Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Executive Office of Elder Affairs (January 28, 2025)
January 28, 2025 · Executive Office of Elder Affairs · 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
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“It is clear from our review of the issues examined in our report that the system in place regarding employee settlements in state government is dysfunctional – at best.”
Read the plain-English breakdown
This is a performance audit of state 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.”
The State Auditor reviewed whether agencies properly reported money settlements to the Comptroller and whether they had rules for using confidentiality language in employee settlements.
“In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of state employee settlement agreements.”
Without clear rules, settlements may be handled unevenly, public money may be hard to track, and confidentiality language could hide misconduct or repeated problems inside agencies.
“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 being used openly and responsibly, and whether state workers can raise complaints without being silenced unfairly.
“This could negatively affect public trust in government and obscures from view how public dollars are being spent.”
The audit found no consistent documented policies for creating, approving, retaining, reporting, or using confidentiality language in state employee settlements.
“There is no documented policy on the use of confidentiality language for GOV and other executive offices and agencies.”
The auditor recommends formal policies, centralized oversight, better public reporting, stronger record retention, and limits on confidentiality clauses; the Governor’s Office said it would take some steps.
“Your office has committed to taking actions on some of our audit’s recommendations.”
The report is significant because it says the state paid more than $40 million in employee settlements during the audit period, but lacked reliable, transparent systems to track and oversee them.
“During our audit, we identified more than $40.8 million paid by the Commonwealth in employee settlement agreements.”
A settlement agreement is a written deal to resolve a claim or dispute, often outside court; confidentiality language can restrict what people say about the agreement or the events behind it.
“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: GOV could not ensure fair, ethical, legal, consistent, or transparent handling of employee settlements, and CTR might not have the opportunity to review settlement payments for proper reporting.
Standard: US Government Accountability Office’s Standards for Internal Control in the Federal Government, known as the Green Book ( 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 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 cover up harassment, discrimination, or other unlawful behavior and restrict employees from disclosing matters that may be public or unenforceable as confidential.
Standard: Public Records Law, CTR’s Settlements and Judgments Policy, and the 2013 Superior Court decision in Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance ( 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 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 rights 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: "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: Settlement agreements may have been improperly reported in the state accounting system and by employees to tax authorities.
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 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 test compliance with CTR reporting requirements or verify that settlement lists were accurate, creating risk that settlement information was withheld or unsupported.
Standard: Massachusetts Statewide Records Retention Schedule ( 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 state agencies comply with public records law and develop procedures to retain and provide 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: The Auditor could not assess why confidentiality language was included or whether inappropriate behavior was properly identified and addressed.
Standard: Massachusetts Statewide Record Retention Schedule E05-02 ( 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 provide complaints to external auditors.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."
More audits of this entity
Other Office of the State Auditor reports on Executive Office of Elder Affairs .
- Audit of the Executive Office of Elder AffairsState Agency / Office · October 9, 2018
- Audit of the Executive Office of Elder Affairs (April 25, 2023)State Agency / Office · April 25, 2023