SACRAMENTO, Calif. (AP) — A troubled California tax agency was stripped of its hiring authority Wednesday after a state personnel board investigation into nepotism found nearly one in five employees were related to or living with a coworker.

“Favoritism or perceived favoritism toward employees having personal relationships with other employees had a dispiriting and stressful impact on overall employee morale,” the investigation into the Board of Equalization found.

The investigation is the latest report into wrongdoing at the BOE, a 5-member elected body that until recently oversaw collection of more than $61 billion in revenue and employed nearly 5,000 people. Lawmakers stripped it of most of its authority this summer, transferring most of the employees to new agencies. Due to the employee transfer, the personnel board’s order requires the new California Department of Tax and Fee Administration to provide a detailed report on personal relationships between its employees and to let the state’s central human resources department oversee its hiring for at least a year.

Both the BOE and the tax and fee administration concurred with the investigator’s findings, and both have already adopted new anti-nepotism policies that comply with state rules, according to responses they provided to the investigator.

“The BOE is interested in aggressively addressing and correcting these issues in a timely manner,” David Gau, the board’s executive director, wrote in the response.

Complaints of widespread nepotism prompted the personnel board’s investigation. According to the report, one employee anonymously complained: “We call it the 3 f’s for job requirements. You gotta be friends, family or friends of family to get hired.”

In April 2017, at least 835 of 4,767 employees were related to a co-worker by blood, adoption, marriage, domestic partnership or cohabitation, the investigation found. That number was based on a survey by BOE supervisors in each department and might not reflect the full scope of personal relationships. The investigation outlined instances of a father and daughter, cousins, and spouses reporting to the same supervisor.

California state government departments are supposed to write anti-nepotism policies that discourage hiring people with personal relationships in the same small department, reporting to the same supervisor or in supervisor/subordinate relationships. It also directs agencies to base hiring on merit. The Board of Equalization’s nepotism policies did not reference those guidelines or mention the importance of merit-based hiring, the investigation found.

“It was clear during the investigation that BOE was permeated with a culture that viewed the civil service rules as bureaucratic technicalities that are open to manipulation and circumvention,” the investigator wrote.

The Board of Equalization now employs just 190 people and, of them, four have personal relationships with another employee, according to the agency’s response. Four employee decisions made by the BOE, including three hires and one demotion, will be voided.

The Board is run by five elected officials, including four board members and the state controller. An evaluation into the board by the state’s Department of Finance earlier this year found some board members were inappropriately using state employees’ time, including by asking them to work parking lot duty at promotional events. The board also failed to report accurate finance data to lawmakers, the report found.

Most of the board’s duties of collecting revenue and handling tax disputes were delegated to other agencies under legislation signed by Gov. Jerry Brown in the summer.

Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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