Citing nearly two decades of failure to develop fair and comprehensive hiring practices and ethics policies, the State Auditor’s Office on Thursday, April 21, asked the governor and legislators to step in to assist in holding the Metropolitan Water District of Southern California accountable.

“Although MWD agreed to develop comprehensive hiring procedures nearly 20 years ago in response to our 2004 audit, its hiring process remains decentralized and informal, resulting in inconsistent treatment of applicants,” said Michael S. Tilden, acting California state auditor, in a letter on Thursday addressed to Gov. Gavin Newsom and legislative members.

Similarly, the agency’s longtime resistance to improving its ethics office has allowed management to interfere with the office’s independent investigations, Tilden said in his letter.

“Because MWD’s leadership must fundamentally change the way it approaches many personnel and ethics issues, and because MWD has failed to take appropriate action in the past, we direct several of our recommendations to the Legislature to better ensure that MWD finally improves its practices,” Tilden said in his letter.

The Governor’s Office did not respond to a request for comment Thursday.

Audit findings

The state auditor released its 100-page audit report Thursday, finding that the MWD’s workplace culture has negatively affected employees. Such practices are considered illegal under state and federal laws commonly referred to as “equal employment opportunity protections.”

For years, MWD employees have complained of workplace abuses such as sexual harassment, bullying, discriminatory hiring practices and retaliation.

A lack of an “equitable and accountable hiring process” at the MWD gives significant discretion to hiring managers and lacks transparency, according to the audit. Additionally, the agency has not done enough to address its aging employee housing. The MWD owns more than 100 housing units and requires key staff located at remote plants to reside in them while on duty.

“It has not effectively addressed serious issues threatening the habitability of its employee housing or long waits for maintenance requests,” according to the audit.

Additionally, the audit said, MWD management has interfered with the independent functions of its ethics office.

Recommendations

The state recommended the MWD update its EEO policy to include definitions of retaliation, investigatory procedures and the agency’s obligations under state and federal law, bolster staff in the EEO office and establish procedures to track and fulfill housing maintenance requests.

State legislators are being asked to amend existing law to establish a mechanism to revoke or limit the MWD’s authority over key personnel and ethics processes if the agency fails to take corrective action.

The State Auditor’s Office also is asking legislators to require the MWD to formally adopt procedures for hiring and promoting employees, to have an ethics officer, and to prohibit any MWD board director from interfering in ethics investigations.

Adel Hagekhalil, general manager for the Metropolitan Water District of Southern California. (Courtesy city of Los Angeles)

MWD response

In statements released Thursday, MWD Chairwoman Gloria Gray and General Manager Adel Hagekhalil said their agency has been working diligently in the past year to address their agency’s deficiencies noted in an independent investigation it commissioned last year and those addressed by the state.

“Two years ago, I challenged our board and Metropolitan’s management to work together to focus on Metropolitan’s performance around diversity, equity and inclusion,” Gray said. “At that time, and now, we recognize our responsibility to help foster conditions that shift mindsets, policies, and practices to promote fairness, equity and tolerance for every employee.”

She said she firmly believes the state auditor’s findings and recommendations will foster important changes to help the MWD be more successful as an employer and in service to the communities it serves.

The Metropolitan Water District employs more than 1,800 full-time workers and partners with 26 member agencies to deliver treated drinking water to approximately 19 million people living in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.

“Our board remains committed to working with our general manager to achieve these results,” Gray said.

Hagekhalil said he welcomed the audit’s recommendations, and noted that workplace improvements already are underway at the agency, including new policies recommended as part of a recent Workplace Climate Assessment performed by a law firm commissioned by the district.

“We are working swiftly and diligently to address all of the deficiencies identified in the State Auditor’s report,” Hagekhalil said. “Metropolitan has long been a leader in the water industry and in the communities we serve. Now we must also be a leader in establishing best-in-class EEO policies and systems to safeguard our workforce and create the positive, inclusive culture we are striving to achieve.”

Reforms already underway

The board of directors called for the independent investigation after employees complained of discrimination, sexual harassment and retaliation. Meanwhile, the State Auditor’s Office was receiving pressure from lawmakers to conduct its own audit of the MWD, and the state’s audit commenced in July 2021

It was during that same month that the MWD Board of Directors voted to release the independent investigation report commissioned by the Sacramento-based Shaw Law Group

MWD officials maintain the agency has been working hard to revise its existing EEO policies and implement new ones since the independent investigation was completed last year.

This week, Metropolitan hired a new EEO officer, and the agency is finalizing the recruitment of a diversity equity and inclusion officer scheduled to begin work on May 16, said MWD spokeswoman Maritza Fairfield.

Additionally, the MWD has formed a Joint Labor Management Advisory Committee, where agency managers work with employees to implement new policies and programs for improved workplace conditions, Fairfield said.

“Some of the issues outlined in the audit have dated back many years,” she said. “Since an independent review of our EEO policies and practices was concluded, and since our general manager was hired nine months ago, Metropolitan has instituted many reforms to ensure a workplace that is inclusive and equitable.”