State officials keep hiring their relatives. Will Newsom crack down on nepotism?

Just before Robert O’Neill stepped down as director of the California Lottery, his agency hired his twin sons and his stepdaughter during one 17-day period.

The daughter of Assemblyman Jim Cooper (D-Elk Grove) landed a job with the state Board of Equalization, where her mother also worked, after managers pressured personnel staff to hire her despite a low rating in an interview, according to a special investigation report by the California Personnel Board.

And more recently, the state auditor accused the head of the Department of Industrial Relations of misconduct for bypassing civil service rules to hire and promote her daughter — even though she lacked the required qualifications.

California agencies have a long history of nepotism, along with pledges to end such favoritism, but the practice continues. Workers in at least seven state agencies have alleged favoritism shown to family members and friends of administrators in the last decade.

Getting a desirable job in California government too often depends on who you know, say watchdogs and employees who have raised red flags with the state.

“Absolutely, nepotism is a problem that we have seen in more than one department now, and it really undermines the whole merit-based system of hiring and employment in California in that people should compete for positions in state service,” said State Auditor Elaine Howle.

It remains to be seen if Gov. Gavin Newsom will be able to root out the culture of favoritism that has long festered in state agencies.

Last week, the Newsom administration announced it has expanded the probe of the Department of Industrial Relations to look at whether its director was helped by up to six subordinate managers in getting her daughter hired and promoted.

Yet the retired director at the center of that investigation, Christine Baker, remains on the state Fraud Assessment Commission after being appointed to the panel by outgoing Gov. Jerry Brown. A Newsom spokesman has questioned why she remains on the panel, but the governor has yet to formally request that she step down, saying it is not an at-will appointment.

The perception of a problem appears to be extensive in some agencies.

A 2017 investigation by the Personnel Board found that 835 employees of the Board of Equalization, or 17.5% of its workforce at the time, were related by blood, adoption, marriage or cohabitation.

State rules generally allow members of the same family to work for the same agency as long as they go through the competitive merit-based civil service process without interference and their posts don’t create a conflict of interest, such as having one relative supervise another.

The Personnel Department probe found instances of improper interference in hiring and promotion that benefited family members and politically influential allies of employees.

In response to those and other issues, Brown stripped the elected Board of Equalization of most of its duties of collecting taxes, transferring the bulk of its employees to a new agency. An internal review by the head of the agency last May determined that 141 of 484 managers and supervisors — or 29% — had a familial or other close personal relationship with another employee. At least 17 required some action to eliminate conflicts, such as transferring employees out of a relative’s chain of command, department Director Nicolas Maduros told the Personnel Board.

Overall, the response of state agencies to allegations of nepotism has been “mixed,” Howle said.

She made public the Department of Industrial Relations report on March 26 only after determining the California Labor and Workforce Development Agency, which oversees the department, had not taken sufficient action on the auditor’s recommendations.

“We do not yet see evidence that the agency has acted with appropriate rigor to remediate the effects of the director’s behavior,” Howle wrote to Newsom and legislative leaders.

Officials noted that Baker, the director who allegedly intervened on her daughter’s behalf, retired a year ago. Baker, who was not identified by name in the report, has denied acting improperly.

The auditor’s report said the director “pre-selected her daughter for a role in her own department, precluding consideration of and competition from other potential applicants,” and that the daughter lacked the requisite qualifications for the job.

Senate President Pro Tem Toni Atkins (D-San Diego) felt the Legislature’s role in holding the department accountable was limited by circumstances.

“Nepotism has a pernicious impact on employment in any organization,” said Lizelda Lopez, an Atkins spokeswoman. “Given the non-public nature of the May report and changes occurring at the department, there wasn’t a clear path for the Legislature to take in this situation involving someone else’s employee.”

Assembly Republican leader Marie Waldron of Escondido said she is not surprised by the auditor’s frustration with the lack of action in agencies including the Industrial Relations Department.

“This is the sad but predictable result of Democrats’ complete refusal to provide oversight of state agencies,” Waldron said.

Newsom appointed Julie Su as secretary of the Labor and Workforce Development Agency in January; Su said she is taking the auditor’s allegations seriously, saying the report “exposed a systemic breakdown.”

