Biden’s Pick for New Labor Secretary Lost California Billions of Dollars in Fraudulent Benefit Claims

There’s a popular phrase in California used to describe the stellar career rise of Julie Su, the state’s former labor secretary who caused one of the worst cases of government fraud in United States history and was then rewarded with a promotion to the Biden administration: She “failed up.”

In 2020, Su made the highly questionable decision to suspend claimant eligibility requirements for the Employment Development Department, otherwise known as the state’s unemployment agency.

That lack of system safeguards, the office of California’s Auditor found in 2021, directly led to the loss of an estimated $31 billion in fraudulent benefit claims, many of which were filed by inmates in California’s prison system, as international crime syndicates.

As well, Su oversaw the EDD delaying the legitimate claims of about 5 million workers during the pandemic and the incorrect denials  of another 1 million claims during the same time, according to a report by the Sacramento Bee.

Su also saw the roll-out of, and announced her support for, a labor law that determines who is an employee and who is a contract worker for a company.

Su wrote in a 2019 Twitter post that the law is “about preserving labor standards that are key to quality jobs in California,” although critics say the legislation sets unrealistic standards that has jeopardized the livelihoods of tens of thousands of freelancers and independent contractors.

Su ended up as deputy secretary of labor, the second highest official in the Labor Department — and now, regardless of her track record in California, is the President’s pick to replace current Labor Secretary Marty Walsh, who has confirmed plans to leave his position next month.

Which is why seven Congressional Republicans from California have signed on to a letter urging President Joe Biden not to consider Su for the top labor post.

The letter was sent late last week after current Labor Secretary Marty Walsh confirmed plans to leave his position next month.

Led by Rep. Kevin Kiley, the other congress members who signed the letter include Rep. Darrell Issa, Rep. Jay Obernolte, Rep. Young Kim, Rep. Tom McClintock, Rep. Ken Calvert and Rep. Mike Garcia.

During her confirmation hearings for the deputy secretary position in 2021, Su stated, “There is no sugar-coating the reality, California did not have sufficient security measures in place to prevent this level of fraud,” according to KGO-TV, but asserted the fraud was part of a criminal conspiracy that went well beyond California.

At the hearings, Republican Sen. Richard Burr suggested that while it’s “true that all states struggled…California’s struggles swamp everyone. And none of their (other states’) secretaries of labor are here today seeking a promotion.”

During her confirmation hearings for the deputy secretary position in 2021, Su stated, “There is no sugar-coating the reality, California did not have sufficient security measures in place to prevent this level of fraud,” according to KGO-TV, but asserted the fraud was part of a criminal conspiracy that went well beyond California.

At the hearings, Republican Sen. Richard Burr suggested that while it’s “true that all states struggled…California’s struggles swamp everyone. And none of their (other states’) secretaries of labor are here today seeking a promotion.”

The GOP group’s letter said the most “infuriating” part of the failures at the EDD is it “could easily have been prevented had the state implemented proper fraud prevention systems.”

The letter continued, “While the state stood by twiddling its thumbs” and billions in fraudulent payments were being sent to individuals who did not qualify for the assistance, “those who were eligible and truly needed the help did not receive payments in time for months on end.”

The letter closed by saying Su’s leadership in California should be an “automatic disqualifier” for her nomination, because her decision-making screams “incompetence.”  

On the other hand, Su is lauded by members of the Asian American and Pacific Islander communities as a champion for immigrant workers.

Su started her legal career as an immigrant rights attorney at the Asian-Pacific American Legal Center. She went on to serve as litigation director for Advancing Justice L.A., a non-profit civil rights organization.

She was the lead attorney for a civil case brought by garment workers in El Monte, California. Su successfully held garment manufacturers responsible for wage theft, as well as the operators who kept the garment workers captive. Su and other activists petitioned for the workers involved in the case to stay in the United States under a visa program for those who cooperate with the government in criminal trials. that ultimately led to the creation of the T-Visa for victims of human trafficking.

The Congressional Black Caucus and Congressional Asian and Pacific Islander Caucus both support Su’s nomination
Gregg Orton, director of the National Council of Asian Pacific Americans, told The Bee that Su’s “work as deputy secretary of labor gives her a really strong track record.

“She is pre-eminently qualified,” he said.