Why Julie Su’s appointment to lead the Labor Department could be good news for gig workers

When Julie Su, President Joe Biden’s pick to lead the U.S. Labor Department, heads back to the Senate in the coming weeks for a full confirmation vote, she’ll be facing an uphill battle: Not only do Republicans and a number of corporations stand against her nomination, but it’s also not clear whether every Democrat will back Su, who served as the deputy labor secretary under recently departed department head Marty Walsh and currently holds the title of acting labor secretary.



If she’s confirmed, Su would be Biden’s first Asian American Cabinet secretary. More broadly, her ascent could signal a major shift in the ongoing dispute over how gig workers are classified.



Modernizing labor laws



The bulk of gig regulation has fallen onto states and local government. At a time when gig companies have been benefiting from a lag in regulation, Su could take a federal stance to update what it means to classify independent contractors, an area that many would argue has long been due for a modern update. “A straightforward definition would, I think, affect a lot of workers,” says Erin Hatton, a sociology professor at the University at Buffalo.



As labor secretary, Su could launch an investigation into potential violations of the Fair Labor Standards Act, which would preempt local laws, says Veena Dubal, a professor at the University of California College of the Law, San Francisco, referring to the decades-old federal law that sets minimum wage and overtime pay.



“What matters is the way that the federal government interprets, and the courts enforce and interpret, federal laws with regard to who is an employee,” Dubal says. “So it’s very possible that she could initiate an investigation and an enforcement action that ultimately undermines state-level laws if those state-level laws are in conflict with federal law.”



It’s unclear how tough of a stance Su would take on the gig economy, compared to other issues. As deputy to Walsh, Su was central to averting what could have been a crippling national rail shutdown and establishing the Good Jobs Initiative, a national framework meant to improve access to jobs without discrimination, the White House said when announcing her nomination.



Crafting AB 5



Even though Su’s worked to align herself during preliminary Senate committee confirmation hearings with Walsh’s more moderate record, a number of business groups have voiced concerns about Su’s nomination. The reason? Her time as a labor leader in California.



Su served several key roles in California’s government before taking on the number two labor role in Washington, D.C.—most recently as secretary of the California Labor and Workforce Development Agency under Governor Gavin Newsom—and has a rich history enforcing labor laws.



A large part of Su’s role in California was helping craft AB 5, which established a three-part test that led many of the state’s gig workers to be redefined as employees.



AB 5 is also a sticking point for several Republicans who oppose the nomination. Gig company giants, including DoorDash and Uber, backed a more than $200 million campaign to put a new law, Proposition 22, in place that would carve out their workers as an exception to AB 5. California voters subsequently passed Prop 22 and, after a long legal battle, it is currently being upheld by the courts.



Forcing gig companies to reclassify workers as employees, especially at a national level, would be extremely costly for these players, whose business models rely on using non-staff workers. Now that many of these companies, like DoorDash, Lyft, and Uber, are answering to public shareholders, they’re working to turn a profit, rather than rely on venture capital subsidies. Reclassifying gig workers as employees would require companies to pay minimum wage and provide paid time off and sick leave.



The Flex Association, a trade group that represents a number of large gig companies, voiced its concerns over Su’s nomination in a news release this month after one confirmation hearing. (The association hasn’t taken an official position on the nomination.)



“The next Labor Secretary must embrace the flexible earning opportunities that app-based platforms have unleashed for millions of Americans,” Flex CEO Kristin Sharp said. “We continue to be deeply concerned with Julie Su’s objectivity, particularly given her record in California of undercutting independent work—with real impacts on families and communities.”