| Organization: | Office of the State Auditor |
|---|---|
| Date published: | January 16, 2026 |
Executive Summary
In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor (OSA) has conducted a performance audit of state employee settlement agreements. This audit was conducted on the Office of the Governor (GOV) and the Office of the Comptroller of the Commonwealth (CTR), for the period January 1, 2019 through December 31, 2024. Pursuant to our governing statute, Section 12 of Chapter 11 of the General Laws, our audit covers multiple entities’ use of state employee settlement agreements. Specifically, Section 12 of Chapter 11 of the General Laws states, “Each entity may be audited separately as a part of a larger organizational entity or as a part of an audit covering multiple entities.” As such, our review of the use of employee settlement agreements was completed at 21 state agencies for the period January 1, 2019 through December 31, 2024.
This is the second comprehensive, multi-entity audit report released by OSA focused on state employee settlement agreements, with the first report being issued on January 28, 2025. Please note that settlement agreements related to GOV and CTR were covered in our prior Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies (Audit No. 2023-0028-3S) and are therefore not included in this report. This audit reviewed state employee settlement agreements pertaining to the state agencies listed in the table below:
| State Universities and Colleges | Community Colleges | Independent and Quasi-state Agencies and Constitutional Offices |
|---|---|---|
| Bridgewater State University | Berkshire Community College | Massachusetts Commission Against Discrimination |
| Fitchburg State University | Bunker Hill Community College | Massachusetts Office for Victim Assistance |
| Massachusetts College of Art and Design | Cape Cod Community College | Massachusetts Port Authority (Massport) |
| Massachusetts College of Liberal Arts | Greenfield Community College | Office of the Attorney General |
| Massachusetts Maritime Academy | Middlesex Community College | Office of the Commissioner of Probation |
| Worcester State University | Roxbury Community College | Office of the Inspector General |
| Springfield Technical Community College | Nantucket Sheriff’s Office | |
| Suffolk County District Attorney |
In addition to the 2 comprehensive performance audits centered on state employee settlement agreements, this topic has also been examined across other recent audits conducted by OSA.
In this performance audit, we determined the following:
- whether state agencies reported to CTR monetary state employee settlement payments in accordance with Section 5.09 of Title 815 of the Code of Massachusetts Regulations and CTR’s “Settlements and Judgments” policy and
- whether state agencies developed and implemented policies and procedures regarding the use of confidentiality language, including non-disclosure clauses, within the context of state employee settlement agreements.
Below is a summary of our findings, the effects of those findings, and our recommendations, with hyperlinks to each page listed.
| Finding 1 | Of the 21 state agencies under audit, 19 did not have documented internal policies or procedures on the authorization, development, documentation, and retention of state employee settlement agreements and supporting records. |
| Effect | If agencies do not have policies and procedures to handle state employee settlement agreements, then they cannot ensure that state employee settlements are handled in a fair, ethical, legal, and consistent manner. This results in an inconsistent process that is not transparent to the people of the Commonwealth regarding how public employees are treated or how their tax dollars are being spent. It can also lead to potential errors in financial reporting by not allowing CTR the opportunity to review how a department intends to process state employee settlement payments. |
| Recommendations |
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| Finding 2 | Of the 21 state agencies under audit, 20 have no documented policies and procedures over the use of confidentiality language in state employee settlement agreements. |
| Effect | By not having a documented policy on the use of confidentiality language in state employee settlement agreements, there is a 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 and engage in further inappropriate, unlawful, or unethical behavior. This would be an inappropriate use of taxpayer dollars. Impacted employees may also not know that non-disclosure terms may be unenforceable under Public Records Law. If agencies do not have a transparent and accountable process to guide the use of non-disclosure, non-disparagement, or similarly restrictive clauses in state employee settlement agreements, then they cannot ensure that state employee settlements are handled in an ethical, legal, or consistent manner. We recognize that the lack of documented policies does not indicate, in and of itself, the inappropriate use of taxpayer dollars. It does, however, indicate a problematic lack of transparency and accountability that would prevent the public from knowing one way or another. This prevents the public from clearly seeing the issue, which could be better or worse than people suspect. 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. This perpetuates the risk that public employees may continue to face abusive or harassing treatment from perpetrators and that the taxpayers may be required to pay for the costs of settlements or litigation in connection with repeated problematic behavior. |
| Recommendation | The 20 agencies included in this finding should establish and implement policies and procedures regarding the use of confidentiality language in state employee settlement agreements that are, at a minimum, in line with the Executive Department Settlement Policy established by GOV on January 27, 2025. |
| Finding 3 | Of the 21 state agencies under audit, 3 did not provide the requested state employee settlement agreements, either at all or in a timely manner. |
| Effect | Agencies’ failure to provide state employee settlement agreements to our office, which has the legal authority to receive and analyze them under state law, creates a reasonable concern that information is being unlawfully withheld. This could negatively affect public trust in government and obscures from view how public dollars are being spent. Since these records were not provided to us, we were unable to test (1) whether these agencies complied with CTR’s reporting requirements and (2) whether the settlement lists provided to us were accurately described. Without sufficient documentation, there is a greater-than-acceptable risk that some or many state employee settlement agreements that should have been reported to CTR were not. CTR would therefore have been unable to ensure proper accounting of these settlement agreements. |
| Recommendation | The 3 agencies identified in this finding should develop policies and procedures to ensure that they retain documentation relating to state employee settlement agreements in accordance with the Massachusetts Statewide Records Retention Schedule. These policies and procedures should include the creation of a centralized list of such state employee settlement agreements and the location of the storage of these records to facilitate the production of these records upon request. |
| Finding 4 | Of the 21 agencies under audit, 3 did not disclose to us 12 state employee settlement agreements, totaling approximately $492,614, from the lists provided to us. |
| Effect | Based on the results of our review of CTR’s Settlements and Judgments Access data and of Massport personnel files, there could potentially be more state employee settlements that were not self-reported to OSA. |
| Recommendation |
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| Finding 5 | We found that 7 state agencies did not report 13 state employee settlement agreements to the Office of the Comptroller of the Commonwealth, as required by state regulation. |
| Effect | Failure to report settlement agreements is a violation of regulation and policy and may result in the improper reporting of the state employee settlement agreement in the state’s accounting system and by the state employee to the Department of Revenue and the Internal Revenue Service. According to CTR’s “Settlements and Judgments” policy, agencies are responsible for making any corrections necessary to bring any settlement documentation or payments into compliance if payment was made contrary to the instruction of CTR. |
| Recommendations |
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In addition to the findings above, we also noted 2 other matters focused on a lack of consistent documentation surrounding state employee settlement agreements and a violation of Section 12 of Chapter 11 of the General Laws, specifically inappropriate disclosure of sensitive information to unrelated parties. See Other Matters for more information.
On January 27, 2025, as we were releasing our first multi-entity audit of state employee settlement agreements, including non-disclosure and other confidentiality clauses, the Governor issued an Executive Department Settlement Policy that established “requirements for obtaining authority to settle, settling, and tracking settlements of actual or threatened litigation involving agencies or employees of the executive department.” Although this was issued after the audit period, we reviewed the policy and addressed the requirements as part of our finding recommendations. This policy applies to all executive branch offices and agencies. For all other state entities within this audit, our office views this as a minimum standard for a transparent policy, accessible to all employees within state agencies, as well as the general public.
Obtaining Views from Agency Officials
Upon completion of our audit, we shared the audit report with all 21 agencies included as part of this audit and provided them with the opportunity to respond. Some agencies chose not to respond. Responses received from the remaining agencies are included within the audit findings section of this audit report.