Jay Inslee Let Cabinet Official Stay On The Job Two Months After Resignation

Last March, Washington Gov. Jay Inslee announced the resignation of one of his longest-serving cabinet members, Employment Security Department head Dale Peinecke. A workplace misconduct investigation had found that over the five years Peinecke worked in state government, he made some staff uncomfortable and was “vulnerable to claims of harassment with sexual overtones.”

At the time, Inslee indicated that Peinecke would leave state service much sooner than his announced departure date of June 30.

“We just are trying to wrap up the things that need wrapping up so that we can have a transition as rapidly as humanly possible,” Inslee told reporters at the time.

But as it turned out, Peinecke continued to run his agency while working remotely for two more months. He then took paid leave until the end of June when he turned 65—and could retire.

In a text message, Peinecke, who has said in the past that he was “dumbfounded” by the allegations against him, declined to comment and deferred questions to the governor’s office and Employment Security. He earned $162,240 a year.

Peinecke’s drawn out departure from state government has raised questions from other state employees, especially after Inslee described Peinecke’s conduct as “not consistent with what we expect from anyone in state employment.”

“Truly, I think our interest was how can we make sure there’s an orderly transition,” said Jaime Smith, Inslee’s communications director, in a recent phone interview. “There was no clear and obvious person to step up and take that role.”

Resignation Or Retirement?

Emails obtained through a public records request show the March 15 announcement of Peinecke’s departure was coordinated between Employment Security and Inslee’s office.

Nevertheless, each office treated the announcement differently.

The governor’s office characterized Peinecke’s departure as a resignation.

“I have accepted Dale’s resignation and believe he is making the right decision to pass the ESD leadership baton,” Inslee said in a statement about Peinecke leaving.

The statement went on to say Inslee was “reviewing findings” of an outside investigation into “workplace interactions that made some employees uncomfortable with Peinecke’s behavior.”

An earlier draft of that statement, also obtained through public records, went further in criticizing Peinecke’s behavior. The draft said Peinecke’s conduct “may have violated agency policies,” but that language was struck from the final version after a review by lawyers in the Attorney General’s Office.

Just minutes before the governor’s statement was emailed to reporters, Employment Security issued its own press release with a different message. It carried the headline, “Employment Security Commissioner announces retirement.”

The statement touted Peinecke’s accomplishments during his tenure including changes to the culture of the agency. There was no mention of his resignation.

“I’ve been working since I started my first business at age 14—and I’ll turn 65 in June,” the press release quoted Peinecke as saying. “It’s time to pass the leadership baton and focus more of my energy on family, friends and others.”

The two-page press release made only an oblique reference to the investigation into his conduct.

“In light of a recent external investigation into workplace issues,” the press release read, “Peinecke reiterated respect for employees and commitment to employee engagement.”

Asked to explain the difference in how the governor’s office and Employment Security characterized Peinecke’s departure, Employment Security spokesperson Janelle Guthrie described Peinecke’s decision to retire as a “personal one.”

Inslee spokesperson Smith, however, said that while Inslee did not ask for Peinecke’s resignation, it was appropriate for him to step aside. She added that the investigation into Peinecke’s conduct “showed that Dale fell short, absolutely.”

After the March 15 resignation announcement, Peinecke began working remotely. But even from afar he continued to run the agency for most of the next two months. According to Employment Security, he was even involved in the recruitment and review of potential candidates to replace him.

The governor’s office, meanwhile, said Peinecke “helped field questions” from interested candidates, but his involvement “wasn’t extensive.”

During this period, Peinecke also took two out-of-state business trips. In April, he flew to Houston to attend a two-day symposium hosted by the National Association of State Workforce Agencies. In May, he traveled to Sacramento for a meeting on the “future of work.” According to Employment Security, Peinecke made that second trip at the request of Inslee.

The governor’s office said it greenlit the trip at Peinecke’s request because it had been long-planned.

On May 14, after returning from Sacramento, Peinecke went on leave. He officially left state service more than a month later, on June 30. By then he had turned 65, making him eligible to begin drawing a small retirement benefit.

Washington’s Department of Retirement Services said Peinecke is earning $715.88 per month based on five-and-a-half years of state service and having turned 65.

Even if he had left Employment Security in March, Peinecke would have qualified for the benefit once he turned 65, although it would have been slightly less based on fewer months of employment.

An Employment Security employee, who does not want to be named for fear of retaliation, said she was “angry” at how the Peinecke departure was handled. She previously worked in the commissioner’s office and described him staring at women coworkers’ bodies.

But Smith, Inslee’s communications director, defended the governor’s treatment of Peinecke after the conduct investigation. “The telework arrangement was one way of trying to balance [an] orderly transition with respect for the workers at the agency,” Smith said.

‘Stared At Breasts’?

Peinecke was one of Inslee’s first cabinet appointments in 2013. Previously, Peinecke was the president and CEO of Giddens Industries, an Everett-based aerospace manufacturing company. Peinecke had also served as board chair of Workforce Snohomish, a nonprofit organization that provides employment programs to both business and job-seekers.

“I gotta tell you, Dale is a little bit of an unconventional leader for a state agency,” Inslee said during his announcement of the appointment. “But I can’t think of a person who [better] fits exactly what I’ve been looking for as a leader to try to bring transformational change to a state agency.”

