The phrase doesn't involve actual water. It's a metaphor for trouble or criticism. After losing the company money, Jim was really in hot water with his boss.
Pro Tip 2/3
Severity varies
The phrase can refer to trivial trouble or serious repercussions, depending on context. I was in hot water for being ten minutes late, but it was nothing a sincere apology couldn't fix.
Pro Tip 3/3
Not always literal
Sometimes it's used humorously or sarcastically, not to denote real trouble. He's in hot water now for eating the last cookie, but we're all just teasing him.