California labor secretary grilled over unemployment fraud. Some don’t like her answers
Julie Su — and for that matter, California’s embattled unemployment system — were sharply criticized by Senate Republicans Tuesday who wanted answers as to how the state dealt with billions of dollars in widespread fraud.
The Republicans weren’t satisfied with the answers.
“I was surprised not to get a legitimate answer to very direct questions,” said Sen. Susan Collins, R-Maine, the Senate’s most centrist Republican.
President Joe Biden has nominated Su as deputy labor secretary, a longtime advocate for worker rights with strong support from the AFL-CIO — and strong opposition from some business groups. She is currently the state’s Secretary of Labor and Workforce Development, which oversees California’s unemployment insurance system.
Su is expected to be confirmed by the Democratic-run Senate. During a two hour, 15 minute confirmation hearing by the Senate Health, Education, Labor and Pensions Committee Tuesday, Democrats did not challenge her explanations of the agency’s troubles. Chair Patty Murray, D-Washington, called Su qualified.
Some Republicans weren’t so sure.
“It is true that all states struggled, but California’s struggles swamp everyone. And none of their (other states’) secretaries of labor are here today seeking a promotion,” said Sen. Richard Burr, R-North Carolina, the committee’s top Republican. “So, while you may not be personally responsible for every case of fraud that happened, the fraud did happen on your watch.”
California officials have estimated that about $11 billion in fraudulent unemployment claims have been paid so far. Estimates are that another $19 billion in claims are suspicious.
Burr said Su bears responsibility. “The buck stops with you as labor secretary in California,” he said.
He noted, “You ordered the agency to eliminate some important safeguards to speed up payments, which led to even more fraud.”
On April 23, Su issued a directive that temporarily suspended “the requirement to certify eligibility usually required for claimants every two weeks before a payment can be made.” At the time, the agency was overwhelmed by an unprecedented wave of unemployment claims following the state’s coronavirus stay-at-home order.
A press release from the labor agency’s Employment Development Department added, though, that “Claimants, however, remain required to notify the EDD immediately if they return to work during this time period.”
The department said the suspension would allow the state to expand its ability to improve the system.
“These are extraordinary times calling for extraordinary measures and it is our job to do everything we can to get these critical benefits into the hands of Californians,” Su said at the time.
Operational problems persisted, and in July, Gov. Gavin Newsom announced a “strike team” to study and revamp the EDD systems. It issued its report in September and the agency began implementing its recommendations.
Su explained at the hearing that the fraud problem was unusual and part of a criminal conspiracy that reached well beyond California. She said most of the fraud has occurred in the Pandemic Unemployment Assistance program, a program created by Congress a year ago to provide benefits to those who traditionally don’t qualify for regular coverage, such as independent contractors and small business owners.
Collins was not pleased with the answers.
“There can be no excuse for the kind of rampant fraud that has been so prevalent in California,” she said, and the problem “also seems to be directly related to directives that you issued.”
Su noted that she’s had widespread experience dealing with fraud, and has implemented a number of safeguards and reforms. As deputy labor secretary, who usually serves as the agency’s chief operating officer, “I would bring that experience” of having dealt with the fraud.
Su has been the target of strong criticism from the California Business and Industry Alliance, which last week issued a scating 31-page report on its analysis of her record as secretary.
“Now more than ever, we need an official at the Department of Labor who can act as a steady hand to guide us out of the pandemic. Julie Su’s track record in California shows she is not that person,” said Tom Manzo, the alliance’s president and founder.
Burr and Collins could not say if Su will be confirmed, but Democrats did not challenge her performance as secretary.
She has strong backing from AFL-CIO President Rich Trumka, who said Tuesday “As labor secretary of California, the world’s fifth-largest economy, Su enacted a sweeping pro-worker agenda that is a progressive model for all of America.”
And Sen. Murray told the committee ‘’it is so important we work to get qualified nominees like Julie Su quickly confirmed.”
This story was originally published March 16, 2021 at 1:20 PM.
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