Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Criminal Justice Information Services (January 28, 2025)
January 28, 2025 · Department of Criminal Justice Information Services · 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 across the Governor’s office, its agencies, and the Comptroller, covering 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.”
The auditor reviewed whether agencies properly reported monetary settlements and whether they had rules for using confidentiality language in employee 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.”
Settlements can alert top officials to abuse, harassment, discrimination, poor management, or other serious problems inside agencies, especially when taxpayer money is involved.
“These agreements represent an inflection point, where executive management can become aware of practices inside agencies where potential abuse or other inappropriate activity may be occurring.”
As a resident and taxpayer, this affects whether you can see how public money is spent and whether state employees are treated fairly when disputes happen.
“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 audit found no documented statewide policy for confidentiality language in these settlement agreements, creating risks of secrecy and inconsistent handling.
“There is no documented policy on the use of confidentiality language for GOV and other executive offices and agencies.”
The auditor recommends formal policies, stronger oversight, better reporting, better records retention, and possibly an executive order limiting confidentiality language.
“The Governor should consider implementing an executive order to limit the use of confidentiality language in employee settlement agreements.”
The report says agencies disclosed more than 2,000 employee settlements costing over $40.8 million, but the auditor could not verify that the list was complete.
“During our audit, we identified more than $40.8 million paid by the Commonwealth in employee settlement agreements.”
3 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, settlement agreements may be handled inconsistently, with reduced transparency into employee treatment and taxpayer spending, and possible errors in financial reporting.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government; CTR requirements; best practices from Montana’s Legislative Audit Division. ( 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 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: "In its response, GOV cited policies that existed during the audit period, notably CTR’s Policy on Settlements and Judgments, and the associated regulations at 815 CMR 5.00."
Why it matters: Confidentiality language could be used to obscure harassment, discrimination, unlawful behavior, poor management, or inappropriate use of taxpayer dollars.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government; Boston Globe Newspaper Co. v. Executive Office of Administration and Finance; CTR’s Settlements and Judgments Policy; Massachusetts Public Records Law guidance. ( Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. No. 11-01184-A; CTR’s Settlements and Judgments Policy; 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 policy should weigh 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: "In its response, GOV cited a statement within the CTR Settlements and Judgments Policy explaining to departments 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.”"
Why it matters: Unreported settlements may be improperly recorded in the state accounting system and improperly reported for tax purposes.
Standard: CTR’s Settlements and Judgments Policy and Section 5.09 of Title 815 of the Code of Massachusetts Regulations. ( CTR’s Settlements and Judgments Policy )
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 the 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: "Based on its response, GOV plans to take some measures to address our concerns in this area."
Why it matters: Missing agreements prevented testing of CTR reporting compliance and settlement-list accuracy, and reduced transparency into public spending.
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; Section 12 of Chapter 11of the General Laws )
2 recommendations
- GOV should ensure agencies comply with public records law and retain settlement agreements according to the Massachusetts Statewide Record Retention Schedule.agency: disagreed
- GOV should consider 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: The Auditor could not assess whether confidentiality language was justified or whether unlawful behavior was properly addressed.
Standard: Massachusetts Statewide Record Retention Schedule E05-02 and Section 12 of Chapter 11 of the General Laws. ( Massachusetts Statewide Record Retention Schedule E05-02; Section 12 of Chapter 11 of the General Laws )
3 recommendations
- GOV should ensure complaints are documented, retained, and provided to external auditors upon request.agency: agreed
- Agencies should consult with the Massachusetts Supervisor of Public Records to classify and retain 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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