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NY Times, Jan. 16 2017
Workers Say Andrew Puzder Is ‘Not the One to Protect’ Them, but He’s
Been Chosen To
By JODI KANTOR and JENNIFER MEDINA
At first, Andrew F. Puzder’s California story sounds like one of the
state’s sunny dreams come true: Midwestern lawyer stumbles into burger
business, nurses storied chain back to health, wins industry plaudits
and record profits.
But Mr. Puzder became an outspoken critic of his adopted state because
of its vigorous workplace regulations. The mandatory rest breaks
required by California made no sense, he felt, leaving restaurants
understaffed when a rush of customers came in. His company paid millions
of dollars to settle class-action lawsuits that accused it of cheating
workers.
He spoke out against labor laws intended to benefit hourly workers like
the ones who serve shakes and mop floors at Carl’s Jr. and Hardee’s, the
chains he runs.
“California has gone really from being this golden state, the state of
opportunity, to being a kind of nanny state,” he said in 2009. “You
can’t be a capitalist in this state.”
In the months before California passed a law last year raising the
minimum wage to $15 by 2022, many business leaders kept their objections
discreet, but Mr. Puzder was blunt: “How do you pay somebody $15 an hour
to scoop ice cream? How good could you be at scooping ice cream?” he asked.
Now Mr. Puzder is relocating his corporate headquarters to Tennessee —
and planning his own move to Washington, to become President-elect
Donald J. Trump’s labor secretary. His nomination is moving slowly, with
confirmation hearings pushed back indefinitely, allowing Democrats and
labor advocates to prepare a drumbeat of questions: Can the head of a
company accused of shortchanging workers serve as their champion? Does
Mr. Puzder want to lead the Labor Department, or dismantle it? Will he
enforce rules his company has been accused of violating? How will Mr.
Trump make good on his vision of capitalism that is unfettered by
regulations, yet also helps those left behind?
Guadalupe Urrustieta, 47, said that when he was a manager at two Carl’s
Jr. locations north of Los Angeles, he was routinely asked by
supervisors to make his employees work through unpaid meal breaks
without compensation, so that labor costs would not go up. He said he
also had to work several hours a week without pay.
“I left the company because I didn’t agree with a lot of the things that
were happening,” Mr. Urrustieta said. To him, Mr. Puzder is an
improbable labor secretary, “not the one to protect workers.”
The company headed by Mr. Puzder, CKE Restaurants, says its practices
follow the law. “We have a very strict policy of compliance with
California wage and hour laws and cannot comment on unsubstantiated
allegations of current or former employees,” said Charles A. Seigel III,
executive vice president and general counsel.
Mr. Puzder, who declined to be interviewed for this article, argues that
his efforts to reward workers in more entrepreneurial ways were stymied
by rigid California laws. He has said that he may support smaller
minimum-wage increases, but that over all, the free market is better
than the government is at helping people.
“Andy Puzder has firsthand experience saving and creating thousands of
jobs, and he has an extensive record of fighting for workers,” the Trump
transition team said. “As secretary of labor, he will be able to apply
his business successes in a way that will benefit all Americans —
growing wages and creating opportunity.”
But Mr. Puzder’s appointment, already inspiring protests, could set off
a national clash. In recent years, a resurgent workers’ rights movement
has helped win an employer mandate for health insurance and stronger
enforcement of overtime rules nationwide, and paid sick and family leave
at the local and state levels. Mr. Puzder, opposed to some of those
policies, could lead a backlash by business owners saying the new rules
have gone too far.
If employers are required to do too much, he told Business Insider
recently, they may replace some workers with machines. “They’re 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,” he said.
Mr. Puzder entered the fast-food world almost by chance. A lawyer with a
canny, strategic streak, practicing commercial trial law in St. Louis,
he had a sideline in anti-abortion activism, writing a legal argument
that helped inspire a 1986 state law that declared that life began at
conception and prohibited the use of state money for abortions. A
challenge to the law rose all the way to the United States Supreme
Court, leading to a 1989 decision narrowing the scope of Roe v. Wade.
Around the same time, Mr. Puzder took a legal assignment from Carl
Karcher, who started with a single hot dog cart and expanded it into the
Carl’s Jr. chain, with hundreds of restaurants in California, their
drive-ins emblazoned with smiling yellow stars. Mr. Karcher was in legal
and financial trouble, and as his new lawyer worked to bail him out, the
two became close. Mr. Puzder helped Mr. Karcher avoid bankruptcy; Mr.
Karcher taught Mr. Puzder the restaurant business. By 2000, Mr. Puzder,
who later referred to Mr. Karcher as “a second father,” was chief executive.
In Mr. Puzder’s version, the following years were triumphant. His
franchise restaurants outside California grew exponentially. His
associates had acquired the Hardee’s chain, a move that initially fell
flat, until Mr. Puzder revived the brand. (“No more people behind the
counter unless they have all their teeth,” he recounted years later.)
Other fast-food brands aimed for the broadest appeal, sometimes losing
focus, but Mr. Puzder concentrated on one market: young men delighted to
pay $6 for calorie-laden burgers dripping with sauce. In television ads
that were somewhere between racy and pornographic, bikini-clad models
suggestively crunched and licked their way through burgers. (A “bacon
lover’s fantasy” featured three models and a “bacon three-way burger.”)
The conservative Parents Television Council criticized the ads and, more
recently, Democrats have said they prove a lack of respect for women.
But Mr. Puzder has defended them. “I like beautiful women eating burgers
in bikinis,” he told Entrepreneur magazine. “I think it’s very American.
I used to hear brands take on the personality of the C.E.O. And I rarely
thought that was true, but I think this one, in this case, it kind of
did take on my personality.”
