Workers Comp Zone


It appears that Trump intends to nominate Andrew Pudzer as U.S. Secretary of Labor. That’s a move that will send shivers among many union activists and employee-side think tanks.

California increasingly fancies itself an island unto itself, with its sheaf of laws that regulate various aspects of the employee-employer relationship. From mimimum-wage standards to occupational health regulations to worker leave provisions, California already often marches to a different drummer than federal standards.

Although Pudzer’s appointment will have next to no direct impact on California workers’ comp, it is worth noting some of the issues that he seems to care about. Pudzer is likely to be prominent voice on issues involving working people over the next four years, like it or not.

In addition to running CKE (which operates Carl’s Jr, Hardees and other food franchises), Pudzer has been an outspoken blogger and media commentator.

Pudzer’s blog focuses on many of the common complaints that California businesses have about the cost of operating here. The clout of unions. A Democratic legislative supermajority which is perceived as hostile to business concerns. Higher labor, land, energy and housing costs than in most other states. Onerous land use and permitting rules. Too much trial lawyer clout. Employee classification rules which allegedly interfere with managing a business efficiently.

It may be that Pudzer has complained about California workers’ compensation costs, but I could not locate that as a focus on his blog or in published pieces. In 2013 he was referencing Rick Perry’s drive to get California business to move to Texas.

In one interview with a Wall Street Journal reporter , Pudzer notes that it “it is easier to build on Karl Marx Ave. in Siberia than it is to build on the Avenue of the Stars in Los Angeles”. Construction of restaurants in Texas, Shanghai and Russia are noted to be a fraction of the time it takes to open a California outlet.

CKE and its franchisees continue to have a strong presence in California, but the company moved its headquarters to Tennessee , which was perceived as more business friendly.

CKE has been the subject of various class actions such as ones alleging overtime and Fair Labor Standards Act violations.

More recently, Pudzer has been especially critical of Obamacare, claiming that increasing healthcare premiums have led to a “restaurant recession”. Also receiving his ire was California’s decision to increase the minimum wage to $15 per hour over a phase-in til 2022.

He has raised the specter of increased automation of fast food restaurants and the likely resulting loss of entry level jobs if fast food restaurants increase use of robotics in response to spiraling labor costs.

Readers may want to look at the  December 8, 2016 LA Times article by Michael Hiltzik, “Does Andy Pudzer really want to replace his Carl’s Jr. workers with robots? No, but…” (see link below).

In recent years there have been increasing attempts to organize restaurant workers, and research done by groups such as the Food Labor Research Center at UC Berkeley and the Food Chain Alliance in Los Angeles are focusing on the economics of those workers.

In the fast food world there has been labor law litigation over the issue of whether a corporate mother-ship (McDonald’s) is liable for the labor and wage violations of franchisees. The latest in that litigation can be found here:

So these are some of the issues in the background as Pudzer heads to the U.S. Department of Labor.

California may continue to provide more worker protections (and more generous workers’ comp benefits) than many other states, but Pudzer may attempt to set a tone that is vastly different from California’s path.

Here is the link to the LA Times article:

And here is the link to Andy Pudzer’s blog:

The Challenges of Running a Business in California

Stay tuned.

Julius Young