Untitled Texas Attorney General Opinion ( 1975 )

January 22, 1975
The Honorable Kenneth D. Caver. M. D. Opinion No. H- 502
Commissioner, Texas Department
of.Mental Health and Mental Retardation Re: Whether residents and
Box 12668. Capitol Station patients at MHMR faci-
Austin, Texas 78711 lities are entitled to the
benefits of state employees
when they engage in institu-
Dear Dr. Gaver: tion-maintaining labor
You have asked several questions related to the status of patients of
state hospitals and residents of state schools for the mentally retarded
(hereafter collectively referred to as “patient-worker-d’) as employees of
the state for the purpose of receiving the “fringe” benefits of regular state
employment. You state correctly that under the decision of Souder v.
Brennan. 367 F. Supp. 808 (D. C. 1973), patient-workers of non-federal
hospitals, homes and institutions for the mentally retarded and mentally
ill are “employees” covered by the minimum wage and overtime compen-
sation provisions of the Fair Labor Standards Act (FLSA), 29 U.S. C. A.
sections 201-219 and the regulations promulgated thereunder, 29 C. F. R.
section 524 (providing for special minimum wages for certain handicapped
workers). You then ask:
1. Will patients of State Hospitals and residents of
State Schools for the Mentally Retarded, who are
engaged in institutionlnaintaining labor, be employees
of the State of Texas and. as such, subject to the laws,
rules and regulations and entitled to the rights, privi-
leges and ‘fringe’ benefits of regular State employees?
2. Will patients of State Hospitals and residents of
State Schools for the Mentally Retarded, who are engaged
in work activities of a Sheltered Workshop or Work Acti-
vities Center that are not institution-maintaining labor,
be employees of the State of Texas and, as such, subject
to laws, rules and regulations and entitled to the rights,
privileges and ‘fringe’ benefits of regular State employees?
p. 2260
The Honorable Kenneth D. Gaver, page 2 (H-502)
3. What funds are available for the use of MHMR to
pay wages, overtime pay, and/or ‘fringe’ benefits
to patient-workers?
Your first question assumes that the patient-workers are engaged in
labor activity covered under the FLSA, (“institution-maintaining” labor)
and thus are “employees” for FISA purposes of wages and overtime pay,
as decided in Souder. However, the FLSA does not preempt Texas law
in the area of establishing entitlements to the rights, privileges and
“fringe” benefits of state employment. The FLSA has been described as
a declaration of policy of the United States as to what constitutes fair
labor standards and determines minimum standards for hours and wages,
[Timberlake v. Day & Zimmerman, Inc. t 49 F.Supp. 28, 33 (S. D. Iowa
1943)], designed to accomplish the statutory purpose of eliminating ” . . .
labor conditions detrimental to the maintenance of the minimum standard
of living necessary for health, efficiency, and general well-being of
workers . . . ‘I[29 U.S. C. A. 5 202 (a)]. While the FLSA deals with
child labor, equal pay, and age discrimination, none of the provisions
of the FLSA address employee “fringe” benefits. Thus, regarding such
benefits, it cannot be said that the FLSA attempts to supersede the exer-
cise of state law.
Thus, to determine state law in the area of fringe benefits for patient-
workers, we must consider the text of the various state statutory pro-
visions.
Some of the rights, privileges and “fringe” bs nefits of “state
employment” include: state woriunen’s compensation insurance (V. T. C. S.,
art. 8309g); unemployment compensation (V. T. C. S., art. 5221b-1, et
seq. ); sick leave, vacations, holidays, emergency leave (V. T. C. S.,
art. 6252-8a); retirement (V. T. C.S., art. 6228a); and federal old age
and survivors insurance (V. T. C.S., art. 695h).
These statutes do not contain a general definition of~“state employ-
ment”; each has its own definition of the “employee” or “employments”
entitled to benefits under it. Thus, instead of a single general definition
of “state employee, ” our statutes contain a patchwork of “employee”
descriptions, each having specific exclusions and exceptions. Except for
federal old age and survivors insurance, and unemployment compensation
insurance, none of these statutes expressly exclude patient-workers from
the persons eligible for benefits, and none expressly include any cate-
gory of patient-workers.
, p. 2261
The Honorable Kenneth D. Gaver. page 3 (H-502)
A. Workman’s Compensation Insurance for State Employees.
Article 83096, section 1 defines “employee” as:
. . . a person
in the service of the state
under an appointment or express contract of
hire, oral or written, whose compensation is
paid by warrant issued by the Comptroller,
except a person employed by the State Highway
Department or by an institution of higher edu-
cation subject to a separate workman’s com-
pensation law.
