Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Department of Transitional Assistance (January 28, 2025)
January 28, 2025 · Department of Transitional Assistance · Read the full official report on mass.gov ↗ · official site ↗
Published January 28, 2025 Audit covers January 1, 2010 – December 31, 2022 Under Diana DiZoglio · 2023–present
source
“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.”
Read the plain-English breakdown
This is a state audit of employee settlement agreements and confidentiality clauses used by the Governor’s Office, its agencies, and the Comptroller over a 13-year period.
“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 looked at whether agencies properly reported settlement payments and whether they had rules for using confidentiality or nondisclosure language.
“In this performance audit, we determined the following:”
These settlements involve public employees and taxpayer money, so weak oversight can hide problems and reduce public trust.
“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 affects whether public money is tracked and whether state government is transparent about workplace problems and settlements.
“During our audit, we identified more than $40.8 million paid by the Commonwealth in employee settlement agreements.”
The audit found missing policies, missing records, unreported settlements, and poor documentation around confidentiality clauses.
“Executive offices and agencies did not report 40 state employee settlement agreements to the Office of the Comptroller of the Commonwealth when required.”
The Auditor recommended new policies, centralized oversight, public reporting, better records retention, and limits on confidentiality clauses; the Governor’s Office said it would take some actions.
“Your office has committed to taking actions on some of our audit’s recommendations.”
This report is presented as the first part of a broader review of state employee settlements, so its findings may shape future policy and legislation on transparency in Massachusetts government.
“This is the first audit report released by the Office of the State Auditor as part of a comprehensive performance audit of state employee settlement agreements.”
A confidentiality clause or nondisclosure clause is language in a settlement that can restrict what someone may say about the dispute or settlement; the report says such clauses should not stop workers from talking about unlawful workplace conduct.
“No settlement agreement may prevent a complainant from discussing or disclosing information about unlawful acts in the workplace, such as harassment, discrimination or other forms of misconduct.”
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, settlements may be handled inconsistently and without transparency, and CTR may not be able to review settlement payments for proper financial reporting.
Standard: The report cites GAO Standards for Internal Control in the Federal Government as a best practice for implementing control activities through policies. ( 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: partially agreed
- GOV should provide centralized management and oversight over the use of state employee settlement agreements.agency: partially agreed
- GOV should establish a public reporting process for transparency and accountability over settlement agreements.agency: partially 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, or other unlawful behavior and restrict employees from discussing settlement terms.
Standard: The report cites public records law guidance, CTR’s Settlements and Judgments Policy, and the 2013 Boston Globe Superior Court decision on settlement agreements as public records. ( Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. 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 on confidentiality language and supporting documentation justifying its inclusion.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.”"
Why it matters: Unreported settlements violated regulation and policy and could cause improper accounting and tax reporting.
Standard: CTR’s Settlements and Judgments Policy requires all monetary settlements and judgments to be reviewed by CTR before payment. ( 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
- Executive office employees should receive training on settlement reporting 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 prevented testing of CTR reporting compliance and settlement list accuracy, creating risk that settlement agreements were unlawfully withheld or not properly reported.
Standard: The Massachusetts Statewide Records Retention Schedule requires agencies to retain employee complaint, grievance, disciplinary, personnel action, and related 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 )
1 recommendation
- GOV should ensure agencies comply with public records law and develop policies to retain and provide employee settlement agreements 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: The auditors could not assess why confidentiality language was included or whether unlawful behavior was appropriately addressed, increasing the risk that inappropriate behavior would not be identified and prevented.
Standard: The Massachusetts Statewide Records Retention Schedule 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 to ensure complaints are documented, retained, and provided to external auditors upon request.agency: agreed
- Agencies should consult with the Supervisor of Public Records to classify and retain these records correctly.agency: agreed
- Complaints arising 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: "Based on its response, GOV intends to address our concerns on this matter."
More audits of this entity
Other Office of the State Auditor reports on Department of Transitional Assistance .
- Audit of the Department of Transitional Assistance (DTA) - Information SecurityState Agency / Office · January 6, 2020
- Audit of the Department of Transitional Assistance (January 30, 2026)State Agency / Office · January 30, 2026