CONCORD — Department of Employment Security Deputy Commissioner Darrell Gates — suspended after allegations of nepotism — will retire Sept. 1 and will not return to the office before that date.

He was suspended with pay by Gov. John Lynch after he and former commissioner Tara Reardon were accused in a whistleblower complaint of directing the department to hire their daughters and then having subordinates lay off the pair, making them eligible for unemployment benefits.

Gates' daughter, Kelsey Gates, worked part-time at the department for two years. Her father is alleged to have intervened to have her laid off rather than fired in August 2011.

Reardon's daughter, Whitney Flanders, was a part-time intern at the agency during the summer of 2011 and was to quit at the end of the summer. Instead, Reardon is alleged to have arranged to have her daughter laid off.

Reardon is on paid administrative leave until her resignation is effective, which is Aug. 31.

While Reardon is an “unclassified employee” who answers directly to the Governor and Executive Council, Gates is a classified employee covered under state personnel rules and statutes. Gates was suspended for 30 days, but the suspension could have been renewed for another 30 days.

“Darrell Gates announced his retirement and the governor believes that is appropriate,” Lynch press secretary Colin Manning said Tuesday.

DES general counsel Maria Dalterio filed the complaint with the Attorney General's Office against Reardon and Gates Jan. 9 after the department's Human Resources Director Lisa Riccio told her what had occurred.

The Attorney General's Office began an investigation into the matter several weeks after Dalterio's complaint and later presented a case to a Merrimack County grand jury.

After Reardon's resignation in July, George Copadis of Manchester was confirmed by the Executive Council as Department of Employment Security's interim commissioner.

Copadis has been the Department of Labor commissioner since 2004, and also served as president of the Workforce Opportunity Council.

Copadis said Tuesday he had no comment on Gates' retirement.

“The department and staff continue to focus on the job at hand of assisting all our customers to the best of our abilities,” he said.

After the nepotism scandal at employment security, House Speaker William O'Brien sent all commissioners and deputy commissioners a letter asking them if they employed relatives in their departments.

One deputy commissioner has a relative working in the department — Deputy Commissioner of Safety Earl Sweeney, whose son is a state trooper.

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Garry Rayno may be reached at grayno@unionleader.com.