Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of State Police (January 28, 2025)
January 28, 2025 · Department of State Police · 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 looking at 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.”
The audit examined whether agencies properly reported 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 weak controls can hide how public money is spent and how state employees are treated, especially when settlements involve workplace disputes or possible misconduct.
“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 affects whether you can see how state money is used, whether public employees are treated fairly, and whether misconduct inside agencies is hidden or addressed.
“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 policies for key parts of the settlement process, no documented rules for confidentiality language, missed required reports, missing settlement records, and missing underlying complaints.
“Below is a summary of our findings, the effects of those findings, and our recommendations, with links to each page listed.”
The report recommends formal policies, centralized oversight, public reporting, better record retention, training, and possibly an executive order limiting confidentiality language in employee settlements.
“GOV should provide centralized management and oversight over the use of state employee settlement agreements to ensure that policies and procedures are adhered to and to provide reporting to the public regarding the use of these agreements.”
The audit says agencies reported 2,029 employee settlement agreements costing more than $40.8 million, and the Auditor could not verify that the list was complete because records were missing or access was limited.
“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 state employee settlement is a deal used to resolve a formal workplace claim, such as a grievance, complaint, or lawsuit, brought by a current or former state worker.
“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.”
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 and procedures, GOV cannot ensure employee settlements are handled fairly, ethically, legally, consistently, or transparently, and CTR may not review settlement payments for proper financial reporting.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government; CTR settlement requirements were cited as relevant but not incorporated into GOV or agency policy. ( 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 office will be following up in the coming months to review these measures to ensure the results match the spirit communicated to us."
Why it matters: Confidentiality language could be used to obscure harassment, discrimination, unlawful behavior, poor management, or inappropriate use of taxpayer dollars.
Standard: CTR’s Settlements and Judgments Policy; Public Records Law guidance; 2013 Superior Court decision in Boston Globe Newspaper Co. v. Executive Office of Administration and Finance; US Government Accountability Office’s Standards for Internal Control in the Federal Government. ( CTR’s Settlements and Judgments Policy; 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 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 an employee 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: "There is no policy, however, prohibiting or permitting them or regulating their use."
Why it matters: Unreported agreements may cause improper accounting and tax reporting and violate regulation and policy.
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 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.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 records limited testing, reduced transparency into public spending, and created concern that information may have been unlawfully withheld.
Standard: Massachusetts Statewide Records Retention Schedule; Section 12 of Chapter 11 of the General Laws. ( Massachusetts Statewide Records Retention Schedule; Section 12 of Chapter 11of the General Laws )
1 recommendation
- GOV should ensure agencies comply with public records law, retain settlement agreements under the Massachusetts Statewide Record Retention Schedule, and provide records to OSA upon request.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: "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: OSA 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; Section 12 of Chapter 11 of the General Laws. ( Massachusetts Statewide Record Retention Schedule; 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 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."