In California, a spoils system long meant politicians handed out jobs to friends and supporters. But that changed in 1913, when reformist Gov. Hiram Johnson signed the Civil Service Act, requiring state jobs be filled based on the applicants’ knowledge and abilities for the specific position.

But many state employees say managers often act quietly to influence hiring decisions, making some offices look like a family enterprise.

A state audit of the California Unemployment Insurance Appeals Board in 2008 concluded that nearly half of the employees surveyed “believe that familial relationships or employee favoritism compromised hiring and promotion practices.”

The agency has enacted changes recommended by the auditor, said Assistant Director Lori Kurosaka.

In 2011, another state audit concluded that “[f]amilial relationships contribute to employees’ perceptions that the Commission on Teacher Credentialing’s hiring and promotion practices are compromised.”

A survey of employees found 40% felt that familial relationships or employee favoritism “compromised the commission’s hiring and promotion practices,” the audit said.

A spokesman for the credentialing panel said this week that the audit led to a leadership change at the commission as well as an overhaul of its hiring practices.

Similar complaints of favoritism in hiring were voiced at a public hearing in September by five veteran employees of the California Lottery, including Paulina Vasquez, a district sales director.

Vasquez, a union steward, complained of “unfair hiring practices, cronyism, nepotism” in her comments to the state Lottery Commission.

In a recent interview, Vasquez said she and other employees are cooperating with an ongoing investigation by the state Department of Justice into allegations of hiring irregularities and other misconduct in the agency.

Hirings that have been criticized by employees include some that occurred while O’Neill was director for a year and a half ending in July 2013.

On the April 29 before he stepped down, O’Neill’s agency hired one of his adult sons, Kelly O’Neill, as a route sales representative. He currently has an annual salary of more than $50,000.

Seven days later, the lottery hired the director’s stepdaughter, who now is a program analyst with a salary of $60,000.

Ten days later, the director’s other twin son, Kerry O’Neill, was hired by the agency, also as a sales representative.

Robert O’Neill did not respond to requests for comment. His stepdaughter declined to comment when reached by phone.

The O’Neill brothers say they went through the normal civil service hiring process and they are unaware of their father pulling any strings.

“He told us that the lottery was hiring for the sales position at the time,” Kelly O’Neill said.

“I did the regular process: Panel interviews and online exams for putting yourself on the proper list,” he said, noting that other employees of the agency include married couples.

The relationship between Director O’Neill and his relatives was disclosed at the time by a marketing manager, who instructed hiring officials not to give their applications special treatment, according to Russ Lopez, a spokesman for the agency.

Lopez said all three went through the normal hiring process and the director did not get involved.

Still, Vasquez was concerned about the hiring spree involving the director’s relatives.

“It doesn’t appear to be fair,” Vasquez said.

Lopez declined to comment on the complaints of favoritism lodged by employees at the board meeting. “The [Department of Justice] investigation into personnel-related allegations you reference is still underway, so there is nothing we can comment on right now,” Lopez said.

At the Board of Equalization, cases of nepotism include the employment of a woman after managers exerted pressure on the hiring staff following an interview panel decision to rate her below other candidates and a determination that she missed an application deadline, according to a Personnel Board investigation.

The new worker’s mother was a board employee at the time and her father is Assemblyman Cooper.

“There was influence and involvement at the highest levels of the organization, including Board Member [Jerome] Horton, his chief of staff” and another official, the Personnel Board report said.

The report found “sufficient evidence upon which to find that the appointment was based on pre-selection, favoritism, and the improper use of positions of influence, rather than on merit and fitness.”

Horton disputed the report, saying that the Board of Equalization staff had initially discriminated against the woman, “and the agency later mishandled the hiring process with no illegalities or fault on the part of Ms. Cooper or myself. ”

With a new governor shaking up the state bureaucracy, Howle is hopeful more attention will be given to the problem of nepotism.

How the state deals with nepotism in the future, she said, “really depends on the tone at the top. If leadership sees it as a problem, it will be addressed.”

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patrick.mcgreevy@latimes.com

Twitter: @mcgreevy99