B. Retirement System for State Employees.
..-
Section 3(c)(l) of article 6228a describes that the “membership” of the
Texas Retirement System shall be composed (in part) as follows:
Any person who becomes an appointive officer
or employee on or after the effective date of this
Act shall become a member of the Retirement ,
System on the first day of employment as a con-
dition of employment.~ The term appointive of-
ficer or employee shall mean a person paid a
monthly or hourly salary from the funds of the
State and the position occupied by such person
must be one that subjects that person to the laws,
rules and regulations of the State as applicable
to its employees.
C. Accumulated Vacation or Sick Leave.
Section 1 of article 6252-8a provides yet another definition of employees
entitled to the benefits under it:
‘Employee’ as used in this Act means any
appointed cfficer or employee in a department of
the State who is employed on a basis or a position
normally requiring not less than 900 hours per
year, but shall not include members of the Legis-
lature or any incumbent of an office normally
p. 2262
The Honorable Kenneth D. Gaver, page 4 (H-502)
filled by vote of the people; nor persons on
piecework basis: nor operators of equipment or
drivers of teams whose wages are included in
rental rate paid the owners of said equipment or
team: nor any person who is covered by the Judi-
cial Retirement System of The State of Texas;
nor any person who is covered by the Teacher
Retirement System of Texas, except persons
employed by the Teacher Retirement System,
the Central Education Agency, the Texas Rehabilita-
tion Commission, and classified, administrative,
and professional staff members employed by a
State institution of higher education who have
accumulated vacation or sick leave, or both,
during such employment.
D. Federal Old Age and Survivors Insurance for State Employees
(OASI)
Section 1 of article 69511 defines “Employment” and “State Employee” at
subsection (b) and (c) respectively.
(b) The term ‘Employment’ means any service
performed by a State employee except (1) service
which in the absence of an agreement entered into
under this Act shall constitute ‘employment’ as
defined in the Social Security Act; or (2) service
which under the Social Security Act may not be
included in an agreement between the State and
the Secretary of Health, Education and Welfare
entered into under this Act.
(c) The term ‘State Employee’ in addition to
its usual meaning shall include elective and
appointive officials of the state; and shall not
include those persons rendering services in posi-
tions the compensation for which is on a fee basis.
The term ‘State Employee’ shall not include any
employees in positions subject to the Teacher
p. 2263
The Honorable Kenneth D. Gaver, page 5 (H-502)
Retirement System except those employed by
state departments, state agencies, and state
institutions as construed in their usual meaning.
The State of Texas is a party to an agreement with the Secretary of
Health, Education and Welfare (HEW) to provide coverage of State
and local employees under the Federal OASI pursuant to 42 U.S. C.
section 418. 42 U.S. C. section 418 provides a list of services which
would be approved for coverage (if requested by the State), but it
excludes patient-workers. 42 U.S. C. section 418(c)(b)(B) provides:
(6) Such agreement shall exclude -
. . . (B) service performed in a hospital, home
or other institution by a patient or inmate thereof.
. . .
It appears that 42 U.S.C. section 418 (c)(6)(B), in conjunction with
article 695h (1) (b)(2), V. T. C. S. , excludes Texas patient-workers from
the OASI agreements entered into by Texas with the Secretary of HEW.
E. Unemployment Compensation Act.
Article 5221b-17(f)(6) defines “employer” in part as:
(f) ‘Employer’ means:
. . .
(6) A hospital or an institution of higher
education (or a group of such organizations)
l.ocated in this State and operated by this
State or by this State and one (1) or more
other states or by an instrumentality thereof
for which services are performed which consti-
tute employment . . .
However, the same statute contains a provision that excludes the
service performed by patient-workers from its definition of “employment. ”
Article 5221b-17(g)(5)(U) states:
p. 2264
The Honorable Kenneth D. Gaver, page 6 (H-502)
(5) The term ‘employment’ shall not include:
. . .
(U) Service performed in the employ of a
hospital, if such service is performed by a
patient of such hospital.
Attorney General Opinion H-75 (1973) can be construed as suggesting that the
specific exclusion of patient-workers in the above section was overriden by
the general election made in article 5221b-22d, which covers all services
performed for the state: however, it should be noted that the portion of the
opinion which lends itself to that construction is dicta, and special note
should be made that the Legislature , evincing a legislative intent not to
treat the services that patient-workers render as employment, did exclude
them from the employees eligible for unemployment compensation in
article 5221b-17(g)(5)(U).
