Untitled Texas Attorney General Opinion ( 1978 )

The Attorney General of Texas
December 22, 1978
JOHN L. HILL
Attorney General
Honorable Joseph N. Murphy, Jr. Opinion No. H- 1203
Executive Director
Employees Retirement System Re: Whether the state or a
of Texas political subdivision may estab-
P. 0. Box 12337, Capitol Station lish a special program to make
Austin, Texas 78711 payments to an employee on
account of sickness.
Deer Mr. Murphy:
You ask: “May the State or any of its political subdivisions establish a
special, separate, program to make payments to an employee on account of
sickness, such payments not being e continuation of wages?” Your question
pertains to the relationship of sick pay to “wages” as that term is used in the
Social Security Act and as it has been interpreted by the Secretary of the
Department of Health, Education, and Welfare. The inclusion or exclusion of
amounts paid public employees as “wages” determines the contribution to be
made by public employers end employees, and the rate of benefits to be
received ,by the employee.
The Social Security Act defines wages of public employees to exclude
sick pay as follows:
[Tlhe term “wages” means remuneration paid . . . for
employment . . . except that . . . such term shall not
include -
. . . .
fb) The amount of any payment . . . made to . . . en
employee . . . under a plan or system established by an
employer which makes provision for his employees
generally . . . on account of . . . sickness or accident
disability. . . .
42 U.S.C. S 409.
The Secretary of Health, Education, and Welfare has interpreted this
exclusion as follows:
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Honorable Joseph N. Murphy, Jr. - Page 2 (H-1303)
[Playments made by a governmental entity to en employee
on sick leave are excluded from “wages” only if there is
legal authority for the employer to make payments specif-
ically on account of sickness es distinguished from
authorization to merely continue salary payments during
periods of absence due to illness.
SSR 72-56 (19721. (Compere the Commissioners of Internal Revenue’s Rev. Rul.
65-275 (19651, applicable to exclusion of sick pay in 517 P.2d 989 (10th Cir. 1975), cert den., 423
U.S. 1051(1976). The court interpreted the Secretary’s interpretation and clarified
the matter as follows:
[Tlo be excluded from “wages”, sick leave payments must be
paid solely s account g sickness. Such payments by a
State - as opposed to e mere continuation of wages during
periods of absence due to illness - would allegedly amount
to an improper “donation” of State funds absent express
w authority for the State to appropriate funds for such
use. . . .
. . . .
If . . . the State here has no authority to make “payments
on account of sickness” such es would qualify to be excluded
from “wages” under the Act, we hold thet the Secretary has
the nuthority to bar the exclusion from “wages” of such
payments irregerdless of how they ere denominated or
treated under the State’s “plan.”
&at993. (Footnote omitted, emphasis in original).
With this clarification of the context in which your question is posed, we look
to Texas law on the subject. Pertinent provisions of article 3 of the Texas
Constitution are as follows:
Sec. 44. The Legislature shall provide by law for the
compensation of all officers, servants, agents and public
contractors, not provided for in this Constitution, but shall
not grant extra compensation to any officer, agent, servant,
or public contractors, after such public service shall have
been performed or contract entered into . . . : nor grant, by
appropriation or otherwise, any amount of money out of the
Treasury of the State, to any individual, on a claim, real or
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Honorable Joseph N. Murphy, Jr. - Page 3 (H-13031
pretended, when the same shell not have been provided for
by pre-existing law. . . .
Sec. 51. The Legislature shall have no power to make eny
grant or authorize the making of any grant of public moneys
to any individual, association of individuals, municipal or
other corporations whatsoever. . . .
Sec. 52. inhe Legislature shall have no power to authorize
any county, city, town or other political corporation or
subdivision of the State to lend its credit or to grant public
money or thing of value in aid of, or to any individual,
association or corporation whatsoever. . . .
Sec. 53. The Legislature shall have no power to grant, or to
authorize any county or municipal authority to grant, any
extra compensation, fee or allowance to e public officer,
agent, servant or contractor, afler service has been
rendered, or a contract has been entered into, and per-
formed in whole or in pert; nor pay, nor authorize the
payment of, any claim created against any county or
municipality of the State, under any agreement or contract,
made without authority of law.
It is well established that these constitutional provisions do not prohibit the
payment of benefits to employees under the terms of e contract of employment, or
the expenditure of pub1 v. City of Dallas. 6
S.W.2d 738 (Tex. 1928); 36 S.W.2d 653 (Tex.
Civ. App. - Corpus Ch alveston v. Landrum,
533 S.W.2d 394 (Tex. Civ. App. ref’d n.r.e.); Devon
v. City of San Antonio, 443 S.W.?d 598 (Tex. Civ. App. - Waco 1969, writ a
City of Orange v. Chance, 325 S.W.2d 838 (Tex. Civ. App. - Beaumont 1959, no
writ); Attorney General Opinions H-797, H-786 (1976); H-336 (1974); M-836 (19711;
ww-215 0957); O-4140 (i94i).
It is our opinion that sections 44, 51, 52, or 53 of article 3 of the Texas
Constitution do not prohibit legislative authorization of an employment agreement
between the state or R political subdivision and its employees for payment to be
made’ to en employee under a plan or system established by the employer which
makes provision for the employees or e class of employees generally on account of
sickness or accident disability.
In City of Orange v. Chance, the issue was whether section 53 of article 3 of
the Constitution prohibits payment of money for accumulated sick leave under a
statute after severance of employment. The court described “sick leave” as
follows:
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Honorable Joseph N. Murphy, Jr. - Page 4 (H-1303)
It wes an emolument or grant which would help the
employee if during his employment he was unable to work 2
account of sickness. . . .
Id. et 841. (Emphasis added). The court also said that the method or time of
payment wes not significant. Thus, we believe it is clear that the Constitution does
not prohibit the establishment of a public employee sick leave plan or system which
meets the precise requirements of the Secretary of Health, Education, end
Welfare’s interpretation in SSR 72-56 (1972).
SUMMARY
Sections 44, 51, 52, or 53 of article 3 of the Texas
Constitution do not prohibit the state or a political
subdivision from establishing a plan or system for sick leave
payments for its employees.
Attorney General of Texas
APPROVED:
Opinion Committee ’
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