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Home 9 Federal Legal Corner 9 Settlement Agreement Bars Disclosure

Settlement Agreement Bars Disclosure

On January 23, 2009, the Merit Systems Protection Board issued its decision in Cunningham v. Office of Personnel Management, 2009 M.S.P.B. 5. The Board found that OPM had breached its settlement agreement by disclosing adverse information regarding the appellant to a background investigator for a new employer in violation of a clean record provision in a settlement agreement with OPM. In doing so, the Board held that the public policies favoring enforcement of settlement agreements trump those in favor of provision of complete information as part of employment security/suitability background investigations.

Cunningham was a criminal investigator for OPM’s office of inspector general who was fired during his probationary period. He appealed his termination to MSPB, which had jurisdiction despite Cunningham’s probationary status due to his assertion of marital status discrimination. The parties entered into a settlement agreement before a hearing, which was duly entered into the Board’s record for enforcement. This agreement included a confidentiality provision and required revision of OPM personnel records to show that the appellant had voluntarily resigned.

After his termination, Cunningham applied for a private sector investigative post with an OPM contractor. OPM conducted a background investigation and suitability/security determination regarding Cunningham as part of this employment by the OPM contractor. During the investigation, Cunningham’s former managers disclosed the former termination and MSPB appeal. As a result, Cunningham petitioned the MSPB to enforce the settlement agreement against the agency. The administrative judge, in a July 2008 opinion, recommended enforcement of the settlement agreement and referred the matter to the Board’s office of general counsel.

The Board found a breach of the agreement and ordered rescission of the settlement agreement and reinstatement of Cunningham’s original appeal. OPM argued that public policy favoring thorough suitability investigations trumped the public policy favoring enforcement of contractual settlement agreements, rendering the settlement agreement unenforceable. OPM relied on a prior MSPB decision in Gizzarelli v. Department of the Army, 90 M.S.P.R. 269 (2001).

The Board, however, distinguished Gizzarelli from Cunningham’s situation. In Gizzarelli, the Board had found that public policy favored disclosure of police and criminal records notwithstanding settlement agreement clean record provisions to the contrary. The information disclosed regarding Cunningham, however, related to performance and noncriminal conduct issues. The Board held that no similar public policy allows disclosure of such performance and noncriminal conduct issues to OPM for purposes of a background check or suitability determination. Accordingly, OPM was bound by the terms of its settlement agreement to Cunningham, and its disclosures inconsistent with the clean record provisions of that agreement constituted an actionable breach.