Massachusetts Convention Center Authority - Finding 8

The Massachusetts Convention Center Authority Executed an Employee Settlement Agreement Exceeding $250,000, in Violation of Chapter 190 of the Acts of 1982 and Massachusetts Convention Center Authority Bylaws.

Overview

MCCA executed multiple non-union employee settlement agreements that included non-disclosure, non-disparagement, or similarly restrictive clauses. None of these settlement agreements were presented to MCCA’s board for review and approval. One settlement agreement exceeded the $250,000 threshold, which requires approval from the MCCA board of directors, according to Section 35 of Chapter 190 of the Acts of 1982, as well as the MCCA Bylaws.

If MCCA does not have a transparent and accountable process to handle employee settlement agreements, especially with those containing non-disclosure, non-disparagement, or similarly restrictive clauses, it cannot ensure that employee settlements are handled in an ethical, legal, or appropriate manner. If the MCCA board of directors does not ensure appropriate oversight regarding employee settlements, the well-being and financial stability of MCCA and its employees may be negatively impacted. Furthermore, public dollars could be abused to cover up harassment, discrimination, and other forms of misconduct while protecting perpetrators of abuse in MCCA.

Authoritative Guidance

Section 35 of Chapter 190 of the Acts of 1982 states:

In addition to all powers otherwise granted to the Authority by law, the Authority shall have the following powers: (a) To adopt by-laws for the regulation of its affairs and the conduct of its business and to issue rules, regulations and policies in connection with the performance of its functions and duties. . . . (e) To make and execute all contracts and all other instruments necessary or convenient for the exercise of its power and functions.

Section 4.15 of the Massachusetts Convention Center Authority Bylaws, amended as of March 12, 2020, states,

Delegated Powers. Each of the administrative officers of the Authority shall have such powers as shall be delegated to such officer by the Authority, and shall perform such duties as shall be directed by the Authority or the executive director. Except where limited by the Enabling Act, by these bylaws or by resolution of the Authority, any power delegated to the executive director may be delegated to any other administrative officer of the Authority. In addition to all other powers provided by law or these bylaws, unless otherwise directed by resolution of the Authority, the executed director without further vote of the Authority shall have the power for and on behalf of the Authority to execute and deliver any contract deemed by the executive director necessary or convenient for the conduct of the affairs of the Authority up to a limit of $250,000 per contract, and to pay any amount due under any such contract or under any other contract approved by the Authority without limit. [emphasis added]

Reasons for Issue

MCCA officials stated that non-union employee settlements were infrequent, varying in nature, and handled on a case-by-case basis.

Recommendations

1. MCCA should develop, document, and implement a policy related to employee settlement agreements.
2. To help increase transparency and accountability, MCCA should seek and obtain approval from its board of directors before executing employee settlement agreements and any agreement that includes non-disclosure, non-disparagement, or similarly restrictive clauses.
3. To help increase transparency and accountability, MCCA should track and document all complaints that result in payments and the use of non-disclosure, non-disparagement, or similarly restrictive clauses in employee settlement agreements. This should be done both within respective personnel files and a centralized list.
4. To help increase accountability, MCCA should assign an agency attorney or staff member to handle and monitor claims and employee settlement agreements.
5. MCCA, its executive director, and its employees should comply with the law and all agency bylaws.
6. MCCA’s board of directors should provide appropriate oversight of personnel and the powers it has delegated to its employees.

Auditee’s Response

The MCCA agrees with the [Office of the State Auditor’s] finding. This execution of this settlement occurred under prior executive and Board leadership. The MCCA agrees that, under Chapter 190 of the Acts of 1982, this settlement should have received review and approval by the MCCA’s Board prior to execution. As noted above, the MCCA is currently developing a new policy for non-union employee settlements, which will implement appropriate legal and non-legal review and approval processes for such settlements.

Auditor’s Reply

Based on its response, MCCA is taking measures to address our concerns in this area. We will review progress on this issue in our post-audit review in six months.

Date published:	August 19, 2024