Andy Puzder’s Labor To-Do List

The Wall Street

Dec. 8, 2016

Trump nominates a CEO who puts workers before unions.

Donald Trump ’s selection of CKE CEO Andy Puzder to lead his Labor Department has incited a tantrum on the left, which is a good sign. The burger maven once told us that he often picked up litter around his restaurants, and departing chief Tom Perez is leaving plenty to clean up.

Mr. Puzder, who often writes for these pages, has expertise in labor law and business. Prior to becoming CEO at CKE, he was the company’s general counsel and helped save the business from bankruptcy. CKE restaurants (Hardee’s and Carl’s Jr.) employ 75,000 workers in the U.S., and it’s not an exaggeration to say that thousands owe their jobs to Mr. Puzder.

He is also the rare executive who promotes free markets rather than merely his narrow business interests. Mr. Puzder has expounded in these pages on the unintended consequences of ObamaCare’s mandates and a $15 minimum wage. He’s also detailed how the Obama Administration has contributed to the shrinking labor force and large number of underemployed workers.

Unions and their liberal friends are deploring Mr. Puzder as “anti-worker,” but there’s a difference between unions and workers. Over the last two decades the share of private workers who belong to a union has shrunk by a third to 6.7%. Many have realized that unions are often more concerned with their own pecuniary and political interests than the long-term interests of workers.

To compensate for their shrinking membership, labor groups have sought to use government as a cudgel against business. The Obama National Labor Relations Board (NLRB) and Labor Department have rewritten large chunks of labor law, and the test for Mr. Trump isn’t whether he can give unions more power. The challenge is to foster strong enough economic growth to raise wages more than during the last eight years, and among other things that requires more labor flexibility.

President Obama has issued nine labor-related executive orders including mandating paid sick leave for employees of federal contractors and the use of project-labor agreements that squeeze out non-union workers for federal construction projects. Mr. Puzder should ask his new boss to rescind these orders on day one.

He should also withdraw Mr. Perez’s “guidance” that broadly redefines a joint employer under the Fair Labor Standards Act as one that indirectly controls workers. This interpretation upends the franchise business model and puts corporations on the hook for minimum-wage infractions of their franchisees and subcontractors. The NLRB adopted a similar standard last year, while states and other federal agencies have applied disparate interpretations. Mr. Puzder can work with Congress to codify the “direct control” standard that prevailed for the three decades prior to the Obama Administration.

Many of the Administration’s lawless rule-makings are being challenged in court, and some have been stayed pending appeal. These include a rule doubling the salary threshold for exempting workers from overtime pay, which a federal court enjoined last month. A federal judge has also blocked the so-called “persuader” rule, which abrogates attorney-client privilege by requiring employers to disclose labor-related communications.

Business groups have also filed several lawsuits against Labor’s fiduciary rule requiring brokers to act in a client’s “best” interest, which will raise costs for middle-income investors. Mr. Puzder could do the economy and workers a favor by deciding not to defend these rules in court. Another option is to rescind the regulations with new rule-makings.

Senate Democrats are lining up to oppose Mr. Puzder’s confirmation, but his biggest challenge will be flipping an entrenched Labor bureaucracy that President Obama has emboldened. Mr. Puzder knows that workers will benefit from less government intervention, which is why he’s the right man for the Labor job after eight slow-growth years that have left millions of workers desperate for a raise.