Gov. Whitmer allows Michigan separation deals to continue

Craig Mauger
The Detroit News

Lansing — Gov. Gretchen Whitmer issued a directive Friday that will allow executive branch agencies to continue reaching separation agreements with departing employees, including certain confidentiality provisions, amid widespread criticism.

Under the new directive, a state department can seek a severance deal with a non-disclosure clause if it maintains "confidentiality regarding an employment decision or dispute."

It's unclear what specifically would qualify as a dispute under the directive, and that term could become key.

​Steve Gray, left and Robert Gordon

"The measures laid out in my executive directive ensure greater accountability and promote transparency," Whitmer said in a press release. "Michiganders should have confidence in the activities of state government, including the expenditure of public funds on separation agreements. 

"I am proud of these measures because they will benefit both state employees and the people of Michigan."

But critics said the new policy didn't go far enough.

The conservative Michigan Freedom Fund called it an "an assault on transparency."

"Gov. Whitmer’s new directive is a direct and arrogant assault on Michiganians’ right to know what their government is doing," said Tony Daunt, executive director of the Michigan Freedom Fund. "It will make government less transparent, it will mean more-common secrecy agreements, and it will force taxpayers to fund her administration’s cover-up attempts."

State Rep. Andrew Fink, R-Hillsdale, called the directive a public relations move.

"It doesn’t change anything," Fink said. "It leaves wide open the option for the governor to do what she’s always done, which as we've seen is silence key players to hide the truth from the public."

Whitmer's executive directive treats low-level civil service employees the same as high-level executives, said Matthew Schneider, former U.S. attorney for the Eastern District of Michigan under President Donald Trump and partner at the law firm Honigman.  Meanwhile, high-level executives, like Gordon, draw more public trust and interest, said Schneider, who served as chief deputy under former Republican Michigan Attorney General Bill Schuette.

"The public has a great interest in knowing what the policy disputes are," Schneider said.

Through open records requests, The Detroit News reported on March 1 that Whitmer's chief legal counsel, Mark Totten, had reached a separation agreement with Robert Gordon, the state's former health department director who resigned without explanation on Jan. 22.

Gordon had been a central figure in Michigan's response to the COVID-19 pandemic. As the director of the Department of Health and Human Services, he had the power to sign epidemic orders that shuttered businesses and limited public gatherings.

Under the terms of his deal, Gordon received $155,506. He and the Whitmer administration also agreed to maintain confidentiality about the circumstances that led to his departure.

News of the agreement drew bipartisan criticism as some lawmakers argued that taxpayer dollars shouldn't be used as part of government non-disclosure arrangements.

Some legal scholars have questioned the constitutionality of the clauses.

The new executive directive, which took effect Friday, would still allow the main features of Gordon's deal to occur with another employee in the future.

In addition to Gordon, The News has tracked more than 30 other separation agreements in state government over the last five years, amounting to nearly $1 million in severance payments. Many of the deals involved the Michigan Senate with lesser dollar amounts than the one involving Gordon.

The arrangements in the Legislature fall outside the scope of the new directive, which affects the executive branch.

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

The provision of Gray's agreement that broadly required confidentiality about his employment could be barred in the future under the new directive, depending on how the language is interpreted.

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.

Whitmer's new directive says executive branch employers cannot enter into separation agreements that require the parties to deny the existence of the deals or that require the sides not disclose unlawful actions in the workplace.

It also says any separation agreement involving a monetary payment must secure a release of legal claims and be based on a reasonable judgment that securing the release of claims will mitigate financial risk for the state and protect taxpayer money, according to a press release.

This week, House Speaker Jason Wentworth, R-Farwell, said his chamber is working on an internal policy to address separation agreements. 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."