Workers Comp Zone


With yesterday’s release of a report by California State Auditor Elaine Howle, lingering questions have now been answered about the 2018 sudden departure of Christine Baker from her post as Director of the California Department of Industrial Relations.

Howle’s report details a pattern of nepotism, lies, favoritism, manipulation, retaliation, creation of a culture of fear and even racial animus by Baker. The report can be seen at the bottom of this post.

Baker’s 2018 departure was so sudden that most stakeholders were left scratching their heads and wondering if there was a back-story to the departure. Brown Administration officials circled the wagons and there was little credible information available, though this blog and some of the workers’ comp press had unconfirmed reports. Eventually Workcompcentral published on the allegations after a whistleblower contacted their newsroom.

A 2018 notice of an upcoming audit to be published on the state auditor’s website disappeared, and the auditor office refused to confirm anything at that time.

An apparently related controversy had developed when it was revealed that DIR employees had been ordered to read e-mails to look for whistleblowers. As part of this, e-mails between the Katherine Zalewski, chairperson of the WCAB and a former DIR employee were accessed.

It turns out that Ms. Howle’s office had been doing an in-depth investigation starting in 2015, looking at over a million DIR e-mails. Many interviews were conducted, and many of those interviewed indicated that they were concerned about retaliation.

Most of the events center around how Baker handled the employment of her daughter, Julianna Baker, at DIR. Among other things, the daughter lied about her time and assignments and is said to owe the state a six-figure sum. But the pattern is far beyond that of a protective mother (a helicopter or bulldozer parent) trying to help her daughter succeed. Improprieties regarding another employee was also key.

The story is one of a workplace culture that so concerned Howle that she decided to file a confidential report with the DIR’s oversight agency. That would have been with David Lanier, at the time a member of Jerry Brown’s cabinet and the Secretary of the California Labor and Workforce Development Agency. Lanier is now on the SCIF Board of Directors.

Here is what Howle says happened:

“In April 2015, my staff deemed credible allegations involving improper governmental activities by a department director and her daughter who worked at the same department. Because of the limited scope of these initial allegations against the department’s highest ranking officer, and as state law allows, my office formally referred the case to the department’s oversight agency for it to complete further investigation by June 2015. In that written referral, we cautioned agency officials that, by law, they must keep confidential the existence and details of the complaint, and that they could not disclose any information provided by my office or obtained from reviewing or investigating the allegations.

Nevertheless, we later learned that, within just a few weeks of our issuance of that confidential referral to the oversight agency, the agency secretary directly violated the law by sharing with the director information of the impending investigation, which is evidenced by an email between the director and the agency secretary. In that email, the director defended her daughter’s presence in the department and speculated that the allegations came from within a particular ethnic group of employees. A few hours later, the director further shared with her brother, who also worked at the department, her email to the agency secretary, and the director indicated to the brother that he should delete the email after reading it.”

In further criticism of the way Lanier’s agency handled the matter, Howle notes that: 

“In addition to the agency secretary’s clear disregard of confidentiality requirements, the oversight agency failed to provide its final investigative report to us until a full year after the 60‐day deadline required by law. During that year, my office received additional allegations of other instances of the director’s improper governmental activities. Given the increased number and scope of the whistleblower accusations and our heightened concern about confidentiality and protecting whistleblowers against retaliation, we decided that the oversight agency’s response to the investigative request was insufficient to fully address the allegations. Therefore, we incorporated the agency’s findings into a separate and larger investigation that my staff conducted.”

All of this makes it perplexing as to why, knowing all this, Baker was pointed to the Fraud Assessment Commission in the waning days of the Brown Administration. That would seem to have taken quite an act of chutzpah by those in the Brown chain of command, knowing that this issue with Baker and the Howle investigation was still smouldering.

While there is a reservoir of admiration and gratitude by some of the key workers’ comp stakeholders for Baker’s role in forging the 2012 reforms and the regulatory aftermath, one would have thought that the circumstances of her departure and the pending State Auditor investigation would have made her radioactive for appointment to any further official position.

All of this leaves an overhang for the Newsom Administration to deal with. Howle’s report notes a number of areas that still need attention at DIR. Since at the moment there has been no announced Newsom appointment to DIR, this falls to Julie Su, the new Secretary of Labor and Workforce Development. Here is what Howle says about the situation now:

“After we issued the nonpublic report in May 2018, we expected that the agency would take swift and appropriate disciplinary action against the director and associated subjects, protect those who cooperated with the investigation, and implement our recommendations to prevent future improper activities. Despite the agency providing its mandated monthly updates to us, we do not yet see evidence that the agency has acted with appropriate rigor to remediate the effects of the director’s behavior; in fact, since we informed the oversight agency of our findings, it has not fully implemented any of the recommendations we made in the report. As of March 2019 and excluding duplicative recommendations, the agency has four pending recommendations, four partially implemented recommendations, and two recommendations we deemed resolved because impacted employees resigned or retired from state service.”

Here is the State Auditor report:


Stay tuned.

Julius Young