Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Executive Office of Health and Human Services (January 28, 2025)
January 28, 2025 · Executive Office of Health and Human Services · 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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“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 Auditor performance audit of employee settlement agreements and confidentiality clauses across the Governor’s office, the Comptroller, and 73 other 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 reviewed whether agencies properly reported employee settlements to the Comptroller and whether they had rules for using confidentiality or nondisclosure language.
“In this performance audit, we determined the following:”
Without clear rules, settlements may be handled inconsistently, taxpayer money may be misreported, and the public may not be able to see how government workplace disputes are resolved.
“If GOV does not have policies and procedures for all state agencies to handle state employee settlement agreements, it cannot ensure that employee settlements are handled in a fair, ethical, legal, and consistent manner.”
As a taxpayer, this matters because public money was used for settlements, but the audit says the state lacked enough transparency about how that money was spent and why.
“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 auditor’s bottom line is that the state needs a major cleanup of how it tracks, approves, preserves, and publicly reports employee settlements, especially when confidentiality language is involved.
“We hope this Administration recognizes the need for an intensive overhaul of the broken system that currently exists under its purview.”
The report recommends formal statewide policies, better oversight, public reporting, training, stronger record retention, and limits on confidentiality clauses.
“Your office has committed to taking actions on some of our audit’s recommendations.”
The audit is significant because it raises financial, legal, ethical, transparency, and public trust concerns about taxpayer-funded agreements that may affect employees at vulnerable moments.
“Our audit identifies areas of financial, legal and ethical risks for the Commonwealth – when our fellow public servants are at their most vulnerable.”
A settlement agreement is a written deal to resolve a claim or dispute, often involving money or employment terms; confidentiality language can limit what people say about it; CTR is the Comptroller’s office, which reviews certain settlements for accounting and tax handling.
“For the purposes of this executive order, the definition of settlement agreement shall mean a written agreement resolving any claim (as defined by 815 CMR 5.02), written or unwritten, by any claimant for damages to compensate an injury or wrong allegedly suffered, directly or a result of the Commonwealth failing to prevent such damages, including but not limited to personal injury, violation of civil rights, breach of contract, failure to comply with contract bidding laws, assault, harassment, discrimination, retaliation, whistle blowing, incorrect or improper personnel determinations regarding pay, promotion or discipline, failure to comply with statutory or constitutional provisions applicable to employment, and eminent domain taking damages, misconduct, including any attorney's fees and interest associated with these claims.”
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: This created risk that settlements would not be handled fairly, ethically, legally, consistently, or transparently, and could cause financial reporting errors.
Standard: The report cites the GAO Green Book as a best practice for documented internal controls and 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: 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 obscure harassment, discrimination, unlawful behavior, poor management, or misuse of taxpayer funds.
Standard: The report cites the GAO Green Book, Boston Globe public records case, CTR Settlements and Judgments Policy, Massachusetts Public Records Law guidance, and other nondisclosure best practices. ( Boston Globe Newspaper Co. v. Exec. Office of Admin. and Finance, Suffolk Sup. No. 11-01184-A; CTR’s Settlements and Judgments Policy )
4 recommendations
- GOV should establish and implement policies and procedures regarding the use of confidentiality language in state employee settlement agreements.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: Failure to report settlement agreements 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
- 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 settlement agreements limited testing, reduced transparency, and created concern that information may have been unlawfully withheld.
Standard: The Massachusetts Statewide Records Retention Schedule requires retention of employee complaint, grievance, personnel action, and settlement-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 state 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: "There were 57 settlement agreements requested during the course of the audit that agencies did not provide upon our request."
Why it matters: The auditor could not assess why confidentiality language was included or whether unlawful behavior was appropriately addressed.
Standard: The Massachusetts Statewide Record Retention Schedule requires employee grievance and complaint records to be retained according to specified schedules. ( Section 12 of Chapter 11 of the General Laws; Massachusetts Statewide Record Retention Schedule E05-02 )
3 recommendations
- GOV should ensure complaints are documented, retained under the statewide records schedule, and provided to external auditors upon request.agency: agreed
- Agencies should consult with the Massachusetts Supervisor of Public Records to classify and retain records correctly.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."