The city of Denton paid more than $200,000 to departing employees in recent years in exchange for their silence, their promises not to sue and - in one case - their work as a consultant, according to records obtained by the Denton Record-Chronicle.
The records document the departures of five employees, including the high-profile case of former City Auditor Steve Shepherd, whose contract was allowed to expire last year without explanation. But they shed little light on the reasons for the departures or the potential controversies the city might have sought to keep quiet.
The city's practice of offering employees money to leave attracted attention with the case of Terry Jones, the self-described whistleblower who refused an offer of $21,000 to resign, waive his right to sue and refrain from disparaging the city. Jones sued the city in April over his claim that he was placed on leave and later fired from his job as a Denton Municipal Electric superintendent because he reported reliability-standards violations, which the city denies. The case is pending.
The city defended the practice in a written response to questions from the Record-Chronicle.
"These agreements are a tool used to provide an amicable separation by both parties to avoid rumors, liability exposure, and to protect taxpayers from unnecessary expense," the city's public information office said in a statement. "These agreements provide equity in the separation and allow both parties to have closure and move forward."
The city routinely offers severance pay to employees who lose their jobs because of budget cuts, but the five recent agreements were not part of any budget-related layoffs.
The city has no policy guiding decisions related to who is offered a release-and-waiver agreement. City Manager George Campbell, who oversees personnel matters, approved the recent agreements, although City Council members were involved in the Shepherd case because Shepherd was a council appointee.
When an agreement involves a payout, the money comes out of the budget of either the affected department or the city's risk management department, according to the city.
Speak no evil
The Record-Chronicle filed a request with the city under the Texas Public Information Act seeking all employee release-and-waiver agreements offered between Jan. 1, 2008, and Jan. 31, 2011, after Jones' case became public.
The city released five agreements, all signed, involving former auditor Shepherd, former customer service director Charles Atkinson, former facilities and fleet services director Bruce Henington, and former Denton Municipal Electric employees Harry Hettinger and Joey Torneo.
In four cases, the employee received money to resign or retire. The fifth allowed Hettinger, DME's communications superintendent, to continue working for the city under a six-month, $7,100-a-month consulting contract involving "communications issues."
No agreements have been offered since Jan. 31, according to the city.
The Record-Chronicle attempted to interview the five former employees for this story. Hettinger declined to comment, and Atkinson, Henington and Shepherd could not be reached.
Torneo, DME's former contractor coordinator, said he couldn't discuss the terms of his departure but criticized the city for not paying a worker's compensation claim he filed complaining of on-the-job injuries. He received $94,000 to resign in November 2009, the highest payout of the five released by the city.
"The $94,000 was for me to shut up," Torneo said. "It had nothing to do with my injuries."
Among other things, Torneo said blood tests showed he had PCBs, or polychlorinated biphenyls, in his system because he was exposed to polluted soil while working at DME's Spencer Road pole yard in 1987.
State environmental regulators cited the city in December 2006 for PCB pollution at the Spencer Road complex that investigators blamed on leaks from old transformers stored there years ago. The city spent more than $150,000 to test and clean up the polluted soil, officials have said.
The city declined to discuss Torneo's claim because it involved personal health information.
Unlike the other four agreements, Torneo's included a pledge that he would inform the city's human resources department of "any knowledge of any violations of city policies or regulatory laws."
All of the agreements required the employees to waive their rights to sue the city for "any and all claims." The employees also agreed to keep the agreements secret and not seek future employment with the city.
Some agreements included an extra restriction against saying things that "defame, disparage or in any way criticize the personal or business reputation, practices or conduct of [the] city."
Asked why a former employee would be prevented from criticizing the city, the city's public information office replied: "This is a negotiated agreement to create mutual respect and to avoid creating unnecessary adversarial relationships."
Consulting contract
DME spokeswoman Lisa Lemons, in a written response to questions from the Record-Chronicle, did not explain why Hettinger resigned in March 2010 or say whether there was a precedent for offering an employee a severance and consulting agreement at the same time.
The city offered Hettinger a consulting contract to transition the department and prevent the loss of his expertise, Lemons said.
The Record-Chronicle requested any work produced under the contract. The city produced four e-mails in which Hettinger responded to technical questions.
Hettinger's personnel records, obtained through an open-records request, showed no recent problems. Hettinger was reprimanded in 2004 for an expletive-filled rant against two subordinates and was one of three DME employees targeted in a 2002 workplace harassment lawsuit filed by a female co-worker. The city settled the harassment case for $18,000 in February 2003, according to federal court records.
