Michigan House votes unanimously to curb separation deals

Craig Mauger
The Detroit News

Lansing — The Michigan House voted unanimously Tuesday to place new limits on separation agreements between agencies and departing state employees two months after revelations of secret deals roiled the Capitol.

Most notably, Robert Gordon, the former state health director, received nine months of pay after he resigned on Jan. 22, and Steve Gray, the former unemployment director, got nearly seven months of pay when he left on Nov. 5. Both deals required Gov. Gretchen Whitmer's administration and the ex-officials to maintain confidentiality about the circumstances of the departures.

​Steve Gray, left and Robert Gordon

Representatives voted 110-0 in favor of a bill that would generally cap severance pay at 12 weeks of a person's normal wages for individual employees in the executive and legislative branches. The proposal would also usually bar contracts with state officers that provide severance pay or include nondisclosure or confidentiality agreements.

Different than state employees, state officers are elected or appointed to an office created by law in the executive or legislative branch of state government, like an appointed department director.

"We need to limit these transactions," said Rep. John Roth, R-Traverse City, the sponsor of the bill. "We need to shine light on them when they do occur.”

The proposal includes exemptions for situations when legal counsel determines that severance pay is necessary to serve the best interests of the state based on the risk of litigation. Also, agencies would have to disclose on their websites separation agreements that provide more than six weeks of the state employee’s or officer’s normal wages.

The legislation still has to go before the Michigan Senate and gain Whitmer's signature.

It's unclear whether Whitmer supports the legislation. In March, she issued an executive directive that allowed the separation agreements to continue. 

Through public records request, The Detroit News revealed Gordon's separation agreement on March 1. The former health director, who helped lead Michigan's response to the COVID-19 pandemic, was paid $155,506 after he resigned on Jan. 22, the day Whitmer's administration announced a new order allowing restaurants to reopen indoor dining at restaurants.

Last week, Gordon told lawmakers he was asked to join a video conference call with members of the governor's staff on Jan. 22.

"When I arrived, I saw the governor and members of her staff," Gordon said. "And the governor said to me, 'Robert, (I'm) grateful for your service. I think it's time to go in a new direction.' She subsequently dropped off the call."

Gordon seemed to be unclear about the specific reasons for Whitmer's decision. However, he said there were disagreements about elements of the state's reopening plans. He had privately advocated for a more cautious approach to reopening restaurants, according to emails.

Mark Totten, Whitmer's chief legal counsel, floated the idea to Gordon of an "executive separation agreement" soon after the governor accepted his resignation.

The Democratic governor has contended similar deals are not unusual. But they are used more often in the private sector than among government entities, according to experts. 

Other Michigan agencies have also used separation deals in recent years, including the Michigan Economic Development Corp. and the Michigan Senate. The Michigan Senate says it's handed out $372,614 in severance pay through 20 secret separation agreements with departing employees over the last five years

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.

The House has said it reached only one separation agreement worth $25,000 over the last five years.