Sources Confirm Investigation Into Nepotism at DIR

Wednesday, April 25, 2018 | 4

A former attorney in the legal unit within the office of the director of the California Department of Industrial Relations on Tuesday confirmed allegations in an anonymous letter that a state auditor investigation into complaints of nepotism precipitated the sudden departure of Executive Director Christine Baker last month.

Christine Baker

The anonymous letter that was sent earlier in April to attorneys, doctors and others who are active in California’s work comp community claims whistleblower complaints filed in 2015 accused Baker of favoritism toward her brother and daughter, who both worked for the DIR. Baker retired shortly after the Labor and Workforce Development Agency received a draft of the auditor’s report.

A spokesman for the labor agency said he can’t comment on personnel matters and referred questions to the state auditor’s office. A spokeswoman for the auditor’s office did not return multiple calls for comment on Monday and Tuesday.

The anonymous letter WorkCompCentral received says the Labor and Workforce Development Agency initially handled the investigation into the 2015 complaints of nepotism.

Baker started working at the DIR in 1984, according to the December 2011 statement from the governor’s office announcing her appointment as director of the department. James Culbeaux, Baker’s brother, also started working at DIR in 1984, according to his LinkedIn profile.

Culbeaux, the department’s chief information officer, submitted a request for retirement effective May 1 and is currently on vacation, according to a spokeswoman for the agency.

The anonymous letter claims that Baker, as director, arranged promotions and substantial salary increases for her brother. State payroll data accessed obtained from the Sacramento Bee’s website shows the largest increase in Culbeaux’s pay during the period in which Baker was the director came in 2017, when his base salary rose to $132,129, from $120,880, an increase of 9.3%. From 2011 through 2016, he received pay increases ranging from as little as 0.5% to as much as 5.4%.

Julianna Baker started working for the DIR in November 2011, when her mother was acting director of the agency. She was promoted from a staff services analyst to deputy labor commissioner in June 2012, according to information the DIR provided in response to questions from WorkCompCentral.

Two years later, in April 2014, Julianna Baker was promoted to special investigator. In May 2015, she started a two-year training and development assignment as an associate information systems analyst and upon completion was promoted to associate information systems analyst on May 1, 2017. She been on leave since Aug. 9, 2017.

Julianna Baker's salary increased from $46,390 in 2012 and topped out at $64,468 in 2016, before dropping to $49,596 in 2017.

The anonymous letter and the former attorney in the Office of the Director’s Legal Unit said some department employees had concerns with the quality of the work Julianna Baker was turning in, but her mother impeded disciplinary counseling.

The anonymous letter also said that Julianna Baker was allowed to work from home and collect her salary without coming into the office, an allegation WorkCompCentral could not verify Tuesday. The former DIR attorney said he had heard from others that Julianna Baker worked from home.

Sometime in 2015, an employee or employees at the DIR filed complaints with the state auditor accusing the director of nepotism, according to sources. The auditor initially allowed the Labor and Workforce Development Agency to conduct the investigation, but progress was slow and the administration appeared to “whitewash the findings,” the letter claims.

In 2017, the auditor resumed the investigation, at which point the director allegedly started trying to identify who filed the complaints and who was cooperating in the investigation. She allegedly did this by looking at data on staff computers and intercepting emails of Workers’ Compensation Appeals Board commissioners.

According to the anonymous letter, the auditor was prepared to release the results of its investigation in early April. The auditor’s website as recently as April 3 listed the DIR investigation as a work in progress with an anticipated April 9 publication date. A spokesperson for the auditor told the San Francisco Chronicle that the posting was a mistake but would not elaborate.

The auditor sent a copy of preliminary findings to the Labor Secretary before the scheduled release, and Baker retired shortly thereafter, sources tell WorkCompCentral.

Garin Casaleggio, deputy secretary of communications for the labor agency, said he can’t comment on personnel matters and that any questions related to an audit should be addressed to the state auditor’s office.

California Government Code 8547.6 allows the auditor to request the assistance of a state department or agency in evaluating an allegation or conducting an investigation into complaints of improper governmental activity. The same section prohibits state agencies from disclosing information provided by the auditor or uncovered during an investigation, without the auditor’s prior approval.

The auditor’s website says the agency is prohibited from discussing investigations unless and until it publishes a final report. The website notes that the auditor does not have to make public any findings of governmental wrongdoing but can instead disclose findings in a confidential report to either the head of an agency or the Legislature.

Margarita Fernandez, a spokeswoman for the state auditor’s office, did not return multiple phone calls and an email asking about the possible investigation, or how the auditor goes about deciding whether to inform the public that its investigation substantiated complaints about improper activity.

WCAB commissioners in a February letter said allowing attorneys in the Office of the Director’s Legal Unit to read their emails “raises grave legal and ethical concerns.”

The Office of the Director administers the Uninsured Employers Benefit Trust Fund and the Subsequent Injury Benefit Trust Fund, so attorneys in the unit sometimes appear before the board as litigants and can also be adversaries when appealing a WCAB ruling.

Commissioners said they learned that the emails were being read when Mi Kim, chief of the Anti-Fraud Unit, included in an email to Vanessa Holton, general counsel for the State Bar of California, an excerpt of an email exchange between Holton and WCAB Chairwoman Kathy Zalewski.

Kim in an email response to the WCAB said she was instructed in December 2017 to review emails that Holton sent to DIR staff. Holton was assistant chief counsel for the DIR before she moved to the bar in 2015, and Kim said she was assigned to investigate whether Holton was still “involved in current DIR matters,” but did not elaborate on what that meant.

Holton said in an email on Tuesday that she was in meetings all day and not available to comment.

Kim Card, acting chief counsel for the DIR, in a Feb. 26 letter to the WCAB said there are a limited number of circumstances in which the Office of the Director’s Legal Unit would access the emails of another DIR worker.

“When there is a labor and employment matter concerning a current or former employee of the Department of Industrial Relations, that has advanced to the point where there could potentially be litigation (which could be a disciplinary proceeding, an internal investigation in response to a complaint, a response to a [Department of Fair Employment and Housing/ Equal Employment Opportunity Commission] administrative complaint filed by an employee, or a civil case), there is typically a litigation hold placed on the Outlook email folder of the employee and any additional persons who are identified as being potential witnesses and/or potentially having relevant information,” Card wrote. “This is done to ensure that the DIR meets its obligations to preserve potentially relevant electronic evidence that may exist in the form of emails.”

Card said content from emails is stored on a “separate and secure” litigation hold server, and the messages might not even be read. If it is determined later that someone needs to read the emails, an attorney within the director’s legal unit can be granted access by the DIR’s top attorney.

The other scenario in which the attorneys in the director’s office would access WCAB emails is when processing a public records request, Card said.