DWP OVERTIME SCAM $100 MILLION IN 11 MONTHS INCLUDES TIME-AND-A-HALF FOR PARTIAL DAYS.

Byline: KERRY CAVANAUGH

Staff Writer

Los Angeles Department of Water and Power workers racked up more than $100 million in overtime pay in just one 11-month period, with some employees claiming extra pay even on days when they took some time off, according to an internal audit of the utility.

The audit found that employees charged nearly 2 million hours of OT from March 2005 to February 2006, with roughly 14 percent of employees charging the utility for overtime on the same day they took an absence.

The analysis also found that 32 individuals reported same-day overtime and absences more than 10 times each.

Under labor agreements, DWP workers can charge at least time-and-a-half of their regular hourly wage for working outside their normal work schedule.

So if, for example, a 9-to-5 employee takes personal time off in the morning, then works in the afternoon and into evening, the worker could charge for overtime.

The same rules apply if a Monday-Friday worker took off Friday and then came into work Saturday at the overtime rate, according to the audit.

The audit's findings come as DWP overtime costs have continued to soar amid staffing shortages, even as the utility has raised water rates and union workers have earned regular pay under a 2005 contract in which city officials granted them raises up to 28 percent over five years, making them the best-paid city employees.

"We can't do in this department without overtime," said the Board of Water and Power Commission president, David Nahai. "It's very corrosive to have some workers who commit fraud in the system while other workers are being honest.

"We have to delve into the issue to determine if there is widespread abuse and then come up with a discipline system."

In an effort to rein in the utility's giant overtime bill, the commissioners requested the audit last year to ensure that overtime spending by DWP's 8,985 full-time and temporary employees was legitimate.

Since then, DWP managers have begun scrutinizing overtime payouts each month, but the review raises new questions about the system.

Of particular concern, the auditors said, were the number of employees who took absences and claimed overtime on the same day.

In their report, auditors found that the overtime payroll process had insufficient oversight, poor scheduling systems and not enough manpower.

DWP officials have defended the OT as necessary in a complex organization that operates around the clock.

Officials also have said the high OT payments are partly the legacy of DWP downsizing from 11,600 workers in the early 1990s to as low as 6,700 near the end of the decade.

About 75 percent of employees charged for OT in the same week they took an absence.

In other cases, some employees charged overtime for in-house training beyond their normal schedule.

"It's a scam," said Commissioner Nick Patsaouras, who said he saw similar overtime abuse while overseeing the Metropolitan Transportation Authority.

"It's like the wild, wild West in there. Nobody questions anything. Some employees charge overtime for attending an in-house training? What's going on here? It's crazy."

While most of the overtime is allowed by labor agreements and approved by department supervisors, auditors recommended managers refuse to allow nonemergency or nonunion-mandated overtime on the same day as an absence. They also recommended minimizing the use of OT in the same week as absences.

Auditors further recommended that the DWP establish a policy to limit how much an employee could charge for nonemergency overtime.

Some 3,442 employees charged overtime that exceeded 15 percent of their regular pay. About 90 employees each earned $65,000 in overtime pay over the study period.

Auditors recommended that employees with more than 800 hours of OT in a year be required to receive permission from the general manager to work any additional nonemergency hours.

The DWP budget director, Jeff Peltola, said department leadership adopted a new policy on overtime last year in response to concerns.

Managers now review overtime every month. Any division manager who spends more than 10 percent of labor costs on overtime must explain in writing why OT was up and what is being done to reduce it.

Still, Peltola said the utility is so short-staffed that even with the big overtime payout, the department comes in under budget for labor.

The utility has 8,150 permanent employees, but needs 8,960 to do the work, he said.

"In the short term, it's cost-effective, but in the long run we're going to burn out employees," he said.

The shortages are especially acute for the power-distribution system. Electrical outages and a shortage of linemen -- national phenomena -- result in hundreds of overtime hours.

During last summer's heat wave and the following months of 2006, the power division spent $31 million in overtime -- $17 million more than its overtime budget.

"In a heat storm, we worry about turning the lights on first. Then we start looking at the fiscal impact versus our financial plan," Peltola said.

But other divisions have had unusually high overtime budgets without emergencies.

The audit found that poor scheduling and lax management allowed security employees to charge excessive overtime at double rates.

Overtime was racked up by 228 of 232 security officers, totaling $5 million during the review period.

Forty-five employees each charged 1,000 hours of overtime -- the equivalent of 25 workweeks -- or more.

The security manager and the janitorial staff manager, who also had problems with overtime, have been replaced, DWP officials said.

kerry.cavanaugh(at)dailynews.com

[phone]