The State Worker

Fair Employment director announces sudden retirement

Phyllis Cheng, the embattled director of California’s Fair Employment and Housing Department, said Wednesday she is retiring at the end of this week. Meanwhile, auditors have been scrutinizing her agency’s hiring and promotion practices. A report is pending.

“I will be retiring from State service effective October 6, and my last day at work will be October 3, 2014,” Cheng said in an email to staff obtained by The Bee. “I sincerely appreciate the opportunity to have served the State of California.”

Cheng intends to return to private law practice, she said.

Her administration has managed the state’s anti-discrimination watchdog for nearly seven years, an era marred by deep budget cuts, a controversial computer system and that now ends with her abrupt retirement ahead of a highly-anticipated report on Fair Employment’s own personnel operations.

Auditors have already blasted the department for illegally promoting an unqualified employee into management. A follow-up audit by the State Personnel Board named two managers as key figures the scandal, including Cheng’s former second-in-command. Cheng was not named in the report.

The board is now investigating Fair Employment’s personnel practices for the last five years.

Cheng built a reputation as administrator willing to do more with less. She managed deep budget cuts during California’s epic budget crisis that led the department to close offices and pare down staff.

Those moves upset employees. So did the Houdini computer system introduced in 2012 as a way to automate some functions that were time-intensive, including screening initial claims.

The system’s launch was a disaster. Federal Housing and Urban Development authorities criticized the department for closing far fewer cases than before Houdini went live. The department went back to interviewing claimants at the start of the filing process two months ago.

Last year, a state Senate report revealed that the department since 2008 sought approval from the Governor’s Office before acting on discrimination claims against public agencies. Cheng ended that policy last summer.

A Brown administration spokesman said that no one has yet been named to replace Cheng.