Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Fish and Game (January 28, 2025)
January 28, 2025 · Department of Fish and Game · 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 across 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.”
The audit looked at whether agencies properly reported monetary employee settlements to the Comptroller and whether they had rules for using confidentiality or nondisclosure language in those settlements.
“In this performance audit, we determined the following:”
The report says poor controls can hide misconduct, misuse taxpayer money, and make it harder for the public to understand how state employees are treated and how settlements are paid.
“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, this matters because settlement payments can use public money, and the report says the current reporting system does not show the public all taxpayer-funded employee settlements.
“The system to report state employee settlement agreements to the Office of the Comptroller of the Commonwealth does not provide transparency into all monetary state employee settlement agreements made with taxpayer funds.”
The auditor concluded that agencies lacked documented policies for settlement agreements, confidentiality language, recordkeeping, and reporting, and that some required records were missing or not provided.
“Executive offices and agencies do not have documented internal policies or procedures on the authorization, development, documentation, and retention of state employee settlement agreements and supporting records.”
The report recommends formal statewide policies, better oversight, public reporting, stronger record retention, and limits on confidentiality language; the Governor's Office said it would take some steps, including a public settlement policy.
“The Office of the Governor will issue a public Executive Department Settlement Policy applicable to all executive department offices and agencies.”
The report is significant because it covers 75 agencies, more than 2,000 reported settlement agreements, over $40 million in costs, and major gaps in oversight and documentation.
“Based on state employee settlement agreement lists provided to us by the executive offices and agencies listed in Appendix C, during the period of January 1, 2010 through December 31, 2022, the audited agencies entered into 2,029 state employee settlement agreements with a total cost in excess of $40,839,452.”
A settlement agreement is a written deal that resolves a claim, such as a grievance, complaint, or lawsuit, often without going to court; confidentiality language can limit what people say about the agreement or the dispute.
“For the sake of consistency in the audit, we defined a state employee settlement as a settlement resulting from a formal claim3 (union and non-union grievances, complaint, or lawsuit) against a state agency brought by a current or former employee.”
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: The Governor’s Office could not ensure employee settlements were handled fairly, ethically, legally, consistently, or transparently, and CTR might not review settlement payments for proper financial reporting.
Standard: Best-practice internal control standards in the Green Book and comparable state audit guidance call for documented policies, procedures, and support documentation requirements. ( US Government Accountability Office’s Standards for Internal Control in the Federal Government )
2 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
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 could be used to conceal harassment, discrimination, unlawful behavior, poor management, or misuse of taxpayer dollars, and affected employees may not know such terms may be unenforceable.
Standard: Public Records Law guidance, the 2013 Globe Newspapers Superior Court decision, CTR’s Settlements and Judgments Policy, and best practices caution that settlement agreements are generally public records and confidentiality terms may be unenforceable. ( Boston Globe Newspaper Co. v. Executive Office of Administration and Finance, Suffolk Superior Court No. 11-01184-A; CTR’s Settlements and Judgments Policy; Public Records Law, G.L. c. 4, §. 7, 26 (a) and (c) )
4 recommendations
- GOV should establish and implement policies and procedures regarding the use of confidentiality language in state employee settlement agreements and supporting documentation justifying its inclusion.agency: partially agreed
- GOV’s policy should weigh employee privacy against the public’s right to know how state funds are spent.agency: agreed
- GOV’s policy should not protect an employee with detrimental workplace behavior.agency: agreed
- The Governor should consider an executive order limiting confidentiality language in employee settlement agreements.agency: partially agreed
Agency response & Auditor reply
Agency: "Since 2018, the policy of the executive department has generally precluded the use of nondisclosure agreements."
Why it matters: Unreported settlements violated regulation and policy and could result in improper accounting, tax reporting, and settlement documentation corrections.
Standard: CTR’s Settlements and Judgments Policy requires all monetary settlements and judgments to be reviewed by CTR before payment regardless of funding source. ( CTR’s Settlements and Judgments Policy )
3 recommendations
- GOV should establish and implement policies and procedures over reporting 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: "Based on its response, GOV plans to take some measures to address our concerns in this area."
Why it matters: The Auditor could not fully test CTR reporting compliance or verify settlement lists, creating a risk that agreements were missing, withheld, or not properly accounted for.
Standard: Massachusetts Statewide Records Retention Schedule provisions require retention of employee complaint, grievance, personnel action, settlement, and final decision records for specified periods. ( 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 )
2 recommendations
- GOV should ensure state agencies comply with public records law and retain employee settlement agreements according to the Massachusetts Statewide Record Retention Schedule.agency: partially agreed
- GOV should ensure settlement records are provided to OSA upon request and consider a centralized list and storage-location tracking process.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 underlying inappropriate behavior was identified and addressed to prevent recurrence.
Standard: Massachusetts Statewide Records Retention Schedule E05-02 requires retention of employee grievance and complaint records. ( Massachusetts Statewide Records Retention Schedule E05-02; Section 12 of Chapter 11 of the General Laws )
3 recommendations
- GOV should develop policies and procedures to ensure complaints are documented, retained, and provided to external auditors upon request.agency: agreed
- Agencies should consult the Massachusetts Supervisor of Public Records to classify and retain records correctly.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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