Where Trump's Labor Secretary pick stands on overtime, fiduciary rules

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Reacting to President-elect Donald Trump's decision to appoint fast food executive Andrew Puzder as secretary of the Department of Labor, the benefits industry says his anti-regulation background is likely to be good for business oweners. But labor experts also say they know little about how Puzder will handle the fiduciary rule.

Puzder, chief executive of CKE Restaurants, the parent company of Hardee’s and Carl’s Jr. restaurants, has been very vocal on his blog and in the media about his pro-business, anti-government regulation stances — but he has not mentioned retirement or the fiduciary rules in any of his past comments. A financial backer and supporter of Trump, Puzder believes that many of President Barack Obama’s pro-labor initiatives, including the Affordable Care Act and new overtime rules — which were set to go into effect this year but were put on hold — should be repealed because they would force employers to cut jobs. He also is against raising the minimum wage.

"For those who expected the President-elect to show some degree of balance and restraint with respect to federal labor policy, the appointment of Mr. Puzder to head the DOL is a knockout punch in the nose,” says John Alan Doran, a partner with Sherman & Howard, a law firm that works closely with businesses and governmental entities. "Mr. Puzder, himself an attorney, has been an outspoken voice against raising the minimum wage, the Affordable Care Act and the DOL’s currently enjoined overtime regulations. He is a strong critic of government regulation, preferring market solutions to government intervention.”

In his personal blog, Puzder said that "Obamacare is taking money out of the hands of consumers at the same time it is increasing costs for employers, making an issue that hits people's pockets." He also said that raising the minimum wage would force employers, particularly small businesses, to cut workers or close shop altogether.

Also see:Top benefit trends of 2016: Problem-solving products and election-fueled uncertainty.”

Doran adds that Puzder’s appointment is “great news for employers and not-so-great for the lawyers who represent them" because when regulations changes, it is up to the lawyers to determine how a corporation meets those regulatory requirements, resulting in additional paperwork to remain in compliance.

"While the Obama administration pushed a decidedly pro-labor agenda, we can expect Mr. Puzder to roll back as much of that agenda as feasible," Doran says. "Employers will find themselves in a much friendlier environment, while management-side labor lawyers will have to retool.”

Eric Helman, chief strategy officer for Hodges-Mace in Atlanta, says, "It is perhaps helpful to look at Mr. Puzder's appointment in the context of Rep. [Tom] Price's recent appointment [as secretary of the Department of Health and Human Services]. Both favor the deregulation of businesses allowing for the labor market to perform. Mr. Puzder has long been an advocate of the value of service jobs as a training step in the career progression of Middle America.

“His previous positions reveal a predisposition that employees will be better off when employers have to compete with compensation, benefits and work conditions. This is a major change from the trend of forcing regulation that artificially increases the cost of labor, which may have caused many employers to look at labor elimination rather than competing on the basis of total compensation."

Marlén Cortez Morris, litigation attorney at Cheng Cohen LLC, a full-service boutique law firm serving the franchise industry, says the franchise industry greeted Puzder’s appointment with high praise.

Also see:2016’s best places to work, part 1.”

“Under the current administration, the DOL has targeted franchisor-franchisee (and other independent contractor) relationships through aggressive regulation and administrative enforcement actions, seeking to classify them as employment relationships and expanding joint employment liability to franchise businesses. If confirmed, a Puzder DOL could unwind regulations, enforcement actions, and litigation involving the expansive joint employer standard and new overtime rules — which are temporarily blocked — and thus positively impact the over 700,000 franchise businesses contributing a high number of jobs to the economy.”

Erin Sweeney, an attorney in Miller & Chevalier Chartered’s ERISA and fiduciary litigation practice, says Puzder “was likely selected to serve as Secretary because of his strident opposition to the Affordable Care Act and minimum wage increases. The Department of Labor will be intimately involved in dismantling the ACA given that the majority of the underlying regulations are tri-agency regulations — DOL, HHS, and IRS. Puzder will likely focus the bulk of his attention on ACA dismantling and eliminating the overtime regulation. Although Puzder's views on the fiduciary rule are not on record, he has generally advocated withdrawal of the regulations issued by the Obama DOL, so it is likely that the rule is on his hit list.”

Puzder could not be reached for comment.

Fiduciary rule

The fiduciary rule is “on the short list of really important decisions and issues that whomever the Labor Secretary will be will have to deal with and implement and think about,” says Seth Rosenbloom, associate general counsel at Betterment, a robo advisory firm in New York.

As head of the DOL, Puzder will have a lot of influence on the fiduciary rule, but the direction in which he will take its enforcement — set to go into effect in April 2017 — is yet unknown.

“One thing that is interesting and encouraging, as far as I can tell, the potential nominee Mr. Puzder has not spoken out publicly on the fiduciary rule, unlike some of the other candidates who have been publicly discussed to fill that position,” Rosenbloom says. “He may or may not have a view on it already. At a minimum, he hasn’t expressed one, so it gives us some hope that now is a good time to make our views known as he may still be assessing whether he feels this rule is a good thing or not.”

Also see:2016’s best places to work, part 2.”

A lot of this comes down to priorities. There are many things the Trump administration and the Department of Labor will want to accomplish in a relatively short amount of time. The fiduciary rule goes into effect April 10, 2017, not long after the inauguration.

“A lot of institutions, particularly institutions that had more problematic business models, have already spent millions of dollars and untold hours getting ready for this standard and I think it will be very difficult for those institutions to put the genie back in the bottle,” Rosenbloom says.

Already in motion

Shelby George, senior vice president of adviser services for Manning & Napier in Fairport, N.Y., agrees, saying that “there’s certainly a possibility that Trump, with his appointments or through executive action or congressional action, could either defund or delay the rule; replace it with something else or materially change it. What Manning & Napier has focused on is that many of the trends in the industry that have been accelerated by this rule, those will continue regardless of what happens with this rule.”

She adds that more advisers are taking on fiduciary responsibility and the trend toward fee-based rather than commission-based compensation has already been set in motion.

Along with the DOL appointment, Manning & Napier also is keeping an eye out for other agency nominations, including the Employee Benefits Security Administration and the ERISA Advisory Council. It is important to pay close attention to Trump’s cabinet appointments, because with “President-elect Trump comes quite a bit of uncertainty,” says George.

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