Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Conservation and Recreation (January 28, 2025)
January 28, 2025 · Department of Conservation and Recreation · 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
source
“There exists little more than a haphazard approach to executing settlements, including those containing confidentiality clauses, with an informal, verbal policy that was allegedly promulgated around 2018 regarding non-disclosure language.”
Read the plain-English breakdown
This is a state audit of employee settlement agreements and confidentiality clauses used by the Governor’s Office, the Comptroller’s Office, 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 checked whether agencies properly reported money settlements to the Comptroller and whether they had rules for using confidentiality or nondisclosure language.
“Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.”
The report says poor handling of these agreements can hide workplace problems, misuse taxpayer money, and leave employees without enough protection or public accountability.
“Our audit identifies areas of financial, legal and ethical risks for the Commonwealth – when our fellow public servants are at their most vulnerable.”
For an ordinary taxpayer, this matters because public money may be used in settlements, and the public may not be able to see clearly how or why that money was spent.
“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.”
The auditor’s bottom line is that the state needs formal rules, central oversight, better records, and more public reporting for employee settlements and confidentiality clauses.
“We hope this Administration recognizes the need for an intensive overhaul of the broken system that currently exists under its purview.”
The report recommends new policies, possible executive action, legislation, better training, reporting to the Comptroller, and stronger recordkeeping; the Governor’s Office said it would take some steps.
“Your office has committed to taking actions on some of our audit’s recommendations.”
The report is significant because the auditor says missing or withheld records prevented a full picture of how settlements and confidentiality clauses were actually used across state government.
“Our inability to obtain necessary records, due to so many documents either being withheld or missing – never mind the disorganization and lack of documentation across state agencies – warrants greater concern and urgency from this Administration.”
A settlement agreement is a written deal used to resolve a claim or dispute, often instead of going to court; confidentiality language means terms that limit what people can disclose about it.
“For the purposes of this executive order, the definition of settlement agreement shall mean a written agreement resolving any claim (as defined by 815 CMR 5.02), written or unwritten, by any claimant for damages to compensate an injury or wrong allegedly suffered, directly or a result of the Commonwealth failing to prevent such damages, including but not limited to personal injury, violation of civil rights, breach of contract, failure to comply with contract bidding laws, assault, harassment, discrimination, retaliation, whistle blowing, incorrect or improper personnel determinations regarding pay, promotion or discipline, failure to comply with statutory or constitutional provisions applicable to employment, and eminent domain taking damages, misconduct, including any attorney's fees and interest associated with these claims.”
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: Without policies and procedures, settlements may not be handled fairly, ethically, legally, consistently, or transparently, and financial reporting errors may occur.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government, known as the Green Book ( US Government Accountability Office’s Standards for Internal Control in the Federal Government )
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 state employee 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: "Our audit noted that these differences in the approval of a settlement agreement were not documented in a policy during the audit period."
Why it matters: Confidentiality language may conceal harassment, discrimination, unlawful behavior, poor management, or misuse of taxpayer funds.
Standard: CTR’s Settlements and Judgments Policy, Public Records Law guidance, the 2013 Superior Court decision in Globe Newspaper Co. v. Exec. Office of Admin. and Finance, and the Green Book ( CTR’s Settlements and Judgments Policy; [Boston] Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. No. 11-01184-A (June 14; 2013); Chapter 4, Section 7, clause 26(a) and (c) of the Massachusetts General Laws )
4 recommendations
- GOV should establish and implement policies and procedures regarding confidentiality language and supporting documentation.agency: partially agreed
- GOV’s policy should balance employee privacy against the public’s right to know how state funds are spent.agency: partially agreed
- GOV’s 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: "We again note here that CTR’s policy and regulations are not enforceable policy by the employer—they do not bind an agency in an executive office to any particular course of action related to settlement agreements."
Why it matters: Failure to report settlements violates regulation and policy and may cause improper accounting and tax reporting.
Standard: Section 5.09 of Title 815 of the Code of Massachusetts Regulations and CTR’s Settlements and Judgments Policy ( CTR’s Settlements and Judgments Policy )
3 recommendations
- GOV should establish and implement policies and procedures for 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.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: "The lack of clarity across executive branch agencies further underscores the urgent need to clarify, document and communicate policies and ensure appropriate monitoring of employee settlement agreements, as there appears to even be confusion as to what a “monetary” settlement is, even though we simply utilized the same definition taken from the CTR’s Settlements and Judgments policy which we were told was the existing statewide policy that GOV says it followed."
Why it matters: The missing agreements impaired testing of CTR reporting compliance and settlement-list accuracy, and may obscure how public funds were spent.
Standard: Massachusetts Statewide Records Retention Schedule and Section 12 of Chapter 11 of the General Laws ( Massachusetts Statewide Records Retention Schedule E05-01; Massachusetts Statewide Records Retention Schedule E05-02; Massachusetts Statewide Records Retention Schedule E05-03; Section 12 of Chapter 11 of the General Laws )
3 recommendations
- GOV should ensure agencies comply with public records law and develop policies and procedures to retain settlement agreements in accordance with the Statewide Record Retention Schedule.agency: disagreed
- GOV should ensure these records are provided to the auditor upon request.agency: disagreed
- GOV should consider creating a centralized list of settlement agreements and storage locations.agency: disagreed
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: "There were 57 settlement agreements requested during the course of the audit that agencies did not provide upon our request."
Why it matters: If complaint records are not retained, inappropriate behavior may not be identified or corrected to prevent recurrence.
Standard: Massachusetts Statewide Record Retention Schedule E05-02 ( 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 and retain complaints and provide them to external auditors upon request.agency: agreed
- Agencies should consult with the Massachusetts Supervisor of Public Records to classify and retain these records properly.agency: agreed
- Complaints involving 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."
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