President-elect Donald Trump’s appointee for secretary of labor, CKE Restaurants CEO Andy Puzder, will have more influence on national policy than any Central Coast business leader in decades. The implications for California are significant.
Puzder is a 66-year-old attorney and former general counsel of Hardee’s and Carl’s Jr.’s parent company. He rebuilt the CKE brands through a brilliant strategic move and racy ads that sold, as he put it, “big juicy burgers to big hungry guys.”
The CKE chief has also been railing against California’s anti-business climate for years, advocating for more flexibility for franchise operators and much less onerous workplace rules, particularly for small businesses.
Puzder was a big supporter of Mitt Romney in 2012 and Trump this time around, pressing his agenda for less workplace regulation.
Puzder is likely to get instant credibility because he has walked the talk about California’s business climate. He’s in the process of moving his company to Nashville as Hardee’s and Carl’s Jr. consolidate their offices from St. Louis and Carpinteria. That’s the kind of gutsy move that’s earned him a nomination for labor secretary. The biggest questions are going to be about chemistry and his close ties to the Romney camp.
My research indicates he’s already put his home in the Santa Barbara area up for sale. His office declined to make him available to me for this column but having known Andy and talked with him over the years, it’s pretty clear that his views and the Trump administration are going to be very closely aligned.
It would also appear that his influence on labor practices and small business, particularly franchising, are going to drive a bigger and bigger wedge between California and national standards.
So far, there’s been little sign of California backing down, especially with the Democratic supermajority in the state legislature. But here’s a look at what’s at stake:
• Professional and management rules: Puzder may have run a company that employs hundreds of burger flippers but he’s been eager to break down barriers that keep top performers from getting promotions to management jobs. One of his biggest complaints about California is the state’s insistence that managers be paid as hourly employees if they occasionally step in and work the line if things get busy.
• Exempt employee rules: Hardees and Carl’s Jr. operate in plenty of states where managers earn far less than the proposed $47,000-plus standard for federal overtime exemption. The rules have been suspended by a court and my guess is they would be dead on arrival in a Trump administration. California’s exemption level is on a track to remain much higher than the federal standard as the minimum wage moves to $15 per hour.
• Franchise regulations: One of the whispered items that helped sink candidate Hillary Clinton in rust belt states was the possibility of treating franchise operators like vast enterprises for Obamacare and other regulations. Puzder’s operations are heavily franchised and they are likely to tweak the rules to create more flexibility and maybe press for easier financing for franchisees. California doesn’t give any breaks to franchise operations.
The strategic move that put Puzder on the map was combining the Hardee’s and Carl’s Jr. menus into a single set of offerings, cutting costs and appealing broadly to a demographic that likes big burgers at a value price. His marketing practices, while controversial, actually worked, though they’ve been toned down a bit recently.
Currently, CKE is owned by Roark Capital of Atlanta, which purchased the chain from Apollo Group for an estimated $1.6 billion. Roark, named for a character from Ayn Rand, owns the parent of Arby’s and Wingstop and has a significant stake in Jimmy John’s.
Puzder will have the difficult task of reversing eight years of growing regulation under the Obama administration and moving a large bureaucracy toward more flexible workplace rules. If he doesn’t, his fundraising prowess and firmly set ideas will continue to drive larger policy issues.
Among them are advocating for a greatly expanded earned income tax credit as an alternative to minimum wage hikes. As well, a view that expanding America’s flagship brands overseas via franchise arrangements will help other nations experience the benefits of the free enterprise system.
Puzder has a strong personality and brings a former trial lawyer’s capacity for argument to the table. That may or may not make him a good team player. But he will bring a lot of experience and a shake-the-snow globe view of workplace practices whatever the future holds for him in the political sphere.
• Reach Editor Henry Dubroff at [email protected]