Untitled Texas Attorney General Opinion ( 1974 )

THEA~TORNEYGENERAL
OF TEXAS
AUSTIN. T-s 78711
September 19, 1974
The Honorable Henry Rothell Opinion No. H- 404
Administrator
Texas Employment Commission Re: Effect of guaranteed
Austin, Texas 78778 annual income plan on
an employee% eligibility
for state unemployment
Dear Mr. Rothell: compensation.
Your opinion request requires us to consider the impact a guaranteed
annual income plan would have on an employee’s eligibility for the state
unemployment compensation payable under the Texas Unemployment Com-
pensation Act, Art. 5221b.-1, et seq., V. T. C. S. Before answering the
five questions you have asked, a brief description of the plan is in order.
In 1971 an association of employers operating deep sea and coastal
vessels out of Texas ports entered into a collective bargaining agreement
with a union establishing a guaranteed annual income plan. Depending on
the number.of hours he worked in the three years prior to institution of
the plan, each employee is guaranteed an annual income equal to the mini-
mum number of hours of employment per contract year for which he received
credit multiplied by the current straight-time hourly wage rate. The amount
guaranteedthe employee under this formula is reduced by his actual earnings
during the contract year and by any unemployment compensation benefits
he might have received. In addition the minimum number of paid hours any
employee is guaranteed is reduced if he fails to ,accept all work available
to him.
The plan requires individual employers in the association to contribute
to a guaranteed annual income fund to be controlled and administered by the
association on their behalf. Payments, if due, are made quarterly with a
final adjustment at the end of the year. Overpayments are deducted from
the individuals future guaranteed annual payments.
p. 1884
The Honorable Henry Rothell, page 2 (H-404)
You first ask whether an individual who is covered by the guaranteed
annual income plan would be eligible to receive unemployment compen-
sation benefits during a period &en he is out of work and consequently
is not actually performing services for an employer. The Texas Unemploy-
ment Compensation Act provides that before an individual is entitled to
receive unemployment compensation during any benefit period certain
conditions and requirements must be met. Arts. 5221-2 and 5221b-3,
V. T. C. S. The only pertinent requirement is the one that an individual
must be unemployed in order to receive benefits during a benefit period.
Art. 5221b-2 (f), V. T. C. S. The Act provides that “[a]n individual shall be
deemed ‘totally unemployed’ in any benefit period during which he performs
no services and with respect to which no wages are payable to him.” Art.
5221b-17(lJ, V. T. C. S. “Wages” is defined in the Act as “all remuneration paid
for personal services, including the cash value of all remuneration paid in
any medium other than cash. ‘I Art. 5221b- 17 (n), V. T. C. S.
An individual who is not working manifestly is performing no services
and therefore satisfies the first part of the “total unemployment” definition.
But under the guaranteed annual income plan a union member who is out
of work nevertheless continues to receive quarterly payments. If these
payments are wages payable to him with respect to the benefit period for
which he seeks state unemployment compensation, then he is not “totally
unemployed” during the benefit period and as a result is ineligible for state
unemployment compensation.
In Attorney General Opinion WW-13 (1957) a question very similar to the
one you have asked was presented to this office. A collective bargaining
agreement between a company and a union required the company to create
and maintain a trust fund out of which payments were to be made to union
members who has been laid off in order to supplement the state unemploy-
ment compensation benefits they would receive. An opinion was requested
as to whether receipt of these supplemental unemployment benefits would
render individuals who had been laid off ineligible for state unemployment
compensation. This office had no difficulty in determining that the supple-
mental unemployment benefits were wages and, as such, must be allocable
to some period during which the employee performed services for the com-
pany. An employee performs no services for the company during a period
when-he is laid off.
p. 1885
The Honorable Henry Rothell, page 3 (H-404)
Thus., this office concluded that’the supplemental unemployment
benefits were wages but were wages paid by the company in recognition~of
services performed by the employee prior to his lay-off and were rot paid
“with respect to ” the benefit period during which unemployment compen-
sation was, sought. Accordingly, this prior Attorney General’s Opinion’
determined that an individual who was rec’eiving supplemental benefit pay-
ments during a period when he ‘was laid off was nevertheless “totally
unemployed” so as to be eligible to receive state unemployment compen-
sation.
