A hard-hitting Massachusetts state performance audit about employee settlements has found a serious lack of transparency, poor documentation and an absence of consistent practices and policies in these agreements in 21 Massachusetts independent and quasi-independent agencies, state colleges and universities and community colleges.

The January audit identifies $6.8 million settlements occurring between January 1, 2019, and December 31, 2024, in the agencies that were selected, noting that 19 of the 21 lacked “internal polices or procedures on the authorization, development, documentation and retention of state employee settlement agreements and supporting records.”

Employee settlements can arise from a wide variety of issues, which may include employee claims resulting from discrimination, discipline or promotion issues, termination or employment conditions. The current audit included 263 state employee settlement agreements, and provides substantial detail about when they occurred during the audit period and the entities in which they occurred. It noted, however, that several agencies did not provide requested settlement agreements, generating “reasonable concern that information is being unlawfully withheld.”

The potential impact of management shortcomings is spelled out in the audit’s executive summary. “If agencies do not have policies and procedures . . . they cannot ensure that state employee settlements are handled in a fair, ethical, legal and consistent manner,” the audit stated.

The audit also found an absence of documentation concerning the issue of settlement confidentiality. In fact, only one of the 21 agencies examined was found to have “documented policies and procedures over the use of confidentiality language.”

This problem also carries the significant risk that “confidentiality language may be abused to cover up harassment, discrimination, or other inappropriate, unlawful or unethical behaviors, potentially allowing perpetrators to continue to remain in their positions.”

Many of the findings in the current audit echo similar problems that surfaced in a Massachusetts audit of executive branch agencies that was released on January 18, 2025. That audit also discussed poor transparency; a lack of policies and documentation across the executive branch, as well as potential financial reporting issues due to questions about the state comptroller’s access to employee settlement information. 

The earlier audit also raised problems that stemmed from the existence of confidentiality language across the 75 executive branch agencies it sought to examine. At the time, auditors had far less opportunity to analyze actual settlements, however, due to refusals or significant agency delays in providing the state audit office access to the documents. 

 The early 2025 audit led to Governor Maura Healey’s immediate issuance of a new “Executive Department Settlement Policy”, which requires approval of employee settlements over $20,000; reminds agencies of the need to provide settlement information to the Comptroller’s office; prohibits non-disclosure agreements across the executive branch, and makes it clear that employee settlements are to be treated as public records.

Whether or not the auditor will return to look at executive agencies again is not known at this time. In Massachusetts, the auditor is not permitted by law to discuss in detail ongoing audits or audits it is planning to conduct, according to the audit office.  As to this month’s audit, based on standard procedures, a post audit report will start in about six months.

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