Audit of Settlement Agreements and Confidentiality Clauses Across Multiple State Agencies - Finding 5

Agencies did not provide us 78% of the underlying employee complaints for employee settlements that involved confidentiality language.

Overview

When reviewing employee settlement agreement records that were reported to have confidentiality language, we did not receive 124 of the 159, or 78% of, requested copies of the original claim, complaint, or grievance. Therefore, we were unable to assess whether the employee settlement agreement was supported by a complaint in order to understand the reason for including confidentiality language. Additionally, we are unable to assess whether there was a situation where a state employee engaged in unlawful behavior, such as discrimination or harassment, that was not appropriately addressed by the state agency. If state agencies are not retaining complaint records, there is a risk that inappropriate behavior will not be properly identified and appropriate action taken to prevent it from occurring again.

Authoritative Guidance

The Massachusetts Statewide Record Retention Schedule requires state agencies to retain records relating to an employee settlement agreement in accordance with the following guidelines:

E05-02: Employee Grievance/Complaint Records . . . ¹⁸

Documents work related complaints from non-union employees and grievances from union employees relating to their job environment. Includes complaints, grievances, hearing notices, arbitration findings, meeting notes, dispositions, and related correspondence.

E05-02 (a): Landmark cases

Permanent

E05-02 (b): Case summaries and final decisions

25 years

E05-02 (c): All other records

Retain 6 years final resolution.

In June 2020, the state of Montana issued a performance audit titled “State Employee Settlements: Trends, Transparency, and Administration.” In this audit, a recommendation is given that Montana’s Governor’s Office work with its administration department “to develop and implement policy establishing support documentation requirements . . . for all state employee settlements.”

While GOV is not required to follow this policy, we believe it to be a best practice.

Reasons for Issue

Some complaints that led to settlement agreements were not provided to us by agencies in a timely manner in accordance with the law (Section 12 of Chapter 11 of the General Laws).

Also, one agency official told us that some settlements did not stem from a complaint.

Recommendations

1. GOV should develop policies and procedures to ensure that complaints are first documented and then retained in accordance with the Massachusetts Statewide Records Retention Schedule and are provided to external auditors upon their request. This policy should consider the creation of a centralized list of such complaints and the location of the storage of these records to facilitate production of these records upon request. GOV should clarify its policy on record retention to ensure that complaints are retained.
2. Agencies should consult with the Massachusetts Supervisor of Public Records to ensure that they accurately classify these records and should then ensure that they retain them according to the requirements of the Massachusetts Statewide Records Retention Schedule.
3. If complaints arise out of substantiated egregious behavior, such as illegal or harmful acts, these records should be retained permanently to ensure that this behavior can be tracked across state government.

Auditee Response

Audit Finding 5 appears to inadvertently overstate the percentage of employee complaints that should have been retained under the applicable record retention policy but could not be located upon request. The report notes that in 124 of 159 instances, OSA did not receive requested copies of the original claim, complaint, or grievance associated with a settlement OSA classified as having “confidentiality language.” The report notes, however, that most such records can “be assumed to have records retention periods of 6 years from the date of final resolution or final activity.” The report does not indicate how many of the 124 agreements fell outside of the records retention period, but that number is likely to be substantial given that approximately two-thirds of the 159 settlements identified on the report’s [Appendix A] were entered outside of the referenced records retention period.

Regardless of the numbers, we agree that the report has identified historical record-keeping issues requiring attention. To that end, and as noted in the response to Finding 1, the Executive Department Settlement Policy will address document retention and settlement tracking obligations and, we expect, will assist offices and agencies with improving their settlement-related record keeping as a forward-looking matter.

Auditor’s Reply

Our office was not provided with documentation or evidence that demonstrated whether appropriate steps were taken by executive offices and agencies regarding the destruction of public records. Compliance with public records law requires agencies to follow specific processes and procedures, including receiving approval from the Records Conservation Board before destroying records. Our team cannot be expected to simply believe what is being told to us regarding missing records without sufficient documentation. Should GOV and executive offices and agencies wish to send our office the documentation that provides evidence of appropriately destroyed records, we would welcome such engagement in time for our Post Audit Review.

If there are claims that “no complaint was ever made in association with the settlement agreement”, for example, and the entity making that claim has no procedures, protocols or documentation to back up their claim—then it is just a claim and we cannot know for certain that an employee did not indeed make a complaint. 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. Also, during the audit, it was never at any point clearly communicated to us that any of the requested records were ever destroyed due to the requested records falling outside a reported record retention period of 6 years. It was only communicated that it might be one possibility, suggesting that GOV and executive agencies may not have a clear picture of what settlement agreements and complaints exist, from which time period, and for what purpose. Based on its response, GOV intends to address our concerns on this matter. We will follow up to track progress during our post audit review.

18.    According to the Archivist of the Commonwealth of Massachusetts archives office, there was a typographical error in Section E05-02 of the Statewide Record Retention Schedule where the word “Permanent” was listed directly following the E05-02 header. The reference to permanent retention is to Landmark cases.

 

Date published:	January 28, 2025