Michigan lawmaker prepares bill to ban taxpayer-funded non-disclosure deals

Lansing — Some Michigan officeholders are planning reforms after revelations of dozens of secret severance deals with confidentiality provisions within Michigan government.

House Speaker Jason Wentworth, R-Farwell, said Wednesday his chamber is working on an internal policy to "address the issue." And state Sen. Tom Barrett, R-Charlotte, said he's drafting a bill to generally prohibit separation agreements with non-disclosure clauses that involve taxpayer-funded severances.

"When you’re using taxpayer dollars, you shouldn’t have non-disclosure agreements," Barrett said. "I don’t see what the public interest is in having non-disclosure agreements."

Through open records requests in the last 10 days, Gov. Gretchen Whitmer's administration, the House and Senate have acknowledged more than 30 agreements with departing staff over the last five years involving nearly $1 million. The deals have ranged from an economic development official getting about $3,548 to the former state health director Robert Gordon receiving $155,506 after he abruptly resigned on Jan. 22.

The Detroit News reported Gordon's separation agreement on March 1. Like many of the deals, it included a non-disclosure provision. Under Gordon's deal, he and Whitmer's administration must maintain confidentiality about the circumstances that led to his departure.

Gordon led the Michigan Department of Health and Human Services through the first 10 months of the pandemic. He signed all of the health department's epidemic orders that the Whitmer administration used to fight COVID-19 after the Michigan Supreme Court in October ruled the law the governor used for unilateral emergency orders was an unconstitutional power grab from the Legislature.

Michigan's former unemployment director Steve Gray received $85,872 as part of a settlement deal with the state when he resigned on Nov. 5. Gray's deal required both he and the state "maintain confidentiality" regarding his employment and his departure.

Gray left his job after unemployment surged because of the pandemic and the rush overwhelmed the state's online filing system last year, leaving some residents waiting months for their benefits. A state-commissioned report by Deloitte found in November that the state's attempts to speed unemployment payments — including personnel moves, policy changes and technological shortcuts — likely exposed the system to fraud amounting to "hundreds of millions" of dollars.

A few months earlier, Jeff Mason, the departing CEO of the Michigan Economic Development Corp., received $128,500 in severance pay as part of a mutual retirement agreement. His pact included a non-disparagement clause.

The MEDC is quasi-governmental agency, and an agency spokeswoman said the money came from revenue allocated to the organization through tribal gaming compacts.

On Tuesday, after the revelations from agencies that fall under the Democratic governor's authority, the Republican-controlled Michigan Senate disclosed it had reached 20 separation agreements worth $372,614 in the last five years.

The GOP-controlled state House disclosed one agreement over that time worth $25,000. It was a result of a legal dispute, according to the House Business Office. Neither the Senate nor the House released the agreements themselves.

However, one of the Senate agreements reviewed by The Detroit News included a non-disparagement clause that limited the former worker's ability to talk about the individual's employment and a provision that required the deal be kept secret.

Not all severance agreements are bad, Barrett said, but non-disclosure provisions are not good when they involve public dollars.

There's a possibility of a situation involving a legal dispute that could require such a clause, he acknowledged.

"I want to have that debate," Barrett said. "I want to have that discussion."

After a Wednesday morning legislative council meeting, Wentworth, the top Republican in the GOP-controlled House, said his chamber is working on a House policy to address the issue.

"I am not going to get into details," he said.

In a Wednesday statement, Senate Majority Leader Mike Shirkey, R-Clarklake, said when used properly, severance agreements are "entirely appropriate."

"Public and private organizations use them. Republican, Democratic and nonpartisan legislative offices have used them," Shirkey said. "But understandably, people are asking whether Gov. Whitmer used them appropriately when she rewarded cabinet officials whose decisions directly and negatively impacted millions of Michiganders."

Across the aisle, Sen. Jeremy Moss D-Southfield, said disclosed separation agreements show the need for Michigan to expand its open records law to the Legislature and governor's office.

Michigan is one of only two states that wholly exempt the Legislature and governor's executive office from the Freedom of Information Act, meaning they don't have to fulfill public requests for documents they control.

"We are a public space, serving the public," Moss said. "I can't imagine what could possibly go on here that is so secretive that the public doesn't have the right to know."

The House Oversight Committee is expected Thursday to consider legislation to expand the Freedom of Information Act.

Last week, Tricia Foster, Whitmer's chief operating officer, sent an email to state department leaders, saying they will receive guidance in the coming weeks "related to handling separation agreements with state employees going forward."

cmauger@detroitnews.com