3 Reasons Why Agencies Should Not Settle Cases

Settlement agreements can make sense for agencies, but they can also create problems. Here are three reasons why they can be bad.

My most recent post addressed settlement agreements and when they may make sense for an agency. There are also reasons why settlement agreements can be a terrible idea. Here are three that I find particularly troubling.

Passing bad employees around

The chief problem with settlements is that there are some folks who are truly bad employees. They engage in misconduct that most of us would find appalling, and they do it deliberately.

When an agency settles a case with that type of employee, the clean record and nondisclosure provisions that are typical in settlement agreements mean other agencies are likely to hire the employee with no knowledge of the prior bad behavior. The agency settling the case generally does not care, because they are rid of the employee and have little to no risk of getting the problem back. Sounds great for one agency, but not so great for other agencies or the taxpayers who are stuck paying for these folks.

This problem is what the president’s Executive Order titled “Promoting Accountability and Streamlining Removal Procedures Consistent with Merit System Principles” is trying to stop. It does not totally ban settlement agreements, but it does attempt eliminate the non-disclosure provisions (at least with respect to withholding the information from other agencies).

It does not allow agencies to share the information with potential private sector employees. Doing so might run afoul of the Privacy Act. Passing the bad apples around is never a good idea, and in some cases it is a horrible idea. That leads to the next reason to not settle.

Some misconduct should be fought to the end, whether the agency wins or loses

It is one thing to fail to disclose information about offenses like absence without leave, but what happens in a case where an employee is found to have engaged in sexual harassment? Or stolen from the government? Or assaulted another employee?

Some people will argue that those are the type of cases where an agency should settle to make certain they are rid of the offender. I disagree.

Those are the cases where an agency should take the moral and ethical high road. Some offenses are worth fighting over. Should we protect the employees of one agency from a sexual harasser, but allow him or her to march down the street and get hired in another agency? What happens when the employee repeats the behavior?

There is no record that it happened once or twice or more times before, so it keeps happening. The government is not alone in having this problem. As we have seen in the news in numerous recent situations, people who have engaged in misconduct are all too willing to enter into nondisclosure agreements to cover it up. These are the type of cases where everyone involved should take a stand to stop the behavior.

Settlements can cover up misconduct that should be made public

There are cases where agencies want to settle to protect employees. There are others where the intent is to keep something embarrassing from the public. The default should be transparency. The people have a right to know what their government is doing, and when an agency has problems that may be indicative of systemic issues that should be addressed.

For example, what happens when an agency has a pattern of sexual harassment? Or of discrimination? Or misuse of government resources? Settling such cases rarely makes the problem go away, but it can conceal them from the Congress and the public.

As I said previously, settlement agreements can be a useful tool. Too many times, that tool is misused and settlements become the default approach for some ER specialists and lawyers who do not want to take the time to handle a case properly, or an agency leader who does not want issues to become known.

As it is, the Executive Order may reduce the frequency of settlements, some good and some bad. It is also likely that some agencies will continue to enter into settlements that include nondisclosure provisions.

There is no real enforcement mechanism in the Executive Order. Like some other Executive Orders from President Trump and previous presidents, the only enforcement mechanism is likely to be the president firing the agency head whose agency signed the agreement. That is not likely to happen.

Because barring nondisclosure provisions in settlement agreements will be difficult to enforce, and there is no guidance on when to use or not use them, we are likely to continue to see cases being settled with nondisclosure provisions when they should not be.

I would prefer to see clear guidance on when to settle, when to agree to nondisclosure, and the situations where agencies must fight the case to its conclusion. That approach would keep the tool for use where it makes sense, but make it more likely that it is used wisely.

This column was originally published on Jeff Neal's blog, ChiefHRO.com, and has been reposted here with permission from the author. Visit ChiefHRO.com to read more of Jeff's articles regarding federal human resources and other current events along with his insights on reforming the HR system.

About the Author

Jeff Neal is author of the blog ChiefHRO.com and was previously the chief human capital officer at the Homeland Security Department and the chief human resources officer at the Defense Logistics Agency.