Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Children and Families (January 28, 2025)
January 28, 2025 · Department of Children and Families · Read the full official report on mass.gov ↗
Published January 28, 2025 Audit covers January 1, 2010 – December 31, 2022 Under Diana DiZoglio · 2023–present
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“It is clear from our review of the issues examined in our report that the system in place regarding employee settlements in state government is dysfunctional – at best.”
Read the plain-English breakdown
This is a State Auditor performance audit of employee settlement agreements and confidentiality clauses across the Governor’s Office, the Comptroller, and many executive branch agencies from 2010 through 2022.
“This audit was conducted on the Office of the Governor (GOV) and its subordinate agencies, as well as the Office of the Comptroller of the Commonwealth (CTR), for the period January 1, 2010 through December 31, 2022.”
Auditors wanted to know whether agencies properly reported monetary employee settlements to the Comptroller and whether they had rules for using confidentiality language in those settlements.
“whether state agencies developed and implemented policies and procedures regarding the use of confidentiality language, including nondisclosure clauses, within the context of state employee settlement agreements.”
The report says weak oversight can hide mistreatment, misuse public money, and leave taxpayers unable to see how employee disputes are handled.
“This results in an inconsistent process that is not transparent to the citizens of the Commonwealth regarding how their public employees are treated or how their tax dollars are being spent.”
As a taxpayer and resident, this matters because public money may be used in settlements, and the report says the public should be able to see enough to know whether government is acting fairly and lawfully.
“The public interest in the financial information of a public employee outweighs the privacy interest where the financial compensation in question is drawn on an account held by a government entity and comprised of taxpayer funds.”
The auditor found no documented statewide internal rules for authorizing, documenting, retaining, and overseeing these employee settlements, and no documented policy for confidentiality language.
“There is no documented policy on the use of confidentiality language for GOV and other executive offices and agencies.”
The auditor recommends formal policies, centralized oversight, better public reporting, record-retention fixes, training, and possible executive action limiting confidentiality language.
“Your office has committed to taking actions on some of our audit’s recommendations.”
The report frames this as a transparency, legal, financial, and ethics issue, especially because the agreements may involve vulnerable public employees and taxpayer-funded payments.
“Our audit identifies areas of financial, legal and ethical risks for the Commonwealth – when our fellow public servants are at their most vulnerable.”
A settlement agreement is a deal used to resolve a dispute outside court; confidentiality or nondisclosure language can limit what people say about the deal or the events behind it.
“Let’s be clear, settlement agreements that exist to settle and resolve issues or disputes, outside of court, can actually provide great benefit to taxpayers, state agencies and employees by saving on time and costly legal fees while creating a mutually agreed upon, beneficial resolution.”
4 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Did state agencies report monetary state employee settlement agreement claims to CTR in accordance with Section 5.09 of Title 815 of the Code of Massachusetts Regulation (CMR) and CTR’s Settlements and Judgments Policy?
- Did not comply To what extent, if at all, have agencies developed and implemented policies and procedures regarding the use of confidentiality requests, including nondisclosure language, within the context of state employee settlement agreements?
What the Auditor found
Why it matters: GOV cannot ensure employee settlements are handled fairly, ethically, legally, consistently, or transparently, and CTR may not have the opportunity to review intended settlement payment processing.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government; Montana Legislative Audit Division performance audit best-practice recommendations. ( Section 12 of Chapter 11 of the Massachusetts General Laws )
3 recommendations
- GOV should establish and implement policies and procedures over the authorization, development, documentation, and retention of state employee settlement agreements, and requirements for supporting documentation.agency: agreed
- GOV should provide centralized management and oversight over the use of state employee settlement agreements.agency: agreed
- GOV should establish a public reporting process for transparency and accountability over settlement agreements.agency: agreed
Agency response & Auditor reply
Agency: "The executive department agrees that documenting policy and procedures can help ensure consistent practice across a broad and wide-ranging government."
Auditor: "We note that it will be important that GOV ensure proper monitoring of any policy implemented to address these concerns and ensure agencies comply on an ongoing basis."
Why it matters: Confidentiality language may be used to conceal harassment, discrimination, or other unlawful behavior and may improperly restrict employees who do not know such terms may be unenforceable.
