By admin 
Two managers at the California State Controller’s Office were the subject of an audit released this month outlining improper actions after they regularly teleworked from out of state. The finding prompted auditors to recommend the Legislature clarify remote work policies in state law.
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The allegations come after the California Department of Human Resources sent a notice in February 2022 outlining that departments cannot approve employee requests to regularly work from out-of-state locations. The State Controller’s Office’s policy also restricts employees from relocating to an area that “preclude their ability to return to an assigned work location within (a) normal commute time.”
One manager worked from Idaho for at least five years, starting in November 2020 when he moved to the state. Auditors found the employee owned property in Idaho and had a driver’s license issued by the state.
“Despite living and working in Idaho for approximately five years, (the manager) did not disclose to anyone at the SCO his actual location,” the California State Auditor report disclosed. “In each of the telework plans that (manager) signed in 2023, 2024, and 2025, he said that his telework address was in California.”
Another manager was found to work from both Alabama and Tennessee without disclosing that information to the Controller’s Office, according to the audit report.
“IP address log‑in data showed that she accessed the internet from Alabama about half of her work time and from California the other half from June 2025 through September 2025, and her access during October 2025 and November 2025 was exclusively from Alabama,” the audit report states. “We also identified IP address data that shows she logged in for work from Tennessee.”
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Auditors obtained a court order from 2024 that identified the second manager as a Tennessee resident. In her 2023 tax documentation, according to the audit report, this manager listed a Tennessee address as her home residence. The state worker also expressed plans to move to Alabama in an email reviewed by auditors.
The auditor’s report also questions the Controller’s Office, saying “the SCO could have provided better guidance and stronger internal controls to ensure compliance with CalHR’s 2022 guidance and to detect or prevent the long‑term out‑of‑state telework in which both employees engaged.”
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Both employees didn’t provide the Controller’s Office with accurate information about where they worked, the agency said, resulting in the “office’s inability to identify the issue sooner.” The Controller’s Office also said it discovered the telework pattern before the auditors.
Auditors reported there was no explicit language in the Controller Office’s telework policy that required employees generally conduct telework from California. Both employees told auditors such policies were unclear.
Additionally, staffers in the agency’s information technology and human resources divisions said the Controller’s Office generally doesn’t monitor where employees telework. Without such policies and completed investigations, the audit report states it could cause a tax problem.
“Without such a process in place, the SCO risks withholding incorrect payroll taxes for employees because living in or working extensively from another state could trigger changes to employees’ tax liabilities,” the report states.
Going forward, the audit asks the Legislature to amend state law to provide clear instruction that prohibits state workers from regularly teleworking outside of California. That change requires a bill be introduced and approved this coming legislative session before its fate is determined by governor’s office.
The audit also asked the Controller’s Office to impose corrective actions on the two managers, update policies and implement a process to periodically monitor where employees telework — including possibly reviewing where agency-issued mobile devises are used. Both managers no longer work for the controller’s office.
“The SCO has fully implemented the auditor’s recommendations prior to the release of the report,” the Controller’s Office wrote in a statement.
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