The rationale employed and the conclusion reached in Attorney General
Opinion WW-13 are consistent with the case law on the ..subject. See, e. g.
Western Union Tel. Co. .v. Texas Emplovme~nt Commission, 243 S.W.2d
217 (Tex. Civ. App. -- El Paso 1951), dism’d w. o. j., 243 S.W.2d 154 (Tex.
1951) and American Sugar Co. v. Doval, 237 So. 2d 415 (La.App., 4th Cir.
1970).
In our opinion it is difficult to distinguish payments pursuant to a ” ”
guaranteed annual income,plan and the supplemental unemployment bene-
fits considered in Attorney~General Opinion WW-13, insofar as theirimpact
on an individual’s eligibility for state unemployment compensation is, con-
cerned. They too are paid~in recognition of services rendered prior’to the
time of unemployment. In fact the exact amount an individual will receive
under the plan depknds upon, and varies in accordance with, the number of
hours he worked in the three years prior to adoption of the plan. In light
of these precedents and legal authorities, we do not feel at liberty to
characterize these payments, as wages paid with respect to a period when
the individual is out of work and is performing no services for an employer.
In our opinion therefore, individuals receiving payment pursuant to the plan
are nevertheless eligible for state unemployment compensation benefits.
However, such benefits then may be deducted~from any amount which would
be due him under the guaranteed annual wage.
Your second question is:
If the individual is entitled to unemployment insurance
benefits during periods whe.n he is not working, will
subsequent payments under the guaranteed annual
income plan be applied retroactively in establishing
an overpayment in the individual’s unemployment
benefit account?
p. 1886
The Honorable Henry Rothell, page 4 (H-404)
With respect to this question, you have referred us to Texas Employment
Commission v. Busby, 457 S.W.2d 170 (Tex. Civ.App. --Amarillo 1970,
writ ref., n. r. e. ). In this case an individual who had been discharged
from her job applied for and was granted state unemployment compensation
benefits. In subsequent grievance proceedings it was determined that
her discharge had been wrongful, and she was reinstated with back pay for
the period of her discharge. The Texas Employment Commission (TEC)
then ordered her to repay the unemployment compensation she had re-
ceived. The court upheld this order reasoning that the back pay was wages
payable with respect to the period of her discharge and receipt of benefits.
Since wages payable with respect to her benefit period had been received,
the individual was not “totally unemployed” during this period and was
ineligible for the state unemployment compensation benefits she had been
granted.
Implicit in your second question is the suggestion that payments under
the guaranteed annual income plan might have the same effect on an indivi-
dual’s right to retain unemployment compensation benefits previously
received as did the back pay awarded in Texas Employment Commission v.
Busby, supra. We have considered this analogy and have encountered
difficulty in resolving, in our own minds, its applicability here. Our legal
research has led us to no additional case authorities that would aid US.
While reasonable minds could differ, we have concluded that payments
under the plan are unlike the back pay awarded in that case because they are
not allocable to a benefit period in which no services are performed and
unemployment compensation is received. Instead, as indicated in our answer
to,your first question, these payments are made in recognition of services
performed a’nd are allocable to periods of actual employment. Therefore
the, receipt of them does not, in our opinion , render an individual liable for
the repayment of any unemployment compensation previously received when
out of work.