Standard: Public Records Law; Boston Globe Newspaper Co. v. Executive Office of Administration and Finance; CTR’s Settlements and Judgments Policy; US Government Accountability Office’s Standards for Internal Control in the Federal Government. ( Public Records Law, G.L. c. 4, §. 7, 26 (a) and (c); Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. No. 11-01184-A; Speak Out Act )
4 recommendations
- GOV should establish and implement policies and procedures regarding the use of confidentiality language in state employee settlement agreements and required supporting documentation.agency: partially agreed
- GOV’s confidentiality policy should weigh employee privacy against the public’s right to know how state funds are spent.agency: partially agreed
- GOV’s confidentiality policy should not protect employees with detrimental workplace behavior.agency: partially agreed
- The Governor should consider an executive order limiting confidentiality language in employee settlement agreements.agency: partially agreed
Agency response & Auditor reply
Agency: "The executive department cannot concur with Audit Finding 2 to the extent that it appears to overlook the Comptroller’s Settlement and Judgments Policy which explains that “confidentiality language mandating that a settlement or settlement terms be kept confidential may not be enforceable”; that “[c]onfidentiality provisions will not create protections that do not already exist under the Public Records Law or other statutory bar to disclosure”; and that “the name of a recipient payee of a settlement or judgment payment made from the settlement and judgment account is considered a public record.”"
Auditor: "This demonstrates that GOV agrees that the lack of a documented policy over the use of non-disclosure language exists and should be clarified in a written policy."
Why it matters: Unreported settlements violated regulation and policy and may have caused improper accounting and tax reporting.
Standard: Section 5.09 of Title 815 of the Code of Massachusetts Regulations; CTR’s Settlements and Judgments Policy. ( CTR’s Settlements and Judgments Policy; Section 5.09 of Title 815 of the Code of Massachusetts Regulations )
3 recommendations
- GOV should establish and implement policies and procedures over reporting state employee settlement agreements to CTR.agency: agreed
- All executive office employees should receive training on these policies and procedures.agency: agreed
- GOV should establish monitoring controls to ensure compliance and appropriate management.agency: agreed
Agency response & Auditor reply
Agency: "We agree that offices and agencies must follow the Comptroller’s reporting requirements, even when the settlement at issue requires no disbursement from the settlements and judgments fund."
Auditor: "Based on its response, GOV plans to take some measures to address our concerns in this area."
Why it matters: The missing agreements impaired testing of CTR reporting compliance and settlement-list accuracy and created concern that settlement information was being withheld.
Standard: Massachusetts Statewide Records Retention Schedule; Section 12 of Chapter 11 of the General Laws. ( Massachusetts Statewide Records Retention Schedule E05-01; Massachusetts Statewide Records Retention Schedule E05-02; Section 12 of Chapter 11of the General Laws )
1 recommendation
- GOV should ensure agencies comply with public records law, retain settlement agreements under the Statewide Record Retention Schedule, and provide them to the Auditor upon request.agency: partially agreed
Agency response & Auditor reply
Agency: "We respectfully disagree with the report’s assertion that “57 executed settlement agreements” requested by OSA “were not provided.”"
Auditor: "We revisited the responses from the agencies that came in late and after our requested timelines and revised the figure, which still shows 47 settlements agreements were not provided to us in order for us to conduct our tests."
Why it matters: The Auditor could not assess why confidentiality language was included or whether unlawful behavior such as discrimination or harassment was appropriately addressed.
Standard: Massachusetts Statewide Record Retention Schedule E05-02; Montana Legislative Audit Division best-practice recommendation. ( Massachusetts Statewide Record Retention Schedule E05-02; Section 12 of Chapter 11 of the General Laws )
3 recommendations
- GOV should develop policies and procedures to document, retain, and provide complaints to external auditors upon request.agency: agreed
- Agencies should consult with the Massachusetts Supervisor of Public Records to accurately classify and retain these records.agency: agreed
- Complaints from substantiated egregious behavior should be retained permanently.agency: agreed
Agency response & Auditor reply
Agency: "Regardless of the numbers, we agree that the report has identified historical record-keeping issues requiring attention."
Auditor: "What we know for certain is that we did not receive 124 of the 159, or 78% of, requested copies of the original claim, complaint, or grievance."
More audits of this entity
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- Audit of the Department of Children and Families (November 7, 2024)State Agency / Office · November 7, 2024
- Department of Children and FamiliesState Agency / Office · May 8, 2012
- Department of Children and FamiliesState Agency / Office · May 12, 2011
- Department of Children and FamiliesState Agency / Office · March 26, 2014
- Audit of the Department of Children and FamiliesState Agency / Office · December 7, 2017