Trump pick for Labor secretary not likely to favor DOL fiduciary rule

Though Andrew Puzder, a fast-food CEO, has not weighed in on the regulation, his conservative leanings on employment policies indicate he probably won't embrace it

Dec 8, 2016 @ 4:15 pm

By Bloomberg News and Mark Schoeff Jr.

Andrew Puzder
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Andrew Puzder

President-elect Donald Trump has nominated as labor secretary Andrew Puzder, chief executive of the company that owns the Hardee's and Carl's Jr. burger chains and who opposes raising the minimum wage.

Mr. Puzder, who served as an economic adviser to Mr. Trump during the campaign and is a major Republican donor, has been an outspoken critic of the Obama administration's labor policies and of the president's signature legislative achievement, the Affordable Care Act.

Although he has been a strong opponent of raising the minimum wage and of toughening overtime rules, Mr. Puzder has not taken a stance on the DOL fiduciary rule that would raise investment advice standards for retirement accounts.

"He's a blank slate. We don't know," said Duane Thompson, senior policy analyst at Fi360, a fiduciary duty training firm. "A lot of his [attention] is with the wage-and-hour division of labor because that's where his interests are."

But it's safe to extrapolate from his conservative leanings on employment policies that he probably won't embrace the investment advice rule, said John Doran, a partner at Sherman & Howard.

"His philosophy is such that I suspect that he would move away from the rule," Mr. Doran said. "He's very strong on small government, pulling back regulations and allowing market solutions to economic challenges."

The nomination, made Thursday, is subject to Senate confirmation.

Mr. Puzder, 66, is CEO of CKE Restaurants Inc., parent company of the fast-food brands. He's a graduate of Washington University Law School and was a trial attorney in St. Louis before joining CKE in 2000.

He does have experience with pension issues by virtue of the company's direct contribution retirement benefit. The CKE Savings Plan had $40.8 million in assets and 3,110 participants at the end of 2015, according to BrightScope.

The Employee Benefits Security Administration, which is currently headed by DOL assistant secretary Phyllis Borzi, has jurisdiction over 401(k) plans as well as the DOL fiduciary regulation.

(More: What Phyllis Borzi has to say about the DOL rule now)

The fate of the rule "may come down to who his selection is for assistant secretary," Mr. Thompson said.

Mr. Puzder was an economic adviser to 2012 Republican presidential nominee Mitt Romney and has been a contributor to Republican Party organizations and candidates. He and his wife, Deanna, each gave $75,000 to the Trump Victory joint fundraising committee, according to a Bloomberg Government analysis of Federal Election Commission data.

The selection of Mr. Puzder sheds light on what direction the Labor Department might take under Trump. Mr. Puzder has a long record of spoken and written remarks on job creation. He's against an Obama administration rule that would expand the number of workers eligible for overtime pay. The rule, which would affect about 4.2 million workers, was temporarily blocked by a federal judge in November.

Tapping Mr. Puzder “might be the surest sign yet that the next Cabinet will be looking out for the billionaires and special interests, instead of America's working class,” said New York's Chuck Schumer, who will be the Democratic leader in the Senate. Mr. Puzder is “exactly the opposite” of a Labor secretary who will fight for American workers, Sen. Schumer said.

Mr. Puzder has said Mr. Obama's health-care overhaul hurt his company's growth and forced it to rely more on part-time workers. Some Hardee's and Carl's Jr. locations also are shifting to touch-screen kiosks. Those stores need fewer employees behind the counter, Mr. Puzder said, a move made desirable by what he called ill-advised government policies and taxes.

In an interview in September, Mr. Puzder decried the U.S. labor participation rate, which has been falling steadily since peaking at 67.3% in 2000. It was 62.7% in November, even as the unemployment rate fell to 4.6%. He said there's a need for employment opportunities at the low end and high end.

“Low-skill jobs are important because that's what gives you access to the high-level jobs,” he said. “If you focus on redistributing income, you're not going to create growth.”

He's written on a variety of topics affecting businesses.

In a July opinion article published in the Wall Street Journal co-written with Heritage Foundation economist Stephen Moore, Mr. Puzder said legal immigration was an asset to the country and that deporting the 11 million people in the U.S. illegally “is unworkable.” But he said Mr. Trump's proposals to build a border wall, stiffen enforcement and defund cities that provide sanctuary to undocumented immigrants was “reasonable and sensible given that voters demand action.”

Mr. Puzder and Mr. Moore described themselves as free traders who oppose putting punitive tariffs in place. They also said taking a tougher stance in trade negotiations may be necessary to restore public support for open markets.

CKE, a closely held company based in Carpinteria, Calif., has about 3,700 restaurants across most U.S. states and 28 countries. The chain filed for an initial public offering in 2012, but later delayed the move, citing uncertainty about health-care and commodity prices. The company is relocating its headquarters from the beachside town about 80 miles north of Los Angeles to the lower-cost Nashville, Tenn., area — a move that's expected to be completed in 2017.


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