Overview
BCSO should have a documented process for handing employee settlement agreements during the extended audit period of July 1, 2019 through June 30, 2024. We consider written policies to be best practice. We believe such policies and procedures should apply to the review, approval, processing, and reporting of employee settlement agreements, including the use of any non-disclosure, non-disparagement, or similarly restrictive clauses.
A documented, written process to handle employee settlement agreements, especially for those containing non-disclosure, non-disparagement, or similarly restrictive clauses, can help ensure that employee settlements are handled in an ethical, legal, and appropriate manner.
Authoritative Guidance
According to 815 CMR 5.09,
(1) Responsibility of assigned attorney or staff person: Preparation of Reports. When litigation involving a monetary claim against the Commonwealth covered by these regulation terminates in a final Settlement or judgment with regard to such a claim, the agency attorney or staff person assigned to handle or monitor the claim shall do the following:
(a) Prepare a report indicating:
1. the principal amount of the settlement or judgment;
2. the amount of any attorney’s fee award;
3. the amount of any interest award or accrued, and whether the interest continues to accrue post-judgment;
4. a request for payment of the amount;
5. a description of the basis for the request, (e.g., Court order or settlement agreement); and
6. whether the assigned attorney desires to award the payment check to the claimant;
(b) Forward the report with a copy of the settlement or judgment just described to the General Counsel of the [Office of the Comptroller of the Commonwealth] within the time frames set forth in 815 CMR 5.09(2). . . .
(2) Time for preparation of reports. The report . . . shall be sent by the agency attorney to the General Counsel of the [Office of the Comptroller of the Commonwealth]:
(a) if based on a settlement agreement, within 15 days of signing of the final settlement papers.
Reasons for Issue
During one of our interviews, BCSO’s Sheriff stated that BCSO does not have a policy over the process of entering into settlement agreements or the use of non-disclosure, non-disparagement, or similarly restrictive clauses because it is BCSO’s practice to not include such clauses in employee settlement agreements.
For settlements that result in monetary payments, BCSO uses the Office of the Comptroller of the Commonwealth’s (CTR’s) “Settlements and Judgments Policy” as the default for handling such settlement agreements.
Recommendation
BCSO should develop, document, and implement a written policy related to employee settlement agreements, including prohibiting the use of non-disclosure, non-disparagement, or similarly restrictive clauses in its agreements, as recommended in the Governor’s “Executive Department Settlement Policy,” issued January 27, 2025.
Auditee’s Response
During the audit period, July 1, 2022 through June 30, 2024, the BCSO executed no settlement agreements. During the “extended audit period January 1, 2019 through June 30, 2024”, the BCSO had two settlement agreements with employees during the extended time period. The first settlement agreement was executed in February, 2021. The second settlement agreement was executed in December, 2021. Neither settlement involved the expenditure of state funds as acknowledged by the draft report.
The auditor's draft report faults the BCSO for not having formal policy on settlement agreements containing prohibitions on non-disclosure and non-disparagement agreements. However, the only guidance the auditor's report points to are:
Auditor's draft report p. 8 - Comptroller's "Settlements and Judgments Policy" dated January 10, 2022
Auditor's draft report p. 2 - Governor's executive department settlement policy issued January 27, 2025
The practice shows the BCSO did not use NDA’s (non-disclosure agreements) or non-disparagement agreements. It has since formalized this in policy. The draft audit report fails to acknowledge this.
Auditor’s Reply
We acknowledge that BCSO implemented an employee settlement policy in response to our finding. This policy does not outline internal processes to be followed other than stating that BCSO will follow CTR’s policy for processing employee settlement payments. BCSO’s policy does not include prohibiting the use of non-disclosure, non-disparagement, or similarly restrictive clauses in its agreements.
Based on its response, BCSO has taken some measures to implement an employee settlement policy as recommended. However, we encourage BCSO to consider our recommendation to develop, document, and implement a written policy related to employee settlement agreements that includes prohibiting the use of non-disclosure, non-disparagement, or similarly restrictive clauses in its agreements. As part of our post-audit review process, we will follow up on this matter in approximately six months.
| Date published: | November 25, 2025 |
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