Why Julie Su Matters: Labor Department Moves to Gut Freelancers

If you have ever wondered why we cover Julie Su’s doomed quest to actually become U.S. Secretary of Labor, here’s why:

The Labor Department today released new rules governing freelance, consulting, and gig work that will gut the livelihoods of millions of people.

The new regulation is a massive payback to Big Labor, as was California’s similar AB 5 law that Su helped write and then zealously enforced when she was the state’s labor secretary (oh, and she lost more than $32 billion to unemployment fraud during the pandemic, but that’s for another time.)

Why do unions care? Simple: you can’t unionize freelancers, but you can unionize employees.  If millions of freelancers are forced to make the switch, union coffers will grow and then, in turn, so will the coffers of the Democratic Party.

It is a vulturous circle being greased by the sweat of the contractors.

The “we’re protecting workers” claim is more than a lie – it is an intentional and brazen ruse as the people behind the new rule know it will harm millions of said workers.  

That has been proven in California.

AB 5 cost writers, photographers, medical and court transcriptionists, etc. jobs, contracts, gigs and, most importantly, money.  Eventually the bill was sliced and diced with carve outs and exemptions – rideshare drivers, for example – to reduce some of the pain, but what does it say about a law that it sparks a successful proposition to defang part of it and has so many carve outs that the amendments to the bill run far more pages than the bill itself?  Of course, if you couldn’t stroke Sacramento, nothing for you.

While not exactly like AB 5, the new federal rule – set to take effect in March – will massively complicate the relationships between freelancers and consultants and the companies that hire them.  

A key difference is that the fed rule will have different “should you really be an employee and not a contractor?” standards than AB 5.  While not as “strict,” as it were, the new standards – and how to judge and rate them – are so obtuse that many of the “employee or contractor?” decisions can and will be made by a mid-level Labor Department bureaucrat in local district offices.

In other words, the standards set up an “eye of the beholder” situation and the labor cubiciloids and rafts of judges and lawyers will be the beholders.

Here – in a nutshell from the Labor Department – is the new test:

The rule addresses six factors that guide the analysis of a worker’s relationship with an employer, including any opportunity for profit or loss a worker might have; the financial stake and nature of any resources a worker has invested in the work; the degree of permanence of the work relationship; the degree of control an employer has over the person’s work; whether the work the person does is essential to the employer’s business; and a factor regarding the worker’s skill and initiative.

How to balance these standards, which to note as more important, etc. is left deliberately obscure.

In pitching the bill to the national media (no, we were not invited – go figure) on a private call Monday, Su claimed she had “traveled and talked to workers across the country who are working full time year-round and still struggle to make ends meet because of misclassification.  They sometimes work side by side with individuals who are properly classified doing the same work. But misclassified employees don’t get paid for all of their hours.”

It should be noted that contract employees already have myriad ways to make sure this does not happen, including making sure the initial contract language ensures fair pay.

Freelancers and contractors across the country specifically chose to be so – the flexibility and the independence are incredibly valuable when a person wants to be able to control their own life and set their own schedule (personal note – I’m one and I’ve written stories at 3 a.m. and 7 a.m.  and 6 p.m. and when the mood strikes and days ahead of time to fit my schedule.  It’s very handy, though the downside is you can almost never honestly say “I can’t schedule a dental visit that day because of work,” let alone call and cancel. Sigh.)

Su, who has made a career out of controlling other people’s lives – simply cannot understand that advantage.

Karen Anderson, founder of Freelancers Against AB 5 and Visiting Fellow with the Independent Women’s Forum, said the new rule takes its inspiration from the “unmitigated dumpster fire” that was AB 5.

The “eye of the beholder” problem is one of the new rules biggest problems, Anderson said.

“It will have a ‘chilling effect’ on all freelance work,” Anderson said. “A risk-averse business could easily terminate all of its contracting relationships because of this convoluted rule.” 

The new rule was hailed by the egregious Lorena Gonzalez Fletcher, she who wrote the AB 5 union giveaway and shortly thereafter was made director of the California Labor Federation – not a coincidence.

You will remember Lorena from such other honest, ethical, and appropriate behavior as allegedly threatening a public employee if they mentioned that her ooze trail of a husband –  former of a bunch of public offices Nathan Fletcher – had sexually harassed her – https://www.kusi.com/lorena-gonzalez-fletcher-under-fire-for-ab-5-amid-husbands-alleged-sexual-assault-scandal/  and from her under and behind the back room dealings and bald faced lying about AB 5 when it was slithering its way through the legislature – https://thecoastnews.com/commentary-san-diego-lawmaker-used-false-data-to-peddle-her-disastrous-ab-5-law/ . 

She had this to say on Twitter (X) today:

A reminder: California actually has stricter rules thanks to AB5, but this is great news for workers across US.

Also Federal rules should supersede Prop 22 state carve outs….so get ready. 🍿 

Time for enforcement & for workers to get what they’ve earned!

In other words, she is planning to target the professional exemptions clawed back by California workers and businesses.

That’s just great.

There are two rays of hope, though. 

First, Louisiana Sen. Bill Cassidy, the ranking Republican on the Senate Health, Education, Labor, and Pensions committee, announced within hours of the new rule becoming public that he will introduce a “Congressional Review Act (CRA) resolution” to repeal the rule.

“Independent contractors, or freelancers, are shielded from forced or coerced unionization that would strip their flexibility away. This has made eliminating freelancing a top priority for large labor unions who want more workers paying forced union dues,” said Cassidy. “This is yet another example of the Biden administration prioritizing unions over Americans who choose to earn a living without participating in a union.”

Second, The new rule will come under withering legal attack in a shortly and lawsuits will fly.  The suits will involve the law itself and whether or not Su can legally implement the new rule as she is only “acting” labor secretary (can a substitute teacher decide to give a pop quiz to the whole school?)  A previous new rule has already been challenged on this basis, arguing that the Senate’s failure to confirm Su – as it must all cabinet members – means she cannot impose any new rules.

From https://californiaglobe.com/fr/biden-re-nominates-julie-su/ :

Not only does Su have no chance of being confirmed, the likelihood the Senate will even take a vote is microscopic.  No full Senate vote was taken last year – and won’t this year – because if Su were to lose that vote her nomination would be officially dead and she could no longer be the “acting” secretary. 

In other words, lose the vote, out the door you go – don’t have a vote but pretend you will have one eventually and you can stay.

And regulations like this explain why the Biden administration is fighting so hard and so dubiously to keep her in office.

We reached out the Department of Labor with a few questions but received no reply.

Anyhoo, here are the questions they didn’t answer:

How does the new differ substantially from California’s AB-5, something Su testified that she wouldn’t federalize?

Does the new rule put too much power in the hands of local offices to make determinations?

Does the department have a comment on Sen. Cassidy’s CRA to stop the new rule ?

Does the new rule jeopardize freelance work ?

As she is acting secretary is it appropriate for Su to install such sweeping changes?

Whom will this benefit?