Romney Economic Advisor Andy Puzder Gets Overtime Pay Law Wrong

Andy Puzder is the CEO of CKE Restaurants (Hardee’s and Carl’s Jr.). Bloomberg reported his 2012 salary and other compensation as $4.485 million, so he is doing well in what he likes to deride as the Obama economy.  His restaurant chain is doing well, too, apparently, since its profits reportedly rose more than 30 percent last year. (So much for overregulation!)

But Puzder is opposed to President Obama’s proposal to update the Department of Labor’s overtime rules, an update Puzder claims would turn CKE’s poorly paid assistant managers into “glorified crew members.”  Those rules have been updated only once in the last 39 years and are so obsolete that workers earning less than the poverty level can be considered “executives” and denied overtime pay even if they work so many extra hours that their pay falls below the minimum wage. But that helps Puzder make a bigger profit, so he says leave the rules alone.

One thing is certain: Puzder won’t let any rule change reduce the millions he takes home from CKE. He wants us to know he will take it out of his employees, one way or another. As Puzder says, “overtime pay has to come from somewhere, most likely reduced hours, reduced salaries or reduced bonuses.”

Puzder’s greed aside, there’s a real question about how businesses like his will handle the new rules.  The safest bet is that they’ll do what companies did in the past, and not reduce worker salaries or bonuses, because that would harm employee morale. In the 1960’s and 1970’s, the salary below which employees were guaranteed overtime pay was about $1,000 a week in today’s dollars, wages were growing much faster than they do today, and unemployment was lower. The whole economy worked better and more fairly. Companies absorbed the higher overtime pay or hired more employees.

There’s no law of economics that says Puzder couldn’t raise the price of the sandwiches he sells by a nickel or two to pay for his employees’ overtime. After all, his competitors will all be subject to the same rules. And, he could take it out of his pay, and the pay of his top executives – CEO pay has skyrocketed in recent years as worker pay has flattened.

Puzder claims that a misunderstanding “led Mr. Obama to believe that government should compel employers to pay managers hourly overtime.” But the misunderstanding is Puzder’s, not the president’s. It’s the law that compels overtime for low-level, poorly paid managers. The Fair Labor Standards Act requires that all workers, with few exceptions, be paid extra for their overtime. One of those exceptions is for highly paid executives and was never intended for people like CKE employees paid less than twice a poverty wage. At $36,000 a year, if his so-called executives work 50 hours a week Puzder is paying them only $13.84 an hour – less than the median wage. Once they have the experience and status to be paid $50,000 a year or more, it might be possible to think of CKE’s store managers as executives. But until Puzder values them enough to compensate them as executives rather than as average employees, he ought to pay them time and a half when they work long hours.

  • benleet

    Apparently this employee is paid $36,000 a year, and $692 per week, and $17.30 per hour. When he works 10 more unpaid hours his hourly pay goes down the $13.84 an hour figure. I didn’t know it was legal to demand 10 additional unpaid hours from a wage employee. Is that true, or legal? He makes $17.30 an hour for 40 hours, then nothing per hour for 10 hours? His pay would increase from $692 per week to about $942 per week if his 10 additional hours were at $25.95 an hour, time and a half.

    Here’s what I believe about the minimum wage:
    John Schmitt at CEPR showed that the minimum would be $21.72 (in 2012) if it had “If the minimum wage had continued to move with average productivity after 1968, it would have reached $21.72 per hour in 2012.”

    Monopsony is a new word for me, it means wage levels when not at full employment. Well, that’s my current definition.

  • Maybe its just me

    I was a “manager” at Radio Shack in the early 2000’s and found the same thing as Mr. Puzder’s managers. I had no authority that is generally part of management, I just got to work ot without wages. While I was in management training, I had to work one day a week without pay. I was on commission vs draw and the draw was for the 40 hours,including the 8 of management training. It always wiped out commissions from the 32 hours I actually sold. As a manager, the pay for the hours worked out to less than minimum wage, not the 70K they promised, with lots more headaches. I quit to find a better job. I was part of a class action suit that did get a settlement for unpaid ot. I guess a man that makes what 300 of his restaurant workers makes figures, I don’t get ot, why should they? We’re all managers. Yeah right, Mr. Puzder.

  • PurpleAardvaark

    I first ran across the concept of “exempt from overtime” about 25 years ago and I thought it was a royal purple shaft then and I still do now. The main reason is that if I work less than 40 hours a week, I have to record it as vacation, sick leave, personal time, or something. I don’t get docked, but it can eat into vacation time. In contrast, if I work more than 40 hours a week at best I get a “thank you for your effort” but mostly the extra time is ignored and taken for granted.

    The part I find most annoying is that I’m engaged in a position where I don’t get paid so much for “doing” as I do for “thinking” and my brain doesn’t shut down when I’m not at my desk. Oftentimes my best work is done when I’m driving home or working outside, exercising, or doing any number of things that aren’t “work”.

    • Joe Flowers

      Exact same situation here.

  • JackChanse

    perfect choice to run Department of Labor. Donald ran as a populist, but his cabinet is full of reactionaries and robber barons.

    if they raised the minimum wage 1000%, that still isn’t enough to buy a 1 BR in San Francisco or New York. why are prices up ten times higher than my parents paid for everything? and how can we possibly pay enough in wages to make up the difference?

    where is the discussion of lowering profits? A return to 70% tax rates and union jobs would get us back our lost standard of living.