91: A New Direction For The DOL

Andrew Puzder couldn’t be more different than Thomas Perez.
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The new direction of the DOL is the opposite of where they’re headed today.

Andrew Puzder has been nominated by Trump to be the new Secretary of Labor. This is a huge departure from the traditional bureaucrat who lacks private sector experience. Certainly he is a stark contrast to the current Secretary, Thomas Perez, a lawyer, politician and consumer advocate.

The Perez pigsty:  

Perez has never been a business owner or an employer. Instead, he has worked for the government as a prosecutor and advisor to several politicians on civil rights and labor matters. He has advocated for “living wage” laws, opposed privatization of a healthcare provider and, as the Maryland Secretary of Labor, passed the Workplace Fraud Act that made employers who misclassify employees as independent contractors, guilty of tax evasion.

As the Secretary of Labor, he’s had a history of implementing rules that aren’t authorized by the Act he’s trying to bolster.  He tried enforcing a new rule requiring an employer’s attorney to publicly disclose the advice they gave their clients about how to avoid unionization. Fortunately, a Federal Judge stoped it from being implement saying it was not authorized by the Act, and that it violated the First Amendment to the United States Constitution.

He also implemented President Obama’s Fair Pay and Safe Workplaces executive order. But thankfully, A judge issued a nationwide injunction blocking it. The rule required federal contractors to tell the DOL whenever someone merely alleged that they violated the law.  The judge said that the rule violated the Constitution’s Due Process Clause.

Under the leadership of Perez, the DOL has campaigned for a higher federal minimum wage, mandatory paid leave, and pay equality laws. Congress has failed to pass either of these so, the DOL has turned to state and local governments, encouraging them to do what Congress won’t. And many have obliged.

The DOL has partnered with the NLRB to attack and destroy the franchisor business model by changing the rules to designate franchisors as joint employers and therefore responsible for their franchisee’s compliance with the National Labor Relations Act the many, many laws administered by the DOL. Check out episodes 60, 61 and 62 the learn more about that.

And in the final Coup De Gra of his reign, his doubling of the wage level required for the executive, administrative, and professional employees to be classified as exempt from overtime rules, was stoped in its tracks by a Federal judge’s injunction on November 22, 2016. To learn more about this you can listen to episodes 86, 79 and 33.

I wonder to what extent, Perez would go, if he could implement whatever rules or pass whatever laws he wanted. If mandating a living wage is good then wouldn’t a better-than-living wage be great? Does he know that these minimum wage laws kill jobs and opportunities or does he think employers have unlimited ability to pay wages? Maybe he thinks there is a balance and he knows best what that is?

Only someone who’s worked in government their entire career and who’s never been an business owner or employer, could be so hair-brained!

The Puzder paradigm:

Andrew Puzder couldn’t be more different than Thomas Perez. Well, they actually have one thing in common…. they’re both lawyers. Perez is a government henchman and Puzder is a private sector business advocate.

Here’s the change I think you can expect to see:

One thing you can count on going away is this preposterous policy regarding joint employers. Puzder wrote an article for the Wall Street Journal in 2014 blasting the DOL General Counsel’s rule that McDonald’s Corp. could be treated, in labor complaints, as a joint employer of its franchisees’ workers.

He wrote, “Imagine the upheaval in the fast-food industry if tens of thousands of restaurants accustomed to operating independently suddenly were forced to work hand in hand with franchisers on every employment-related decision.”

I can’t wait to watch him pull the DOL’s support from the NLRB and see what happens to their position.

Puzder, understands that minimum wage laws hurt low skilled workers. He knows that low skill jobs – entry level positions, aren’t worth $15.00 an hour. He knows that sales automation kiosks will replace many of these jobs, and I think that’s inevitable regardless of an increase in the federal minimum wage. It’s less expensive in the long run.

So I don’t see the DOL, under his leadership, wasting anymore time or money advertising to the public, and state and local governments, to get new minimum wage laws passed.

When it comes to the Affordable Care Act, Puzder is no fan. Reporter Michael Hiltzik interviewed Puzder and quotes him as saying:

“The government is traditionally not very good at managing these types of programs,” he told me. “The incentives of Obamacare are not set up in a way that makes economic sense. Obamacare is surviving based on increased government funding and increased taxpayer funding.”

More recently, he wrote the following in a Wall Street Journal opt-ed on October 31, 2016.

“The struggling restaurant industry is the canary in the coal mine for the Affordable Care Act’s impact on the broader economy. Unless Congress repeals and replaces the law, as both Donald Trump and House Speaker Paul Ryan advocate, with a patient-focused alternative that relies on competition to keep costs down and quality up, the outlook for economic growth and patient care will remain bleak.”

The proof is in the pudding…. the ACA is an unmitigated disaster. Any insurance professional who’s worth their salt, knew from the begging that this would fail. I took a more cynical view and said that this was designed to fail, that it was a stepping stone to universal health care.

And last but not least, you can take the DOL Wage and Hour Division’s new salary level increase to $47,476 for the Executive, Administrative, and Professional Employees overtime exemption off the table.

Puzder sums it up in his own words on his blog at andy.puzder.com – the title to his latest post is: “Overregulation has hurt the restaurant industry, jobs & the economy but Trump’s win will reverse that narrative.”

So the new direction of the DOL is the opposite direction it’s currently going.

About the author, Thomas

I have 20 of years insurance industry experience in C-level management, focusing on all aspects of workers compensation, risk management, loss control, employee benefits, HR, payroll and professional employer organization (“PEO”) operations. Currently, I am the owner and CEO of Humanly HR, and founder and host of SmallBiz Brainiac; a podcast providing employer intelligence to small business owners.

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