Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Division of Capital Asset Management and Maintenance (January 28, 2025)
January 28, 2025 · Division of Capital Asset Management and Maintenance · 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 auditor examined whether agencies properly reported money settlements to the Comptroller and whether they had rules for using confidentiality or nondisclosure language.
“In this performance audit, we determined the following:”
The report says poor controls can hide workplace misconduct, silence employees, and put taxpayer money at risk.
“Our audit identifies areas of financial, legal and ethical risks for the Commonwealth – when our fellow public servants are at their most vulnerable.”
As a taxpayer, this matters because public money may be used for settlements, and the public may not be able to clearly see 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 audit found no documented statewide policies for handling these settlements or for deciding when confidentiality language should be used.
“Executive offices and agencies have no documented policies and procedures over the use of confidentiality language in state employee settlement agreements.”
The auditor recommends formal policies, centralized oversight, public reporting, better record retention, training, and limits on confidentiality clauses.
“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.”
The auditor says this is not just paperwork: settlements can reveal problems inside agencies, and without good oversight the state may miss chances to stop misconduct or misuse of public money.
“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.”
A settlement agreement is a written deal used to resolve a claim, such as a workplace complaint or dispute, without continuing the fight in court or another formal process.
“For the purposes of this audit, we reviewed state employee settlement agreements that resulted in monetary and non-monetary awards.”
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, employee settlements may not be handled fairly, legally, ethically, consistently, or transparently, and financial reporting errors may occur.
Standard: Best-practice internal control standards from the US Government Accountability Office’s Standards for Internal Control in the Federal Government. ( Section 12 of Chapter 11 of the Massachusetts General Laws )
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: "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 inappropriate conduct, and employees may not know such provisions may be unenforceable.
Standard: Public Records Law principles, CTR’s Settlements and Judgments Policy, the 2013 Globe Newspapers decision, and best-practice internal control standards. ( Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. No. 11-01184-A; G.L. c. 4, §. 7, 26 (a) and (c); Speak Out Act )
4 recommendations
- GOV should establish and implement policies and procedures regarding confidentiality language in employee settlement agreements and supporting documentation justifying its inclusion.agency: partially agreed
- GOV’s policy should weigh employee privacy rights 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.”"
Why it matters: Failure to report settlement agreements may cause improper accounting and tax reporting and violates regulation and policy.
Standard: CTR’s Settlements and Judgments Policy and Section 5.09 of Title 815 of the Code of Massachusetts Regulations. ( 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 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: Missing agreements prevented testing of CTR reporting compliance and settlement list accuracy, raising concerns that information may have been withheld and public dollars obscured.
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 )
1 recommendation
- GOV should ensure agencies comply with public records law and develop policies and procedures for retaining and producing employee settlement agreements.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: Without complaint records, auditors could not determine why confidentiality language was included 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 develop policies and procedures to document, retain, and produce complaints related to settlements.agency: agreed
- Agencies should consult the 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."
More audits of this entity
Other Office of the State Auditor reports on Division of Capital Asset Management and Maintenance .
- Division of Capital Asset Management and Maintenance's Planning, Design, and Construction ActivitiesState Agency / Office · March 6, 2013
- Audit of the Division of Capital Asset Management and MaintenanceState Agency / Office · February 23, 2022