Newsom's California Labor Policy Will Go National Under Secretary Su

The Department of Labor under President Biden has already made waves in announcing the rulemaking on independent contractor status. This will almost certainly evolve into a regulatory morass that will cause business uncertainty and drastically increased legal and compliance costs. Now, the Senate is considering the nomination of Acting Labor Secretary Julie Su for the full-time position in the Cabinet.

This should give taxpayers reason to be concerned given her track record in California State Government. During her tenure as California Labor Secretary under Governor Gavin Newsom, the push for onerous and anti-business regulation surged from the legislature with support from her office. California’s AB-5, the much-litigated anti-independent contractor legislation that has been reinstated, stayed, and modified by referendum, was heavily supported by Su.

As NTU has written in the past, this confusing law contained dozens of carveouts for various industries and the controversy surrounding this legislation nearly forced Uber and Lyft out of the state, until they were rescued by a successful referendum. Exporting this brand of California independent contractor regulation nationally will harm businesses seeking regulatory clarity, particularly smaller operations like franchisees and sole proprietors.

Even more recently, and in her official capacity as a federal appointee, Su was quoted supporting California’s FAST Act (A.B. 257). This legislation creates market distortions by treating franchise businesses differently from others, places increased regulations on these businesses, and creates an unelected labor council to oversee the whole regulatory morass. It has proven so controversial even in California that it has been put on hold pending a 2024 referendum which itself required one million signatures.

During her supportive statements of the CA legislation on a video call with a California chapter of union-backed Fight for $15, she said: “So let me be very clear: The [U.S. Department of Labor] stands with you. The Biden-Harris administration stands with you…And you have a president who has vowed to be the most pro worker pro union president in history."

Taken as a whole, Acting Secretary Su’s past should concern federal taxpayers who do not support spreading California’s policies against businesses and independent contractors nationally via the U.S. Department of Labor.