G. The Texas Mental Health Code.
The Texas Mental Health Code, article 5547-1, et seq., does not address
itself to any employment relationship between the State and any of the
patients or residents described in this opinion. Section 2. OlA of article 554’
202, V. T. C. S., provides for employees for MHMR:
. . . The number of employees and the salaries
shall be as fixed in the general appropriations Bill.
If the Legislature had intended to provide for patient-workers as “employees
it could have done so by way of the general appropriations bill, in confor-
mity with article 5547-202.
This survey of the various fringe benefit statutes shows that the Legis-
lature has not created a general definition of “state employee” or otherwise
defined that employment relationship. The most logical explanation for
legislative inaction on the question of patient-worker eligibility for benefits
is that the Legislature never considered patient-workers to be State employe
and therefore, had no reason to deal with them in that capacity. The Legis-
lature did consider patient-workers in their capacity as patients but not as
employees, in article II, se&Ion 3(d) of the Appropriations Act for fiscal
p. 2265
The Honorable Kenneth D. Gaver, page 7 (H-502)
year 1974-1975, (Acts 1973, 63rd Leg., ch. 659,~. 1786 at 1885) which
provides a limited gratuity to such persons:
d. Patient or Student Assistance. Subject to the
approval and rules and regulations of the governing
.boards covered by this Section,patients or students
in any state hospital or special school under the juris-
diction of the boards, who are assisting in the oper-
ation of the institutions as part of their therapy,
may receive gratuities out of any funds available to
the respective institutions in amounts not to exceed
five dollars ($5) per week for each such student or
patient participating. (Emphasis added)
The Texas Legislature used the same language in the Appropriation
Acts for fiscal years 1970-71 and 1972-73. Before 1970-71, the Legis-
lature employed different language to provide for patient or student
assistance. For example, the language of the Appropriation Act for
fiscal 1968-69 (Acts 1967, 60th Leg., R. S., ch. 784, p. 2097 at 2137)
is:
Sec. 18. Patient or Student Employment. Subject
to the approval and rules and regulations of the governing
boards, patients or students in any State Hospital or
Special School under the jurisdiction of the board, who are
assisting in the operation of the institutions, may be paid
out of any funds available to the respective institutions an
amount not to exceed Two Dollars ($2) per week for each
working student or patient. (Emphasis added)
Thus, before fiscal 1970-71, patient-workers were paid a “compen-
sation” for “Patient or Student employment” instead of a gratuity. Patient-
workers were paid this “compensation” for “Patient or Student employ-
ment” instead of a gratuity. Patient-workers were paid this “compensation”
beginning with fiscal. 1960-61 (the first time the Legislature appropriated
money for patient-workers) and again in fiscal years 1962-63, 1964-65,
1966-67, and 1968-69. The switch from a compensation to a “gratuity”
is evidence that the Legislature intended to treat patient-workers as
non-employees by removing all doubt about their non-employee status.
p. 2266
The Honorable Kenneth D. Gaver, page 8 (H-502)
We note that article II, section 3d of the current Appropriations Act
limits only the amount of the gratuity a patient-worker can receive. That
section does not, in our opinion, affect the status of patient-workers as
“employees’.’ for FLSA purposes of wage and overtime compensation, nor
limit their compensation under FLEA standards to $5 per week.
Section 3d is a clear expression of the legislative intent of treating
patient-workers as non-employees and supports the conclusion that
although Souder brings them within FLSA for wage and hour purposes,
they do not thereby become “employees ” for the purpose of statutory
fringe benefits of state employment.
Furthermore, to the extent that the fringe benefit statutes are ambiguous
we believe they are subject to the rule of statutory construction stated
in State v. Arkansas Dock and Channel Co., 365 S. W. 2d 220, 224 (Tex.
Civ. App., -- San Antonio 1963, err. refd. ) that:
Where an Act of the Legislature is ambiguous, the
Courts are inclined to follow the administrative
construction of the Act over a long period of time
by the officials charged with its administration.
The Department of Mental Health and Mental Retardation has consistently
taken the position that no patients of state hospitals or students of state
schools are state employees for fringe benefits purposes.
