The SEIU said its inquiry found no wrongdoing by Annelle Grajeda, who was one of six executive vice presidents of the national union as well as the head of its California council and the local that represents Los Angeles County workers.
Grajeda had been on leave since August, when the union began examining whether she played a role in payments to Alejandro Stephens, a former president of the Los Angeles local.
The SEIU has said Stephens violated a severance agreement by remaining on the county payroll after he lost his union position. Two local members had filed an internal complaint that suggested Grajeda used her influence to help Stephens continue receiving a government paycheck, something she denied.
One of the members, Ron Tanner, a retired county worker, said he was disappointed that the union didn't bar Grajeda from holding any future office. "I don't particularly care for this," he said. "I'd rather see her banned."
SEIU spokeswoman Michelle Ringuette said the internal probe determined that Grajeda "never stood to benefit" from any money Stephens received. She said Grajeda opted to step down after "sitting and reflecting" on what she wanted to do next.
"We're absolutely supporting her decision," Ringuette said.
She added that the union is still trying to recover severance payments from Stephens, who could not be reached. The county fired him for allegedly refusing to return to his job with the Department of Health Service after an eight-month paid leave that had been arranged by Grajeda. The firing took effect in December, and he appealed. The status of the appeal could not be determined late Tuesday.
The 80,000-member Los Angeles local is one of several SEIU chapters that have been hit by spending scandals.
Last year, the union ousted the president of its largest California local, Tyrone Freeman, and demanded that he return more than $1 million it says he misappropriated from the SEIU and at least one affiliated nonprofit.
The Times had reported that Freeman's local and a second charity paid hundreds of thousands of dollars to small companies owned by his relatives and friends and spent a similar sum on golf tournaments, expensive restaurants, a Beverly Hills cigar lounge and a Hollywood talent agency.
The SEIU removed Freeman's former chief of staff from the presidency of the union's biggest Michigan local after determining that he received $33,500 in improper payments from a housing nonprofit.
Freeman and others with ties to the SEIU are the subjects of a federal criminal investigation. The House labor committee has also opened an inquiry.
The union fired the officers of a Bay Area-based healthcare local after accusing them of misusing funds to finance a battle against the SEIU's national leadership. The officers say they were retaliated against for voicing dissent, and they have launched a rival union that seeks to replace the SEIU at numerous hospitals and nursing homes.