Julie Su, who oversaw California unemployment agency amid fraud wave, nominated U.S. Labor secretary

WASHINGTON —  President Biden on Tuesday nominated Julie Su to be his next Labor secretary, setting up the former California labor chief to become the first Asian American to run a Cabinet department during his presidency.

Su, who has served as deputy U.S. Labor secretary since 2021, was confirmed by the Senate for her current post on a party-line vote of 50 to 47, and could face another tough confirmation fight. Republicans have raised concerns about her role overseeing California’s unemployment insurance office during the COVID-19 pandemic, when the state paid out billions in fraudulent claims.

Su, the Stanford- and Harvard-educated daughter of Chinese immigrants, also spent 17 years as a civil rights attorney. She defended Thai garment workers who were trafficked in the U.S., according to a White House statement. She earned a MacArthur Foundation fellowship in 2001 for her legal work seeking better working conditions for immigrants.

Before joining Biden’s Labor Department, Su served seven years as secretary of California’s Labor and Workforce Development Agency. In that role, she oversaw the state’s troubled Employment Development Department, which is responsible for doling out unemployment benefits but struggled to manage a backlog of claims and to combat widespread fraud during the pandemic.

The office received at least 26.4 million claims and paid out $180 billion in benefits from the beginning of the shutdown through last spring, and about $30 billion of those payments went to scammers, according to state officials. The state had recovered at least $1.1 billion of that as of June, most of which was to be turned over to the federal government.

Su’s supporters say she inherited a broken, understaffed unemployment system that was not prepared to handle the onslaught of COVID-related claims.

Her critics say she mismanaged the agency.

Rep. Kevin Kiley (R-Rocklin), a former California Assembly member who ran against Gavin Newsom for governor, called Su’s nomination a “clear example of failing up.”

“It’s appalling that President Biden would even consider Julie Su, who oversaw this whole mess, to be his next secretary of Labor,” Kiley said. “I can’t think of anyone who’s less qualified for that position, given what happened to California on her watch.”

White House Deputy Press Secretary Olivia Dalton pushed back on the criticism, telling reporters aboard Air Force One on Tuesday that Su had helped California process unemployment claims despite “fragile, outdated technology.”

During the pandemic, federal and state officials quickly distributed trillions in relief funds to help Americans cope with the biggest economic crisis since the Great Depression. The speed with which the payments were made meant some claims were never verified, leading to widespread fraud, a U.S. Government Accountability Office report released in February found.

The California EDD’s “improper payment” rate during the first six months of the pandemic was 36.6%, according to a U.S. Labor Department audit report from September. It is unclear what share of that was fraud or payments made in the incorrect amount. Some scammers posed as prison inmates, or, in one instance, as Sen. Dianne Feinstein, to receive COVID relief money.

If confirmed, Su, 51, will replace Labor Secretary Marty Walsh at the head of a department that has been central to Biden’s domestic agenda. Walsh, former mayor of Boston, plans to leave the administration in March to lead the National Hockey League Players’ Assn.

As a longtime labor official, Su had been considered the front-runner for the post since Walsh announced his exit. Unions including the Service Employees International Union and the National Education Assn. have endorsed her nomination.

The Congressional Asian Pacific American Caucus and other Asian American and Pacific Islander advocates had pressured Biden to name Su to the role. Biden is the first president in more than 20 years to not have an Asian American Cabinet secretary. Vice President Kamala Harris, U.S. Trade Representative Katherine C. Tai and Arati Prabhakar, director of the White House Office of Science and Technology Policy, serve in Cabinet-level positions but are not Cabinet secretaries.

Rep. Judy Chu (D-Monterey Park), chair of the Congressional Asian Pacific American Caucus, said in a tweet she was “elated” by Su’s nomination.

“She’s eminently qualified to lead the Department and will successfully deliver results for our workers on Day 1,” Chu said.

Sen. Bernie Sanders (I-Vt.), who chairs the Senate Health, Education, Labor and Pensions Committee, praised Su’s nomination, though he had written a letter to Biden earlier this month to propose two other choices: former Clinton administration Labor Secretary Robert Reich and Sara Nelson, head of the nation’s largest flight attendants union.

“I’m confident Julie Su will be an excellent secretary of Labor,” Sanders said in a statement. “I look forward to working with her to protect workers’ rights and build the trade union movement in this country.”

Biden called Su a “tested and experienced leader” and “critical partner” who played a key role in recent negotiations between railroad operators and unionized workers. He urged the Senate to quickly confirm her to the position.

Sen. Bill Cassidy (R-La.), the top Republican on the Senate labor committee, said in a statement that Su had a “troubling record” and called for a “full and thorough hearing process” on her nomination.

He also criticized Su’s support of a controversial California law that reclassified some gig workers as employees instead of independent contractors, which critics argue restricts businesses’ flexibility on hiring freelancers.

“This does not inspire confidence in her ability to hold her current position, let alone be promoted,” Cassidy said.

Times staff writers Sarah D. Wire and Jennifer Haberkorn contributed to this report.