In addition, there has been a long standing custom of treating Texas
patient-workers as non-employees. The authority of the State to utilize
patient labor has been judicially recognized since Clough v. Worsham,
74 S. W. 350 (Tex. Ct. App. --1903, writ refd).
Thus, given the expression of legislative intent in several appropriations
acts and the long standing administrative construction, it is our opinion that
patient-workers engaged in institution-maintaining labor are not employees
of the State for fringe benefits purposes.
For reasons outlined above in response to your first question, we
also answer your second question negatively. Patient-workers engaged in
work activities of a Sheltered Workshop or Work Activities Center that
are not institutionmaintaining labor are not state employees for fringe
benefit purposes even though they may be considered as employees for
p. 2267
The Honorable Kenneth D. Gaver, page 9 (H- 502)
purposes of the FISA and the regulations promulgated thereunder.
29 C. F. R. 5 525 (Employment of Handicapped Clients in Sheltered
Workshops).
The answer to your final questionis that the necessary specific
appropriations for the payment of wages and overtime pay to FLSA-
covered patient-workers are available to MHMR from a number of
appropriated items in the current Appropriations Act.
Article 3. section 44 of the Texas Constitution provides in part
that:
The Legislature shall. . . [not] grant. by
appropriation or otherwise, any amount of
money out of the Treasury of the State, to any
individual, on a claim, real or pretended,
when the same shall not have been provided for
by pre-existing law; nor employ anyone in the
name of the State, unless authorized by pre-
existing law.
The pre-existing law for payment of minimum wages and overtime
pay to FLSA-covered patient-workers is supplied by the FLSA. See
Attorney General Cpinion M-341 (1969).
Section 6 of article 8 of the Texas Constitution provides that
no money shall be drawn from the Treasury but in pursuance of specific
appropriations made by law. However, in National Biscuit Co. v. State,
135 S. W.2d 687, 693 (Tex.Sup. 1940). the Court stated:
. . . , one of the provisions of Section 6 of
Article 8 of our Constitution requires all appropria-
tions of money out of the State Treasury to be
specific. It is settled that no particular form of
words is required to render an appropriation specific
within the meaning of the constitutional provision
under discussion. It is sufficient if the Legis-
lature authorizes the expenditure by law, and specifies
the purpose for which the appropriation is made . . .
p. 2268
The Honorable Kenneth D. Gaver, page 10 (H-502)
The necessary items of specific appropriation for payment of wages
and overtime pay to patient-workers are available in a number of cate-
gpries of the current Appropriation Act. See, for example, the various
items authorizing “unclassified personnel-r “temporary labor. ”
In addition, the special provisions of article II of the Appropriation
Act empower the h4HMR Board to allocate funds from a number of very
broad categories, including the following: unexpended balances, gifts,
donations and federal grants, [Acts 1973. 63rd Leg., ch. 659, at p. 1880,
sections 2(c)(d)] and line item 13 for the Central Office, Departments
of Mental Health and Mental Retardation, (Acts 1973, 63rd Leg. , ch. 659,
at p. 1827).
The special provisions of article II also provide for the hiring of
hourly workers to be paid out of the appropriations for salaries of
classified positions:
It is further provided that appropriations for
salaries of classified positions may be used to pay
the wages of hourly workers when the utilization of
such personnel is in the best interest of an eco-
nomical and efficient program. [Acts 1973, 63rd Leg.,
ch. 659, at p. 1879, ,section 2(a)(4)].
Thus, depending on administrative considerations and the fiscal
condition of MHMR. sufficient flexibility has been provided by the Legis-
lature for the commitment of MHMR funds to meet FLSA minimum wage
and overtime pay monetary obligations. Since, we conclude that such
patient-workers are not “state employees ” for fringe benefit purposes
we do not need to discuss the source of funding for any such state
benefits.
SUMMARY
The FLSA does not preempt Texas law in the area
of establishing entitlements to the rights, privileges and
“fringe ” benefits of state employment. Patient-workers
of a state hospital or residents of a state school for the
p. 2269
The Honorable Kenneth D. Gaver, page 11 (H-502)
mentally retarded whether performing institution-
maintaining labor or engaged in activities of a
sheltered workshop or a work activities center are
not state “employees, ” for fringe benefit purposes.
The necessary specific appropriations for the pay-
ment of wages and overtime pay to patient-workers
covered by the FLSA are available to MHMR from a
number of appropriated items in the current 1974-1975
Appropriations Act.
Very truly yours,
Attorney General of Texas
-..._
APPROVED:
\
he%&
DAVID M. KENDALL, First Assistant
C. ROBERT HEATH. Chairman
Opinion Committee .
p. 2270