CKE Restaurants CEO Andy Puzder, nominated to head the Labor Department, has run into organized opposition from major labor groups.
Fairy tales never die. Opponents of labor secretary nominee Andy Puzder, CEO of CKE Restaurants, must be reading fairy tales. They continue to say that 60% of CKE's restaurants have workplace violations. How, they ask, can President Trump nominate the CEO of a company that routinely breaks the law?
Just one problem: CKE has an exemplary record, and performs better on the Labor Department's Wage and Hour Division inspections than most of its rivals. The attacks on Puzder are politically motivated and are not grounded in fact.
If you want to support a law-abiding company, go eat at Hardee's or Carl's Jr., CKE's chains of fast-food restaurants.
One critic is the Restaurant Opportunities Center United, a union-funded advocacy group, which states that "under Puzder's leadership, CKE Restaurants has been subject to multiple lawsuits for discriminating against workers and failing to pay overtime, and accused of firing workers for protesting against poverty wages."
But records from the Labor Department's Wage and Hour Division collected by Bloomberg-BNA show that Hardee's and Carl's Jr have far fewer Fair Labor Standards Act (FLSA) violations per store on average than other chains. In the past eight years, the average CKE restaurant has had 0.16 FLSA violations. That is, one would have to combine six different CKE restaurants to expect to find even one violation over the past eight years.
It is important to note that currently 8% of these restaurants are owned by CKE, down from about 32% in 2009, and the rest are owned by franchisees. Under the terms of the contract, CKE does not control the actions of its franchisees. Although the number of violations is tiny, the majority are not the responsibility of the parent company, CKE.
Other restaurant chains have an average of 0.56 FLSA violations over the past 8 years. Thus, one would expect to find one FLSA violation for every two restaurants outside of CKE.
The same pattern holds for total penalties and wages paid after FLSA violations. The average Hardees or Carl's Jr. restaurant — most owned by franchisees, a small share owned by CKE — paid $39 in penalties and back wages over the past 8 years. This is less than $5 per store per year, or less than one hour's wage per store.
Other chain restaurants paid an average of $132 in penalties and back wages for FLSA violations over the past 8 years. This amounts to less than $17 per store per year, or less than 3 hours of wages.
If these numbers seem small, they are. Even so, they overstate the violations, because some penalties are paid as settlements rather than admissions of guilt. When violations at a restaurant are alleged by a Wage and Hour Division inspector, it is frequently less expensive to pay the fine than to challenge the Labor Department in court and go through a lengthy legal fight.
Chain restaurants have a history of compliance with labor laws. Among chain restaurants, CKE restaurants headed by Andy Puzder are among the very best for compliance with these laws. American workers seek to work at these restaurants not because they are bad places to work, but precisely because they are attractive places to get a start on a career.
The franchise industry, including many fast-food chains, provides 7.6 million jobs and contributes $674 billion to GDP. Former Labor Secretary Tom Perez waged a war on franchises by asserting that parent companies were joint employers of individuals who worked for franchised businesses. This would have made it easier for unions to organize these chains. Unions are terrified that Puzder will roll back these directives, and so they are mounting a full-fledged attack.
President Trump has the wisdom to nominate for labor secretary someone who has run a successful company, who has had to make payroll, and who has complied with the applicable labor laws. Puzder has first-hand experience of the regulations that can impede hiring — and he is the right person to work out how to expand it.
This piece originally appeared in Investor's Business Daily
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Diana Furchtgott-Roth is a senior fellow and director of Economics21. She had previously served on the transition team for President Trump. Follow her on Twitter here.
This piece originally appeared in Investor's Business Daily