership, the DOL could very well withdraw the pending appeal before a decision is issued by the Fifth Circuit and otherwise not support the new overtime rule. Even if the overtime rule eventually takes effect, Puzder’s arsenal will include the authority to engage in rulemaking to roll back or modify the overtime rule, consistent with the notice and comment process under the federal Administrative Procedures Act. In an op-ed piece earlier this year in Forbes, Puzder said that the overtime regulation will “add to the extensive regulatory maze the Obama Administration has imposed on employers, forcing many to offset increased labor expense by cutting costs elsewhere.” He expressed the opinion that this cost cutting would result in reduced opportunities, bonuses, benefits and promotions.

Other immediate measures that Puzder could take to shift or reverse the direction of the DOL would be to modify interpretive guidance issued under the Obama Administration. For instance, Puzder will likely modify an administrative interpretation by the DOL’s Wage and Hour Division regarding the joint employer doctrine. Under Obama, the DOL has cracked down on employee misclassification and been vocal about its belief that most workers should be treated as employees, insinuating that in a majority of cases, it would hold employers accountable for the specific obligations of an employer-employee relationship. The Wage and Hour Division has offered an administrative interpretation under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act that broadened the definition of joint employment. Under that doctrine, two employers may be responsible for the violations of each other because of how they jointly use the same employees or because of the control an employer exercises over the employees of an intermediary employer such as a contractor or staffing agency.

Puzder’s authority to impact regulatory and enforcement actions will extend to the DOL’s administration of guest worker programs, allowing foreign nationals to immigrate to the United States and work on a temporary basis, as well as the DOL’s coordination with the Department of Homeland Security over the enforcement of immigration laws in the workplace. It is uncertain what will happen under a Labor Secretary Puzder, whose past immigration stance is at odds with the President Elect’s. In an op-ed piece Puzder authored in The Wall Street Journal last year, he counseled Republican presidential candidates to come up with a vision of how to deal with immigration, including the 11 million undocumented workers already in the country. He supported a “path to legal status” that would be “short of citizenship” so long as the undocumented pass a background check, pay a fine and learn English, among other measures.

Ultimately, employers may benefit most from Puzder’s authority to reallocate agency resources away from agency enforcement actions for labor law violations. Under Obama, the Wage and Hour Division has been very active in enforcing labor laws and investigating industries and workplaces with a history of labor law violations. Puzder could slow down enforcement and conduct fewer investigations. The first few months of a Puzder Labor Department may be telling as we continue to read the tea leaves to assess how employers will be affected by the change in administration.

D.C. and Maryland Set to Increase Minimum Wage on July 1, 2016

As ostack of moneyf July 1, both Maryland’s and the District of Columbia will increase the minimum wage.  Maryland’s minimum wage will increase to $8.75 per hour while the District of Columbia’s will increase to $11.50 per hour.  Employers should be prepared to implement these changes on July 1 to avoid wage complaints and make the appropriate changes to their business models to remain competitive.

Maryland

The raise in the Maryland minimum wage is a result of legislation that was passed in May of 2014.  The Maryland Minimum Wage Act of 2014 calls for the minimum wage to ultimately be raised to $10.10 per hour by July of 2018.  The raise that will go into effect in less than two weeks is a .50 cent increase from the current $8.25 minimum wage.  Although the minimum wage is set to increase, there is no increase in the amount employers are required to pay tipped employees.  Therefore, employees receiving over $30 per month in tips only need to be paid $3.63 per hour, and the remainder may be supplemented by the tip credit.

Employers in Montgomery County and Prince George’s County, Maryland, the two counties neighboring the Washington, D.C. area, should also take note that the counties Continue reading

Don’t Wager Your Company on Incorrect Wages in 2016

As we transition into 2016, it is essential that employers are aware of and plan for changes to employee wage requirements and the increased emphasis on wage and hour compliance. For at least the past decade, the number of wage and hour claims filed in federal courts has increased exponentially and 2016 looks like it will be much of the same with fuel for a significant rise. In Fiscal Year (FY) 2000, employees filed only 1,935 claims for violations of the Fair Labor StandardIncreasing Money Graphs Act. At the end of FY 2014, that number had increased by more than 420% to 8,160 wage and hour lawsuits filed in federal court. In FY 2015, the trend continued with 8,781 wage and hour cases based on data released by a national law firm from the Federal Judicial Center. This represents a 7.6% rise in these types of suits from 2014. With employees filing wage and hour claims on a much more frequent basis, compliance is of even greater importance and 2016 looks to present some additional challenges on that front.

An Increasing Minimum Wage

Last year, many employers saw an increase in the required minimum wage at the state level, as well as a rise at the federal level for federal contractors. For many states and federal contractors, 2016 will bring another round of higher minimum wages. Continue reading