State Gov’t Not Immune to NDAs and Big Severance Payouts
HARTFORD, CT — U.S. Rep. Elizabeth Esty’s non-disclosure agreement with a former aide may have made headlines recently, but it’s not unique to Congress or even Connecticut state government.
In 2016 the Auditors of Public Accounts reported that many payments to employees who departed state service were in excess of $100,000 and included non-disparagement agreements.
Since that time, the auditors criticized a 21-page non-disparagement agreement with the former president and CEO of the Connecticut Lottery that allowed her to continue receiving her $212,000 annual salary until she reached the 10 years of state service necessary to receive a pension. That’s at the same time they kept her on and paid her $25,000 per month as a consultant.
State auditors John Geragosian and Robert Kane sent a letter last year to the comptroller’s office, outlining their concerns about the circumstances of Noble’s transition agreement and what led to her departure.
“Based on our review to date, it appears that the principal reasons for the transition agreement were to enhance Ms. Noble’s retirement benefits and to not reveal the existence of a Department of Consumer Protection investigation and pending action against Ms. Noble that would have suspended or terminated her license,” the auditors wrote.
“We estimate these benefits will cost taxpayers hundreds of thousands of dollars,” the auditors added, pointing out that the legal fees for the separation agreement cost more than $100,000.
More recently, over $376,000 in severance payments were made to four senior level managers at Access Health CT, the state’s insurance marketplace. Those employees were all “involuntarily terminated” by outgoing CEO James Wadleigh. Each received at least six months of salary and benefits, and the separation agreement was not reviewed by any other state entity or party.
There also was a $251,000 severance payment to Eric Chatman, the former president and executive director of the Connecticut Housing Finance Authority. Chatman had only been with the quasi-public agency for two years before he was offered his full salary, plus health benefits and vacation accruals, through a three-month transition period to separation.
The state, according to information from the Auditors of Public Accounts, has paid out more than $5.5 million to departing employees since 2011, most of whom are associated with the higher education system. Most of those payments were more than $100,000, and many offered no reason for the separation.
“During the course of our audits, we have found large payments made by state agencies to departing state employees,” the auditors wrote in a report last January. “Upon further investigation and discussion with agency personnel, we determined that the payments (many of which were in excess of $100,000), were made for the purpose of avoiding costs associated with litigation or as part of non-disparagement agreements.”
Many of the employees were involuntarily separated from state service for reasons that were unrelated to job performance.
Cheryl Norton, the former president of Southern Connecticut State University, left state service with $321,000 in May 2011. There’s little if any information available about why her employment ended.
Others were separated for reasons associated with job performance.
Former University of Connecticut Athletic Director Jeff Hathaway received more than $534,000 in 2011 under an agreement inked by UConn President Susan Herbst. Former UConn Football Coach Bob Diaco chose a lump sum payment and departed with $3.4 million.
All of these payments were accompanied by non-disparagement agreements, presumably to avoid litigation costs.
The Auditors of Public Accounts are backing legislation this session that would limit these payments to resigning or retiring employees and require any non-disparagement agreement to be reviewed by the Attorney General’s office or authorized by the governor. They also want to make sure the employee leaving state service isn’t prohibited from making a complaint under the state whistleblower act.
“Departing state employees who are party to a non-disparagement or settlement agreement should not have their rights as a state or federal whistleblower undermined by such an agreement,” Geragosian and Kane wrote. “We recommend that the General Assembly consider requiring that any such agreement expressly state that the former employee retains a right to whistleblower status and the right to cooperate in any inquiry related to their agency.”
The auditors made the same recommendation last year and the year before.
In 2016, a bill that would have made the recommendation into law was passed by the Senate unanimously and by the House on a 114-3 vote, only to be vetoed by Gov. Dannel P. Malloy for reasons unrelated to that portion of the bill.
Sen. Paul Doyle, D-Wethersfield, believes the state should go a step further in banning the use of non-disparagement agreements.
“There’s no need for them,” Doyle said last week. “It’s unacceptable. It’s taxpayer money and taxpayer money should not be cloaked in darkness.”
Last week, the Judiciary Committee voted unanimously to forward to the Senate Doyle’s legislation to ban these types of agreements.
Senate President Martin Looney, D-New Haven, testified that non-disparagement agreements “can hide bad and even criminal behavior.”
He said they are used by employers “to hide disturbing patterns of sexual abuse, harassment and discrimination. I believe that non-disparagement (non-disclosure) clauses have no place in public employment contracts.”
Doyle’s legislation would ban these types of agreements on or after October 2018 for state agencies, universities, and quasi-public agencies.
There was no testimony in opposition to the legislation.