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.

Federal Regulatory Activity Remains Active for Employers in 2016

2015 has been a busy year for government agencies in terms of Labor & Employment Rulemaking, and this trend will only continue into the New Year. Thus, as the holiday season swings into full gear and the end of 2015 is right around the corner, we want to take this opportunity update you on important Labor & Employment regulations rules that are set to be released in the coming months.

Rules issued by the U.S. Department of Labor’s Wage and Hour Division

  • Revisions to Overtime Regulation. Department of LaborAs we have previously explained here, the Wage & Hour Division (WHD) of the U.S. Department of Labor (DOL) has released proposed regulations that will dramatically expand the number of workers who could be eligible for overtime. Specifically, the WHD has proposed raising the minimum salary threshold for employees to be exempt from overtime from the current level of $455 per week to $970 per week, or $50,440 per year. In addition, the WHD is considering whether it should modify the existing “duties” test in order for a worker to be exempt from overtime. There have been nearly a quarter of a million comments submitted to the WHD regarding these new regulations. It is currently anticipated that the WHD will issue its final regulations in the summer of 2016.
  • Impact of the Use of Electronic Devices by Nonexempt Employees on Hours Worked. The DOL plans to issue a Request for Information (RFI) to gather information about employees’ use of electronic devices to perform work outside of regularly scheduled work hours and away from the workplace, as well as information regarding last minute scheduling practices being utilized by some employers that are made possible in large part by employees’ use of these devices. While this is not intended to become an actual rule at this time, the information gathered may be used to support some form of guidance in conjunction with the overtime regulation. The RFI is expected that to be issued in February 2016.
  • Regulations Requiring Federal Contractors to Provide Paid Sick Leave. Executive Order 13706 requires federal contractors and all levels of subcontractors to provide paid sick leave at the rate of one hour per every 30 hours worked, up to 7 days annually. Contractors include any company merely leasing space from the federal government such as a day care center in a federal office building. The Executive Order specifies the purposes for which this leave must be available, which include both the employee’s health and those of their family. The terms of when this leave can be used are taken directly from the Healthy Families Act, including making the leave available to deal with domestic violence. It is anticipated that a proposed regulation implementing this Executive Order will be issued in February 2016.

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