A CKE representative said that about 100,000 employees now work in 3,750
restaurants worldwide, 95 percent of them franchises, generating more
than $4.3 billion in revenue. (Domestically, there are 75,000 employees
in 3,000 locations.) The representative said the company had no control
over how employees are treated in franchised locations, but labor groups
tend to dismiss that logic, saying the chains use it to avoid
responsibility.
Mr. Puzder traveled to hundreds of stores to talk with employees about
what they did and how, said Eric Williams, who was formerly director of
training at Hardee’s and is now the chief operating officer for CKE. He
made a practice of ducking behind the counter and asking employees how
long they had been working at the company, whether they had been given
proper training and whether their work schedule was what they had
expected, Mr. Williams said.
Mr. Puzder “wants to get as much bureaucracy out of the company as
possible so that employees can feel free to call the C.E.O.,” Mr.
Williams said. “He wants to make sure that the workers are treated
fairly, and he wants them happy.”
In nearly two dozen interviews across California, some current and
former employees at Carl’s Jr. restaurants described a workplace that
was “basically fair,” as Tony Moua, a former cook from Merced, put it.
“We were always paid on time and had to take our breaks,” he said.
But most offered a different version: restaurants so understaffed they
could barely keep up; having their hours cut so their employer would not
be required to provide insurance under the Affordable Care Act; and
being sent home midshift if the crowds thinned.
“If it was a slow day, I wouldn’t even work for four hours,” said Cristo
Delgado, who worked at a Carl’s Jr. in Bakersfield in 2010. “They would
lose money if we stayed.”
“I never complained,” he said. “I didn’t know I could complain.”
In interviews and lawsuits, workers have made a graver charge: that the
restaurants often broke the law by cheating them on their wages. Some
said they were expected to arrive early for their shifts to clean but
were not allowed to clock in until later.
Others said they would often work through their breaks, even though
those rest periods, required by California law, were unpaid. When Tracy
Bradshaw, who worked in a Carl’s Jr. in Bakersfield for two years, would
take her 30-minute lunch break, she was often called back into the
kitchen to help with a sudden rush.
“I need you back here now, I know you are on your break,” she said her
manager would say. If she refused, the manager was more likely to send
her home early, she said, which often meant fewer hours the next week,
leaving her short on money.
After several months, Ms. Bradshaw said, she complained. Soon after
that, she brought in paperwork showing that her pregnancy would prevent
her from doing certain tasks. A week later, she was let go, she said. A
CKE representative said the company is opposed to all forms of
discrimination, including pregnancy-related.
During Mr. Puzder’s tenure, the company has paid millions of dollars to
settle class-action lawsuits alleging that it failed to pay managers
fairly, by misclassifying them in a way that skirted overtime rules. CKE
has also faced other class-action lawsuits, some settled and others
ongoing, alleging that it routinely forced workers to skip breaks,
altered its time records in a way that left workers paid less, or placed
caps on what managers could make, meaning they worked for more hours
than they were compensated for.
A CKE lawyer declined to comment on the lawsuits, saying only that it
was often less expensive to settle cases out of court.
Mr. Urrustieta, the former manager near Los Angeles, who is part of a
current lawsuit, said he would often work 60 hours a week, dealing with
early-morning and late-night emergencies, and problems that cropped up
on his day off. But he and other managers said Carl’s Jr. had rules
against paying them for more than 47.5 hours a week. His district
manager refused to pay him for all of the time he worked, he said.
Federal and state regulators have made similar findings, citing Carl’s
Jr. and Hardee’s for wage violations in dozens of both corporate-owned
and franchise stores, and requiring tens of thousands of dollars in back
pay. (Many chains have records that are worse.)
David Weil, head of the agency’s Wage and Hour Division, declined to
speak about the investigations of CKE in an interview. But the core
mission of the Labor Department is “a fair day’s pay for a fair day’s
work,” he said.
Mr. Puzder has contended that the California rules defy business logic.
The mandatory breaks, for example, meant workers were sometimes
unavailable when they were needed most.
“Have you ever been to a fast-food restaurant and the employees are
sitting and you wonder, ‘Why are they sitting?’” he asked in a 2009
interview, conducted by Allison Varzally, a history professor at
California State University, Fullerton. Even if a bus pulls up filled
with hungry customers, an employee on a break cannot assist, he said.
For several years, managers and assistant managers were given bonuses
based on sales in their stores, giving top performers a share of the
profit, said Bill Foley, a former CKE chairman, but in light of
California rules over who could be considered a manager and required
overtime pay, the company scrapped the practice.
In Mr. Puzder’s view of the lawsuits, his corporation was the victim.
“Lawyers support state politicians out of profits from class-action
lawsuits, and once they’re elected, lobby those politicians to pass more
restrictive laws that they can use in their next raid on the California
business community,” he said in a 2014 speech.
Mr. Puzder, exasperated, found himself more interested in politics. He
made appearances at conservative events and wrote opinion pieces for The
Wall Street Journal arguing that excessive regulation was stifling
economic growth and forcing stores to close locations. In the 2016
presidential race, he and his wife gave over $170,000 in support of Mr.
Trump’s campaign, most of it right as he secured the nomination.
With Republicans controlling the Senate, Mr. Puzder’s chances for
confirmation remain high. Some chief executives have celebrated the
appointment, confident Mr. Puzder will run a very different Labor
Department from his predecessors.
“There are so many regulations imposed by politicians who have never run
a business,” said David Newton, an entrepreneurship professor who
co-wrote a 2010 book with Mr. Puzder, “Job Creation: How It Really Works
and Why Government Doesn’t Understand It.”
Once Mr. Puzder steps into his new role, Mr. Newton said, business
leaders will know “there’s someone who is like us and understands what
we’re up against.”
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