Likely Biden deputy labor secretary pick could face Senate scrutiny over California unemployment fraud

close

Video

Keystone Pipeline worker on Biden canceling the project: 'This is totally political'

Laid-off Keystone Pipeline worker discusses laying off the team on the project due to the Biden administration's executive order.

California Labor Secretary Julie Su, President Biden’s reported pick to serve as deputy secretary in the US Department of Labor, could face tough scrutiny in the Senate regarding her handling of unemployment claims in the state during the coronavirus pandemic.

The Biden administration is expected to announce Su’s nomination this week, and the former civil rights lawyer has already accepted the role, Bloomberg reported. Biden has pledged to raise the federal minimum wage to $15 and Su is a longtime advocate for workers’ rights, including increased wages.

However, reports that a state agency under Su’s jurisdiction mistakenly paid out billions in false unemployment claims could complicate her candidacy. A state audit revealed that California paid out at least $11.4 billion in fraudulent unemployment benefits since the coronavirus pandemic began last March, while about $20 billion in claims remains under review.

Video

"There is no sugarcoating the reality," Su said during a Monday press conference. "California has not had sufficient security measures in place to prevent this level of fraud, and criminals took advantage of the situation."

Su said California’s Employment Development Department, the agency responsible for assessing unemployment claims, was "overwhelmed" by the volume of requests during the pandemic, the Los Angeles Times reported. She accused "international and national criminal rings" of exploiting the system through identity theft and other illicit means.

Su also blamed the Trump administration for the department’s issues, arguing that the fraudulent claims were largely filed through a federal program for which the government did not provide adequate support.

"Every state has been struggling," Su added. "What we think would have been helpful was for the federal government at the time to have developed a coherent and coordinated, proactive approach to the fraud, not just investigating cases after they happen."

Aside from the fraud claims, state officials questioned the Su-led Employment Development Department’s preparedness to handle claims in the event of a crisis that led to an economic recession.

CLICK HERE TO GET THE FOX NEWS APP

"Although it would be unreasonable to have expected a flawless response to such an historic event, EDD’s inefficient processes and lack of advanced planning led to significant delays in its payment of [unemployment insurance] claims," California State Auditor Elaine Howle wrote in a report, according to the Times.

Representatives for the White House and Su did not immediately respond to a request for comment.

With the Democrats in control of the Senate, even stiff Republican opposition to Su’s appointment would be unlikely to derail her candidacy. Nominees can be confirmed by a simple majority vote.