Overview
MGC did not have a documented process for reviewing, entering into, and finalizing its employee settlement agreements during the extended audit period, July 1, 2018 through June 30, 2023. During our testing, we identified one settlement in the Office of the Comptroller of the Commonwealth’s (CTR’s) Settlement and Judgment database that was not included on the settlement list provided by MGC. Furthermore, this settlement had not been approved by CTR before disbursement.
The table below summarizes the dates, amounts, and payment methods (if applicable) of the two employee settlement agreements that MGC entered into during the extended audit period, July 1, 2018 through June 30, 2023.
| Were Allegations Specified in the Agreement? | Settlement Date | Amount | Method of Payment | Did the Agreement Include Non-disclosure, Non-disparagement, or Similarly Restrictive Clauses? |
|---|---|---|---|---|
| No* | November 10, 2020 | $47,500 | CTR | No |
| No** | October 15, 2019 | $2,885 | HR/CMS† | No |
* The settlement was allegedly related to a general human resources issue (for example, the sharing of sensitive information).
** The settlement was related to an employment action (for example, employee termination because of alleged performance issues).
† This stands for the Human Resources Compensation Management System.
If MGC does not have an accountability process for handling employee settlement agreements, especially those containing non-disclosure, non-disparagement, or similarly restrictive clauses, then it cannot ensure that employee settlements are handled in an ethical, legal, and appropriate manner. If the MGC board of directors does not ensure adequate oversight regarding employee settlements, then the well-being and financial stability of MGC and its employees may be negatively impacted. Furthermore, public dollars could be abused to cover up harassment, discrimination, or other forms of misconduct, while protecting perpetrators of abuse.
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 Comptroller:
(a) if based on a settlement agreement, within 15 days of signing of the final settlement papers; or
(b) if based on a judgment against the Commonwealth or any agency, within fifteen days of the Commonwealth’s decision not to appeal; or
(c) if based on a judgment against the Commonwealth or an agency, where the Commonwealth decides to take an appeal from the judgment, within fifteen days of any final order on appeal or in remand proceedings, if such remand proceedings are ordered.
Reasons for Issue
MGC officials stated that nonunion employee settlements were infrequent, varying in nature, and handled on a case-by-case basis.
Recommendation
MGC should develop, document, and implement a policy related to employee settlement agreements.
Auditee’s Response
The MGC agrees with the Auditor’s finding. As specified [in the “Settlement Agreements” section of the audit report], the MGC did comply and follow 815 CMR 5.09, the Comptroller’s policy for payment of settlement agreements. However, tracking of said settlements were insufficient in one instance. To ensure future compliance, the MGC must establish a well-documented internal process for tracking the MGC’s compliance with 815 CMR 5.09. In response to the draft finding, the MGC is in the process of drafting a policy on tracking settlement agreements for consideration by the full Commission.
Auditor’s Reply
Based on its response, MGC is taking measures to address our concerns regarding this matter. As part of our post-audit review process, we will follow up on this matter in approximately six months.
| Date published: | August 28, 2025 |
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