Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Division Of Occupational Licensure (January 28, 2025)
January 28, 2025 · Division Of Occupational Licensure · 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 were no documented policies or procedures on these basic aspects of the state employee settlement process, including the following:”
Read the plain-English breakdown
This is a state audit of employee settlement agreements and confidentiality clauses 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.”
Auditors wanted to know whether agencies properly reported employee settlements involving money and whether they had rules for using confidentiality or nondisclosure language.
“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.”
These agreements involve public employees and taxpayer money, and weak oversight can hide unfair treatment, misconduct, or bad spending decisions from the public.
“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 public money is spent openly and whether state workers can report mistreatment without being silenced.
“Further, a lack of a documented policy on the use of confidentiality language creates the risk that confidentiality language could be used to protect or obscure from public view repeated instances of poor management or inappropriate or unlawful behavior at agencies of government.”
The audit says the state needs clear, written, statewide rules, better recordkeeping, stronger reporting, and more public transparency around employee settlements.
“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 recommended new policies, centralized oversight, public reporting, training, better retention of complaints and settlements, and limits on confidentiality language.
“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 report is significant because auditors found large gaps: no documented policies, missing agreements, missing complaints, unreported settlements, and uncertainty about how often confidentiality clauses were used.
“As a result, we cannot determine whether the lists provided by any of the executive agencies included in this audit are complete.”
A settlement agreement is a written deal that resolves a legal or workplace claim, often without going to court. A confidentiality clause is language that limits what someone can say about the agreement or related facts.
“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: Without policies and procedures, employee settlements may be handled inconsistently, unfairly, without transparency, and with potential financial reporting errors.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government, known as the Green Book ( Section 5 of Title 815 of the Code of Massachusetts Regulations )
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: "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 cover up harassment, discrimination, unlawful behavior, poor management, or inappropriate conduct.
Standard: 2013 Superior Court decision in Boston Globe Newspaper Co. v. Executive Office of Administration and Finance; CTR Settlements and Judgments Policy; Public Records Law guidance ( Public Records Law, G.L. c. 4, §. 7, 26 (a) and (c); 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 the required supporting documentation justifying its inclusion.agency: partially agreed
- GOV’s policy should weigh the employee’s right to 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 behavior in the workplace.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: "We again note here that CTR’s policy and regulations are not enforceable policy by the employer—they do not bind an agency in an executive office to any particular course of action related to settlement agreements."
Why it matters: Failure to report settlement agreements can violate regulation and policy and cause improper accounting and tax reporting.
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 these policies and procedures.agency: agreed
- GOV should establish monitoring controls to ensure compliance and appropriate management.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 settlement agreements limited audit testing, reduced transparency into public spending, and created concern that information was being unlawfully withheld.
Standard: Massachusetts Statewide Records Retention Schedule and Section 12 of Chapter 11 of the Massachusetts General Laws ( Section 12 of Chapter 11 of the General Laws; Massachusetts Statewide Records Retention Schedule E05-02 )
1 recommendation
- GOV should ensure agencies comply with public records law and develop policies and procedures for retaining settlement agreements under the Massachusetts Statewide Record Retention Schedule.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: If complaint records are not retained, inappropriate behavior may not be identified or addressed to prevent recurrence.
Standard: Massachusetts Statewide Record Retention Schedule E05-02 ( Section 12 of Chapter 11 of the General Laws; Massachusetts Statewide Record Retention Schedule E05-02 )
3 recommendations
- GOV should develop policies and procedures to document and retain complaints under the Massachusetts Statewide Records Retention Schedule and provide them 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 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: "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."