Hardee’s Plans Layoffs as Hearing on Puzder Approaches

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Ben Penn

CKE Restaurants Inc., the conglomerate helmed by Labor Secretary-designate Andrew Puzder, notified 51 workers Jan. 3 that they will be laid off in March when the company relocates to Nashville, Tenn., according to a letter obtained by Bloomberg BNA.

Most workers were previously given an opportunity to relocate, and new Nashville hires will yield a net gain of three jobs, CKE’s general counsel told Bloomberg BNA. The layoff notices come about two weeks before a Senate panel is scheduled to debate Puzder’s nomination.

Democrats are likely to point to the notices as evidence that Puzder is unfit to be labor secretary because he hasn’t looked out for his own workers. Puzder remains the chief executive officer of CKE, the parent company of the Carl’s Jr. and Hardee’s brands. He would resign if confirmed to serve in President-elect Donald Trump’s Cabinet.

More than one-third of 120 corporate employees at the Carpinteria, Calif., headquarters and at a St. Louis office received the notices, Chip Siegel, CKE’s executive vice president and general counsel, told Bloomberg BNA. The notices were issued in compliance with the Worker Adjustment and Retraining Notification Act.

Another 66 corporate employees are staying on by moving to Nashville, and the 51 departing workers will be replaced by 54 new hires, Siegel said. Of the 51 workers losing their jobs, 28 were not extended relocation offers, he said.

Democrats Skeptical of CEO

The layoff notices followed up on CKE’s March 2016 announcement that it would consolidate corporate offices.

Siegel touted the three-job gain and generous severance packages, health-care continuation, retention bonuses and outplacement assistance, but the decision is likely to get negative attention from some Puzder critics. Democrats have raised concerns about Puzder’s opposition to steep minimum wage hikes and his criticism of the DOL’s pending move to expand overtime pay eligibility.

“Obviously we can’t control what opponents say or think or write, but am I concerned about it? No, because there’s absolutely no correlation between the letters going out and the confirmation process,” Siegel said. “This isn’t a layoff situation; this a consolidation situation where a significant number of the employees will remain within the employ of CKE.”

CKE is getting $2 million in state and local tax incentives related to the move. Siegel also cited as motivating factors impending lease expirations at the two offices, a desire to tap into Hardee’s strong Southeast base, and the difficulty of operating several corporate departments split between St. Louis and California.

Ex-Director Questions Puzder’s Transparency

A former CKE senior management employee who worked directly with Puzder at earlier stages of the relocation process spoke with Bloomberg BNA on condition of anonymity. The source alleged Puzder kept employees out of the loop when the company in 2011 was being wooed by Texas officials to move to the Lone Star State.

Puzder “never wanted to do any internal messaging about it,” said the former company director. Rather than keep employees informed, “his choice was always: ‘they don’t need to know; they just need to know where to show up to work,' ” added the source, who was laid off by Puzder several years ago and acknowledged harboring “strong feelings” about the company.

Siegel dismissed the accusations. “I am not commenting on the opinions of a former disgruntled employee, but from my experience through this process, Andy always prioritized transparency and he made decisions based on the best interests of the employees and of the company,” he said in an e-mail.

Joe Caruso, a franchising consultant who was CKE’s director of franchise development in the 1990s, told Bloomberg BNA that Puzder’s top concern as CEO must be his “fiduciary responsibility.”

“I think at times it can come off as not having an emotional attachment” to workers, Caruso said. “It’s hard to talk about people’s jobs and changing wherever they’re going to be working. He still has an obligation to the shareholders and to the franchisees to be able to deliver profits.”

WARN Letters Not a Surprise

The move probably didn’t catch employees by surprise. After assuming the CEO role in 2000, Puzder has spoken openly about wanting to flee California’s state tax structure and unnecessary red tape for businesses.

The laid-off and relocating employees are primarily in CKE’s marketing and supply-chain departments. CKE will continue to operate an additional office in Anaheim, Calif., which will now house several of the former Carpinteria employees, Siegel said.

He declined to provide details on the severance packages.

The employee letters followed up on prior notices to give affected workers a more clear timetable for the move. They were sent in accordance with federal WARN Act and state requirements that most employers must give workers at least 60 days' notice before a location shuts its doors.

“Since you are not relocating to Nashville, this will confirm that your separation from employment is expected to occur on March 6, 2017, or within the 14-day period that begins on that date,” CKE’s vice president of human resources, wrote in the letter.

Record to Get Close Look

Regardless of what role the relocation plays in Puzder’s confirmation, he’s still expected to face criticism over past comments opposing minimum wage hikes and unionization. He may also get some flak for his interest in automation technology that could eliminate some low-wage jobs.

But Siegel said Puzder’s job creation background satisfies the DOL’s mission.

“Andy’s record of job growth within our system speaks for itself. Every time we open up a restaurant, we employ 30 additional people,” the CKE general counsel said. “We’ve been opening restaurants at a very good pace ever since Andy was the CEO.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.