Department of Labor
Julie Su, Acting Secretary of Labor

Businesses Take a Stand Against Su

April 21, 2023
Business interests oppose President Biden's nominee for Labor Secretary.

Commentary & Analysis

One question currently facing members of the United States Senate is: Do we want to approve the nomination of Julie Su as Secretary of Labor if that means installing an unashamed and enthusiastic advocate of California’s radical style of labor regulation?

President Biden already named Su to serve as acting Secretary of Labor. In 2021 she was confirmed by the Senate to be deputy secretary of labor, the No. 2 position under the previous Secretary of Labor Marty Walsh until he stepped down from that position in March, but things are not going as easy for her this time around and her new nomination has stirred doubts among even some Democratic Senators who appear to be dubious about adopting her home state’s labor policies on a nationwide basis.

A former civil rights attorney, Su served in a number of state government labor positions until she became head of the California Labor and Workforce Development Agency during the COVID-19 pandemic. In that post, her responsibilities also included supervision of the state’s Employment Development Department, which handed out $170 billion in unemployment claims—$20 million to $36 billion of which later turned out to be fraudulent. A state audit blamed her mismanagement for these enormous losses.

In addition, under her executive leadership, the entire system had become such a mess that an estimated 1 million qualified applicants never received any of the money they were due under law, and another 350,000 were deprived of funds because debit cards handed out by her agency lacked adequate security measures, a fact that quickly became evident to professional criminals.

The issue of her responsibility for this mess was raised repeatedly at her Senate confirmation hearing that was held on April 20, where she faced criticism for not addressing the fraud issue in California sooner or more effectively than she did.

There already is precedent for Democratic senators voting to block a Biden Labor Department nominee. Last year, Sens. Kyrsten Sinema (I-AZ), Mark Kelly (D-AZ) and Joe Manchin (D-WVA) voted to block Biden’s nomination of Dr. David Weil to be chief of DOL’s Wage & Hour Division, a position he had served in during the Obama administration. In a situation similar to Su’s, Weil was rejected because of his similarly extreme position condemning the very idea that the independent contractor concept could in any way be legitimate.

When he served at DOL under Obama, Weil had gone so far as to publicly declare that there were no such things as independent contractors; they all were simply misclassified employees (a phrase later repeated by Hillary Clinton during her 2016 presidential run).

In the immediate aftermath of the April 20 hearing, Kelly, Sinema, Manchin and Sen. Jon Tester (D-MT), who earlier expressed doubts about her nomination, had not yet said how they intend to vote on her nomination.

In Su’s role as head of California’s state employment agency vigorously enforcing an anti-contractor measure, she also raised the ire not just of employers, but also of the independent contractors and gig workers who were hurt by her enthusiastic embrace of AB 5, the state’s draconian law seeking to eliminate most forms of contractor status. She went as far as to condemn the use of contractors for leading to what she tartly termed “the day labor-ization of our economy.”

In a 2019 interview she explained, “We will be doing investigations and audits so that those who want to comply with the need to reclassify can do so and those who don’t will understand that’s not the kind of economy we want in California.” She began this process by adjudicating about 1,000 cases in the port trucking industry that she said resulted in finding millions of dollars owing to truck drivers who were judged to have been misclassified under the new law.

Business groups and several Republican senators have expressed concern that Su will push forward a joint employer standard which would make parent companies responsible for the employees of their franchisees. For years now, unions have been trying to organize franchise operations like McDonald’s and have persisted in pushing for the adoption of just such a standard at the federal level.

Although members of the House of Representatives have no vote on her confirmation, House Speaker Kevin McCarthy (R-CA) and several other prominent House Republicans wrote to President Biden expressing their unhappiness with Su’s appointment as Acting Labor Secretary and nomination to take that role permanently, particularly if she attempts to replicate AB 5 on a national level. “Because of her misguided record in California, we have major concerns about potential disastrous ramifications at the federal level if Ms. Su becomes Secretary,” the representatives declared.

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