Embattled State Fair Employment and Housing Director Resigns

Monday, October 06, 2014
Former Director Phyllis Cheng

In April, Department of Fair Employment and Housing (DFEH) Director Phyllis Cheng told Chris DiMarco at Inside Counsel, “I’m the second-longest serving director in the history of the department, and I hope to be the longest serving. It's a wonderful job and a great place to make changes and bring a civil rights agency into the 21st century.” 

She didn't make it.

Cheng abruptly resigned last week, days before release of a report that was expected to be critical of her department, according to the Sacramento Bee. She was appointed department director by Republican Governor Arnold Schwarzenegger in 2008 and retained by Democratic Governor Jerry Brown in 2012. Nancy Gutierrez held the post from 1991-1998.

Cheng, an immigrant from Hong Kong and speaker of three Chinese dialects, was educated in California. She received a bachelor’s degree and a master’s from UCLA and picked up a Juris Doctor from Southwestern Law School. She was an associate with the civil and human rights law firm Hadsell and Stormer, specializing in employment discrimination.

While at the firm, she was appointed to the California Fair Employment and Housing Commission where she served two terms, including a stint as vice chair. She left Hadsell and Stormer in 1995 to start her own practice but continued at the commission, which was eliminated in 2012.

DFEH is the largest state civil rights agency in the country. The department is an independent, quasi-judicial administration agency that investigates, mediates and prosecutes violations of the Fair Employment and Housing Act, the Disabled Persons Act, the Unruh Civil Rights Act and the Ralph Civil Rights Act. Ninety-five percent of its cases have to do with employment.

But its authority and resources have been diminished over the years. A review by the state Senate Office of Oversight and Outcomes (SOOO) last year said the department has been systematically deprived of the resources necessary to investigate the 20,000 new discrimination claims made to it each year. As a result, discrimination investigations are “too often cursory.”

The problem, the report said, is becoming “more acute with each passing decade” and “top veterans of the department who spoke with the Senate Oversight Office believe that only a small fraction of the work required by law can actually be accomplished.”

The Oversight Office found the agency was underfunded, demoralized, had a crummy computer system and was in direct conflict with the federal government. “DFEH nearly destroyed a 19-year relationship with the Department of Housing and Urban Development [HUD] by directing necessary resources away from housing discrimination investigations,” the report said.

That computer system, HoudiniEsq, launched in 2012. It was supposed to take up some of the slack of lost personnel by automating certain procedures, including the filing of initial claims of discrimination. Many of those claims were being made by people with limited or no English skills, but the computer system itself was English-only. Case filings quickly dropped. The raw claims initially filed through Houdini, often hard to understand, were then sent to employers, much to their bafflement.

The Senate report also claimed that the department had been following a policy of consulting with the governor’s office before acting on claims of bias. That would effectively give the governor veto power over a discrimination complaint against a state or local agency. The report said the secret rule, instituted in 2008 under Governor Schwarzenegger, may be an “unlawful underground regulation.” The governor’s office disputed that, but even if legal, “this policy lacks transparency, and constitutes unequal treatment for public employees,” the report said.  

Cheng said she plans to return to private law practice. Friday was her last day on the job.

–Ken Broder


To Learn More:

Fair Employment Director Announces Sudden Retirement (by Jon Ortiz, Sacramento Bee)

State Of Evolution: Inside the DFEH (by Chris DiMarco, Inside Counsel)

Fair Employment and Housing Department Backlog Tied to Computer Upgrade (by Amy Stewart, TechWire)

Big Changes at California Discrimination-Watchdog Department (by Jon Ortiz, Sacramento Bee)

Director’s Biography (Department of Fair Employment and Housing)

Supreme Court to Hear Another Case on Housing Bias (by Sam Hananel, Associated Press)

State Oversight Office Says Landmark Civil Rights Agency is Crippled (by Ken Broder, AllGov California)

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