Records show Torneo was suspended without pay for five days in 2003 for violating the city's drug and alcohol policy and reprimanded in 2007 for a conflict of interest. In that case, Torneo was accused of failing to tell supervisors that his son had worked on a tree-trimming contract job that Torneo oversaw.
The city could produce no disciplinary records against Atkinson, Henington or Shepherd.
Atkinson, Henington, Hettinger and Torneo received mostly positive feedback in their most recent performance reviews. Some reviews suggested areas for improvement, but nothing in them indicated that their jobs were in jeopardy.
The city had no written performance reviews or other related documents involving Shepherd.
Risk analysis vs. blank check
Employers often seek a release of claims and confidentiality when settling employment lawsuits, but those agreements are less common in cases with no litigation, said David L. Wiley, a Dallas attorney and member of the Texas Employment Lawyers Association, which advocates for worker rights.
"That is not as common a practice unless it's a situation where an employer is going through some permanent layoffs," Wiley said. "Companies, in my experience, don't just give out money out of the goodness of their hearts to a former employee, so what they want is a release."
The practice could make sense in cases where litigation is likely and doesn't necessarily mean an employer has something to hide, Wiley said.
"Usually it's just pennies on the dollar compared with the cost of defending a lawsuit," he said. "If someone is paying a million dollars to a former employee whose damages might be just a fraction of that, the numbers speak for themselves. But quite often an employer is simply avoiding the cost of defense. That, of course, doesn't mean the claim lacks merit. It's simply a risk analysis."
An informal survey of similar Texas cities found the practice is fairly common. Of five cities contacted by the Record-Chronicle, only one - Lewisville - said it offered no release-and-waiver agreements during the three-year period.
Garland released eight agreements totaling an estimated $80,000 but withheld five other agreements with former electric utility employees. The city argued the information should be considered a "competitive matter," which is not subject to release under the Texas Public Information Act. The state attorney general's office agreed in a ruling last month.
McKinney and Bryan released agreements with 10 and 14 employees, respectively, but the records lacked enough information to gauge the total cost to the cities.
Carrollton said it would cost more than $2,900 to research the files of 645 former employees to find the requested information. Carrollton requires that the City Council or city manager approve release-and-waiver agreements that exceed $50,000, and no such agreements were approved during the requested time period, according to the city attorney's office.
Peggy Venable, state director of the conservative political group Americans for Prosperity, said she opposes the practice and the secrecy surrounding it. Venable said she believes most private-sector employees work at the will of their bosses and wouldn't get paid to leave their jobs.
"I don't know why city employees should be any different," she said. "Public service shouldn't be a blank check."
LOWELL BROWN can be reached at 940-566-6882. His e-mail address is lmbrown@dentonrc.com.
DETAILS OF THE AGREEMENTS
Five Denton city employees signed release-and-waiver agreements between Jan. 1, 2008, and Jan. 31, 2011, whereby they received money in exchange for their resignation or retirement.
All of the agreements required the employees to waive their rights to sue the city for "any and all claims." The employees also agreed to keep the agreements secret and never seek employment with the city again. Some agreements also prevented the employee from making disparaging statements against the city.
Other details of the agreements appear below.
CHARLES ATKINSON
Title: director of customer service
Length of city employment: March 2003 to August 2008
Ending salary: $95,500
Agreement details: resigned in exchange for $23,875, equal to three months' severance pay
BRUCE HENINGTON
Title: director of facilities and fleet services
Length of city employment: March 1986 to December 2008
Ending salary: $106,500
Agreement details: retired "in lieu of disciplinary dismissal"; received $1,096 in longevity pay for 2008, along with up to 320 hours of accrued vacation pay
HARRY HETTINGER
Title: communications superintendent, Denton Municipal Electric
Length of city employment: October 2000 to March 2010
Ending salary: not available*
Agreement details: resigned in exchange for a six-month, $7,100-per-month consulting contract, for a total of $42,600
STEVE SHEPHERD
Title: city auditor
Length of city employment: June 2007 to March 2010
Ending salary: $122,767.20
Agreement details: resigned in exchange for $63,061.56, or roughly six months' pay
JOEY TORNEO
Title: contractor coordinator, Denton Municipal Electric
Length of city employment: December 1980 to November 2009
Ending salary: not available*
Agreement details: resigned in exchange for $94,000 and an "adjective-free" reference letter; also agreed to "fully inform the city of any knowledge of any violations of city policies or regulatory laws"
* While most city salaries are subject to open records requests, DME salaries are confidential under a 2000 city resolution. The resolution followed the passage of a 1999 state law that let public power utilities deem certain information "competitive matters" and exempt them from public disclosure.
SOURCE: staff research, city of Denton
