Puzder Conflict of Interest Plan Sets Up Feb. 16 Hearing

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By Ben Penn and Chris Opfer

Labor secretary nominee Andrew Puzder’s plan to avoid conflicts of interest by stepping away from business entanglements reached the Senate Feb. 8, clearing the path for the fast-food CEO’s confirmation hearing on Feb. 16.

Puzder said that if confirmed as labor secretary, he would resign as CEO of CKE Restaurants Inc., sell all of his company stock and divest ownership interests in 213 other businesses, according to documents obtained by Bloomberg BNA. He also pledged to recuse himself from all government involvement with the company unless he is cleared by government ethics rules. Puzder said he won’t participate “personally and substantially” in any matter involving the company without prior approval.

Puzder said his recusal will also apply to any company that owns 50 percent or greater interest in CKE. The disclosure documents don’t clarify how Puzder will approach DOL investigations involving CKE’s franchised restaurants. CKE is the parent company of Hardee’s and Carl’s Jr. About 95 percent of the chain’s stores are owned by franchisees.

The Labor Department’s Wage and Hour Division conducted 108 investigations at CKE-affiliated stores dating back to 2004, according to a Bloomberg BNA review of the agency’s public enforcement database. Those inquiries resulted in the stores agreeing to pay $153,921 in back wages for 936 employees, mostly from minimum wage and overtime violations.

George Thompson, a spokesman for Puzder, told Bloomberg BNA Feb. 8 that OGE didn’t ask Puzder to agree to recuse himself from matters involving CKE franchisees.

“Optics are important and Andy could always voluntarily agree to recuse himself from any matter before the DOL in which a franchisee is a party,” Thompson said. “Doing so would avoid the appearance of a conflict of interest, not because a conflict of interest in fact actually exists.”

Feb. 16 Hearing Follows Four Delays

“The committee has received Mr. Puzder’s OGE paperwork and will notice a hearing tomorrow for Thursday February 16,” a Republican spokeswoman for the Senate Health, Education, Labor and Pensions Committee told Bloomberg BNA Feb. 8 via e-mail.

The announcement comes after the HELP Committee four times postponed the hearing. The most recent delay was attributed to panel members still waiting for the Office of Government Ethics to clear Puzder of potential conflicts of interest.

Separately, Puzder’s responses to senators’ questions are expected to reach committee offices Feb. 9, Thompson said. His FBI background check also has been completed, Thompson added.

Thompson said he didn’t know if Puzder would disclose tax returns per Senate Democrats’ request. The HELP Committee doesn’t require nominees to submit tax returns.

Opposition Research Mounting

A growing stack of opposition research emerged during the five weeks of Senate delays; the hearing was initially scheduled for Jan. 12.

Democrats and labor groups are using the extra time to highlight labor law violations alleged by workers at CKE’s mostly franchised stores and his ex-wife’s domestic violence accusations, which she has since retracted. They’re also focusing on Puzder’s recent admission that he once employed an undocumented immigrant housekeeper.

Puzder’s industry allies, such as the National Restaurant Association and the International Franchise Association, are countering by reporting what they say is Hardee’s and Carl’s Jr. employees’ high job satisfaction. Those groups also touted the thousands of jobs they said Puzder has created since becoming CEO in 2000.

The GOP majority Senate is considered likely to confirm Puzder, barring a surprise revelation in his filings.

The independent OGE is expected to publish a copy of the letter on its website by Feb. 9.

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.

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