Even in announcing Peinecke’s resignation, Inslee praised his accomplishments at the agency, including efforts to pass and implement Washington’s new paid family and medical leave program.

As a boss, Peinecke developed a reputation as “outgoing and friendly” and as someone who would frequently put his arm around people, according to the workplace conduct report by D Diamond Consulting.

For some women in the agency, this wasn’t a problem.

“Dale Peinecke is a very boisterous, in-your-face kind of guy,” one unnamed witness told the investigator. “Mr. Peinecke frequently puts his arm around people’s shoulders, briefly, in a collegial way. It seems to be his way of saying hello.”

But the investigation into Peinecke’s conduct did conclude that he made some employees uncomfortable when he put his arms around them, and that subordinate employees “felt they had to tolerate” his physical gestures because of his position.

The investigation also found that Peinecke was “vulnerable to claims of harassment with sexual overtones” based on allegations from eight women who said that he looked them up and down or stared at their breasts.

The investigator interviewed 16 Employment Security employees, 10 of whom described experiencing or witnessing behavior by Peinecke that they felt was inappropriate.

One female employee told the investigator, “I have never had a man gawk at me in such an obviously leering way.”

Outside of the investigation, retired customer service manager Sheila Johnson-Teeter described Peinecke to the Northwest News Network as “arrogant.”

“I saw him do things that just were not in my moral code,” Johnson-Teeter said, referring to Peinecke gloating after firing someone. She also said he looked women up and down. “I observed it, but he never did it to me,” she said.

Four other employees in the report defended Peinecke’s conduct. One praised him for hiring “strong women leaders.” Another said he “looks both men and women up and down when he encounters them.”

A fifth employee told investigators that Peinecke was counseled during his first year on the job not to hug subordinates. Peinecke told the investigator he didn’t recall this.

Peinecke also told the investigator that he is “outgoing and gregarious,” but didn’t recall any behavior that would intentionally make someone uncomfortable.

“I think this way of relating to people may come from years of coaching and being involved with sports,” Peinecke told the investigator, according to the report. “I have not felt I needed to ask permission to hug or put my arm around anyone in a collegial way.”

As for the allegation that he stared at women’s breasts, the investigator wrote that Peinecke replied, “I am dumbfounded … If I am doing that, it is not a conscious behavior.” He added that he might be trying to read the employee’s name on their badge around their neck.

This photo shows former Employment Security Commissioner Dale Peinecke with his arm around Cathy Petrie during a meeting in January 2016. The image was later posted on the agency intranet,and Petrie said it led to “insinuations” that she must have a “special relationship” with Peinecke.
COURTESY: SCHEFTER AND FRAWLEY ATTORNEYS AT LAW

The investigation into Peinecke launched last December after Cathy Petrie, who began her career at Employment Security in 1978, filed a complaint with the federal Equal Employment Opportunity Commission (EEOC) alleging age and gender discrimination. She later filed a lawsuit. In April, Petrie’s behavior became the subject of its own ethics investigation.

Petrie, who was 59 at the time of her EEOC complaint, said she was forced to accept a demotion and a significant pay cut after her managerial position was eliminated and she was passed over for another manager job that was given to a younger employee.

In her complaint, and later in an interview with the outside investigator, Petrie also alleged sexual harassment. Petrie detailed an incident in January 2016 when she said Peinecke approached her and put his arm around her shoulder. A photograph of that moment was later posted on the agency’s internal website. Petrie told investigators that the photo led to “insinuations” from other employees that she had a “special relationship” with Peinecke.

Asked by the investigator about this incident, Peinecke said “it was certainly not my intention to make her uncomfortable.”

This wasn’t the first time Petrie said Peinecke acted inappropriately at work in her presence.

Nearly a month after Inslee announced Peinecke’s resignation, Petrie became the subject of a state ethics complaint for use of public resources for personal gain.

In the complaint filed with the Washington State Executive Ethics Board, Petrie was accused of using her work computer to visit websites unrelated to her job. A follow-up investigation by the ethics board found evidence that Petrie sent emails and did other tasks related to outside businesses and interests while at work.

Based on those findings, in July, the Board found there was reasonable cause to believe she had violated state ethics law. Petrie said any use of her work computer for personal tasks was “on my own time and lunch breaks” and was minimal and that she wasn’t operating an outside business. She also said as part of her job as an underground economy auditor, she visited unusual websites in an effort to find businesses that weren’t paying their unemployment insurance taxes.

‘Blatant Retaliation’

After she filed her complaints and a subsequent lawsuit, Petrie said she felt targeted by her superiors at Employment Security.

“The amount of scrutiny that I was under at work was blatant retaliation,” Petrie told the Northwest News Network. “I could not even do anything without being called to the supervisor’s office.”

In response to the allegation of retaliation, Employment Security said in a statement, “We deny the allegation and remain committed to fostering a diverse, inclusive and respectful workplace for all.”

Petrie recently retired after 40 years with the state of Washington. But she said it wasn’t the retirement she had planned. A recipient of two prior governor’s awards for her contributions, Petrie left under the cloud of an ethics investigation and was denied her 40 years of service award.

In June, Petrie settled her lawsuit against Peinecke and Employment Security. The state agreed to pay her $140,000, according to the Department of Enterprise Services, with no admission of wrongdoing on the part of the state.

Petrie said that, in retrospect, she regretted filing her complaints against Peinecke.

“It was never my intent to leave employment in this fashion,” Petrie said.