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Bridge Michigan
Michigan’s nonpartisan, nonprofit news source

Whitmer releases policy on confidential payouts. Critics say it’s lip service.

Gov. Gretchen Whitmer
Gov. Gretchen Whitmer has faced weeks of scrutiny over her use of a chartered jet in March to fly to see her father in Florida. (Bridge file photo)

LANSING — Facing criticism for a series of confidential separation payouts with former aides, Michigan Gov. Gretchen Whitmer on Friday issued an executive directive specifying when and how such deals can continue.

The directive would not prevent separation payouts contingent upon confidentiality clauses, but it instructs state departments to only offer them after making “a reasonable judgement” that the deals will “mitigate financial risk for the state of Michigan and protect taxpayer money.”

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To qualify for a payout, departing employees must agree to a “release of all claims” against the state, past or present, meaning they could not sue the government for any reason. 

Whitmer said the new policy will “ensure greater accountability and promote transparency” in state government, but critics contend it will do little to curb the kind of deals that have landed the governor in hot water. 

“Michiganders should have confidence in the activities of state government, including the expenditure of public funds on separation agreements,” Whitmer said in a statement. “I am proud of these measures because they will benefit both state employees and the people of Michigan.” 

The guidance comes one week after the Whitmer administration released copies of a $155,000 agreement with former Michigan Health and Human Services Director Robert Gordon and a $85,872 deal with former Unemployment Insurance Agency Director Steve Gray.

Both separation agreements included legal releases and confidentiality clauses prohibiting the former officials from discussing the circumstances of their departure, which were described at the time as voluntary resignations. 

Republicans decried the deals as an inappropriate use of taxpayer funds, vowing to investigate “hush money” agreements that prevent Gordon or Gray from discussing the administration’s COVID-19 policies developed behind closed doors.

Republican critics described Whitmer’s measure as a half-hearted attempt at transparency. 

“It seems like it's a strong kind of double down and slap in the face to any of the criticism that has been received about these arrangements,” said Tony Daunt, executive director of the conservative Michigan Freedom Fund. “It’s basically saying, ‘Yeah, we’re going to keep doing this, and so what.’ That’s a really dangerous attitude, and I think it’s pretty arrogant.”

Progress Michigan, a liberal advocacy group, this week blasted the GOP-led Legislature for hypocrisy after the House and Senate disclosed nearly $700,00 in settlement and severance payouts to former employees since 2010 but refused to provide documentation of those deals.

Whitmer’s new directive does not apply to the Legislature, and it would still allow state departments to include non-disclosure provisions that “maintain confidentiality regarding an employment decision or dispute, including but not limited to the circumstances of the departure.”

Whitmer has described separation agreements as common in both the public and private sector, but experts and former officials have told Bridge Michigan they are rare in state government and pose troubling barriers to transparency. 

The governor’s office, in a release announcing the new directive, outlined potential reasons a separation agreement might make sense in state government, which is one of Michigan’s largest employers: To define a transition period for a departing employee, secure the return of state property or to mitigate legal exposure and potential costs to taxpayers. 

The directive prohibits separation agreements that require either party to deny the existence of the deals or prevent release of the text of the agreement. It also prohibits confidentiality clauses that would deny the former employee the opportunity to disclose unlawful workplace practices, including discrimination, retaliation, sexual harassment of fraud. 

Gordon and Gray’s separation agreements, which amounted to nine and six months of their annual salary, respectively,  appear to be unique even within the Whitmer administration.

In response to Freedom of Information Act requests from Bridge Michigan, most state departments said they could not provide copies of additional agreements because none exist.

The Michigan Economic Development Corporation, a quasi-governmental agency, however, released copies of eight separation agreements with former employees since 2017 worth more than $300,000 combined. 

Three were during the tenure of former Gov. Rick Snyder, while five were signed since Whitmer took office, including a $128,500 deal with former CEO Jeff Mason after what the administration had called a “retirement.”

Unlike state departments, Whitmer’s executive office is not subject to public records requests under the Michigan Freedom of Information Act. 

But in a Tuesday letter released to the media, Chief Operating Officer Tricia Foster said she conducted a review and found “$0 in separation agreements” inside of the executive office since Whitmer took office in 2019. 

The Michigan Legislature is also exempt from Freedom of Information Act, but financial records released Tuesday show the state House and Senate have spent at least $691,744 in taxpayer money on employee settlement or severance agreements since 2010. 

The Senate Business Office reported 30 separation agreements with severance payments totaling $632,144. 

But “due to the confidential nature of these separation agreements, I am unable to provide individual separation agreements or specifics for those agreements,” Senate Business Office Director Jordan Hankwitz said in a letter. 

House Business Office Director Doug Simon disclosed three new settlement agreements with “terminated” legislative employees: Two May 2015 deals worth $13,250 and $21,250, respectively, along with a January 2018 deal worth $25,000.

Those agreements were related to “legal disputes,” and are in addition to any settlements already publicly disclosed during litigation, Simon wrote in a letter to Bridge Michigan. 

Michigan is one of only two states that fully exempts both the governor’s office and Legislature from public records requests, a dubious distinction that has earned Michigan a failing grade on ethics and transparency and is fueling efforts to expand disclosure laws in Lansing. 

“We need real transparency and accountability in Lansing, not politically motivated hot air and bluster from Republican lawmakers, whose sole purpose seems to be attacking the governor — even from a place of rank hypocrisy,” Lonnie Scott of Progress Michigan, which is planning a ballot initiative to expand the state’s public records law, said this week. 

Daunt, of the Michigan Freedom Fund, said his group generally supports legislation that would make the governor’s office subject to Freedom of Information Act requests and create a similar Legislative Open Records Act for the Legislature. 

“More transparency, not less,” he said. 

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