Business groups are opposing Julie Su’s appointment as head of the US Labor Department, putting some vulnerable Democrats and independents in the hot seat over whether they will support the former California regulator.
Trade associations have criticized Su’s record of running the Golden State’s employment agency in statements after President Joe Biden announced last week that he had landed her to head the DOL once current Secretary of Labor Marty Walsh departs later this month.
Calculating the confirmation vote is difficult given the number of senators up for re-election in 2024. Democrats need at least 50 votes to confirm Su if all senators are in attendance, meaning lobbyists only have to knock out two senators who argue with Democrats for the nomination to fail.
The International Franchise Association, which spearheaded a lobbying effort to sink former Biden DOL nominee David Weil, already has Su in its crosshairs.
“Deputy Secretary Su has been hostile to small businesses throughout her career and mismanaged the California Unemployment Insurance program as head of the California Labor and Workforce Development Agency,” said Michael Layman, IFA’s senior vice president of government relations and public affairs. “Just as the US Senate turned down David Weil because he was anti-small business and willing to legislate instead of enforcing existing laws, so Senators should turn down Julie Su.”
Adding fuel to the fire will be a new TV commercial being run on the DC media market by the California Business and Industrial Alliance, which also opposed Su’s nomination for the position of assistant secretary at the DOL. The group warns that Su “could be importing failed California politics to Washington, DC”
But even if Su’s appointment were successfully blocked, the federal mediation law would allow her to remain the agency’s deputy chief for 210 days. After that, if Biden hasn’t picked another candidate, the agency could delegate the authority of the Secretary of Labor position to Su, making her head of the agency under a different title.
Centered on California
In their opposition to Su, business groups cite her previous work in California, where she was responsible for enforcing state labor laws, which are often significantly stricter than federal ones.
Seven House GOP members of the California delegation wrote a letter to Biden that Su’s previous work should preclude her for this new position. “To say that Su failed in her previous role as Secretary of Labor at the California Department of Labor is an extreme understatement,” Rep. Kevin Kiley (R-Calif.), chair of the House Subcommittee on Workforce Protection, said in a statement accompanying the letter . “The magnitude of the suffering that the Su Department of Labor has inflicted on my constituents and millions of Californians should completely exclude Su from consideration.”
It’s about Su’s leadership enforcing the Worker Classification Act known as AB 5, which assumes workers are employees by law, making it harder for them to be classified as independent contractors. Big tech companies, as well as corporations and independent workers’ groups, opposed the law, saying it would destroy businesses and force legitimate contractors into unnecessary jobs.
But supporters of the law said it would provide protections, such as workers’ compensation and unemployment insurance, for workers misrepresented as independent contractors by companies looking to cut costs and reduce their legal liability.
Su’s critics have also focused on the failure of California’s unemployment insurance system under her leadership, pointing to more than $10 billion in unemployment benefits lost to fraud during the pandemic after the state employment agency failed to apply the system’s recommended updates – Issues she was grilled during her confirmation process for Deputy Secretary of Labor.
While Su blamed outdated technology and an overwhelming spate of new jobless claims for the Golden State’s fraud woes, the issue could resurface during her confirmation hearings amid a new push by the GOP and the White House to tackle pandemic-related identity theft and fraud. The DOL’s Employment and Training Administration oversees the state unemployment system, and the Biden administration also established an Office for Unemployment Insurance Modernization in the Office of the Secretary of Labor in 2021.
tech chill
California-based tech companies, which have had frequent contact with the DOL under the leadership of Marty Walsh, have also changed their tune on some of the department’s regulatory efforts following news of Su’s nomination.
The postponement comes as the Biden DOL is in the process of finalizing regulation that would make it easier to classify workers as employees rather than independent contractors under the Fair Labor Standards Act. When the rule was originally proposed, Uber praised the move, calling it a “measured approach.”
But after reports of Walsh’s exit and the announcement of Su’s nomination, Flex, a trade association representing Uber, Lyft and other app-based platforms, asked the Biden administration to suspend the rule until a replacement is confirmed by the Senate.
“We anticipate that the Senate confirmation process will include a careful review of their record and their potential impact on worker independence and consumer choice,” Flex CEO Kristin Sharp said in a statement. “In the meantime, we continue to urge the Department to delay the finalization of its proposed independent contractor rule until a permanent secretary is confirmed.”
count votes
Moderate senators up for re-election in 2024 will likely be the target of anti-Su lobbying efforts. Democratic Sens. Joe Manchin (W.Va.) and Jon Tester (Mont.) are up for re-election next year in the red states, while Independents Kyrsten Sinema (Ariz.) and Angus King (Maine) also have terms that ending in 2024, and may be more cautious in their voting.
Sen. Mark Kelly (D-Ariz.), who was reelected just last year, has signaled he will reconsider Su, although he voted to confirm her for the acting role. Kelly is one of only two Democrats who did not co-sponsor the reinstatement of the PRO Act this year and voted against Weil along with Sinema and Manchin.
“I have already voted to confirm her as Deputy Secretary of Labor,” Kelly told Bloomberg Law on March 1. “But that’s obviously a different job, and I’m looking at it.”
Manchin gave even fewer indications as to whether he would vote for confirmation.
“Julie who?” he replied when asked about his thoughts on Su. “I hadn’t thought of that.”
Beyond monitoring potential defectors, Senate Democratic leadership must also monitor their participation in the faction. John Fetterman (Pa.) is being treated for depression while Dianne Feinstein (California) is being treated for a case of shingles in San Francisco. Those two absences brought the Democratic faction to 49, level with the Republicans.
While Su faced outright opposition from Republicans in her confirmation as assistant secretary, she could hope that some moderate Republicans would change their minds if they voted on this new role. Sen. Susan Collins (R-Maine), who often crosses the aisle during confirmation votes, said she would reconsider Su but has some reservations.
“I haven’t looked at it yet. I worked well with Secretary Walsh, I had no contact with her,” Collins told Bloomberg Law after Su was nominated. “I remember being concerned about how she was managing the unemployment benefit program in California.”