In your third question you ask whether the TEC is required to furnish
the association administering the plan on behalf of the employers with
information as to the amount of unemployment compensation benefits paid
individuals covered by the plan. Subject to certain exceptions, the Open
Records Act, Art. 6252-li’a. V. T.C.S., makes public all information
collected, assembled, or maintained by governmental bodies pursuant to
law or ordinance or in connection with the transaction of official business.
p. 1887
The Honorable Henry Rothell. page 5 (H-404)
The TEC is a “governmental body” as that term is defined in the Act and,
as such, is required to disclose all information it~maintains in pursuit
of its official business unless one of the exceptions set out in Sec. 3(a)
of the Act is applicable.
Section 3(a)(l) of the Act excepts from mandatory disclosure information
deemed confidential by law. Under~ Art. 5221b-9(e) of the Texas Unemploy-
ment Compensation Act the TEC is authorized to secure from employers
any information about their employees deemed necessary to the effective
administration of the Act and, if deemed necessary, to keep such inform-
ation confidential. Information of this kind would be excepted from the
mandatory disclosure requirements of the Open Records Act by Sec. 3(a)(l).
But information as to the amount of unemployment compensation benefits
paid particular individuals or groups of individuals does not fall into this
category. It is not information about employees collected from employers,
and therefore the TEC is not authorized to keep it confidential by Art. 5221b-9(e)
of the Texas Unemployment Compensation Act. To our knowledge no other
law makes information of this kind confidential, nor does it fall within any
of the other exceptions set out in Sec. 3(a) of the Open Records Act. In
our opinion, then, information as to the amount of unemployment compen-
sation benefits paid’an individual is public information and, upon request,
must be disclosed by the TEC to the association administering the guaranteed
annual wage plan.
Your fourth question is:
Are the payments made under the guaranteed
annual income plan to be considered ‘wages’
as that term is defined in the Texas Unemploy-
ment Compensation Act, for purposes of levying
the unemployment tax and for purposes of cre-
diting employees with wage credits for future
entitlement to benefits?
“Wages” is defined in the Act as “all remuneration paid for personal
services, including the cash value of all remuneration paid in any medium
other than cash. I’ Art. 5221b-17(n), V. T. C.S. Guaranteed annual pay-
ments clearly fall within this definition. They are paid in recognition of
prior services rendered, and the amount of them depends on the number
p. 1888
The Honorable Henry Rothell, page 6 (H-404)
of hours actually worked during years prior to adoption of the plan. American
Sugar Co. v. Doyal, supra; see also Friedman v. American Surety Co. of
New York, 151 S.W.2d 570 (Tex. 1941); Western Union Tel. Co. v. TEC,
supra, Attorney General Opinion WW-13 (1957). and Rev. Rul. 73-22, I. R. B.
1973-2. Therefore these payments should be taken into account for purposes
of levying the unemployment tax, Art. 5221b-5, V. T. C. S., and should be
credited to employees when determining their entitlement to unemployment
compensation benefits, Art. 5221b-1. V. T. C. S.
Your final question is:
If the payments made under the guaranteed annual
income plan are deemed to be wages, who is the
employer?
The Texas Unemployment Compensation Act provides that an individual
or organization is an “employer” if it is an “employing unit”. Art. 5221b-17,
V. T. C. S. “Employing unit” is defined as “any individual or type of organ-
isation. . . which has or, subsequent to January 1, 1936, had in its employ
one (1) or more individuals performing services for it within this State, 1’
Art. 5221b-17(e). V. T. C. S.
Under the guaranteed annual income plan the association is responsible
for administering the fund and making quarterly payments to eligible union
members. But in this matter the association is merely acting as an agent
for its component members. No services are performed for it by recipients
of payments from the fund. Instead it is the individual members of the
association whose contributions create and sustain the fund and for whom
services are performed by union members. In these circumstances it is
our opinion that the individual members of the association, rather than the
association itself, are the “employers ” for purposes of collecting the unem-
ployment tax levied by the Texas Unemployment Compensation Act.
SUMMARY
Receipt of guaranteed annual wage payments
made in recognition of services performed and
allocable to periods of actual employment does
not render an individual who is out of work and
performing no services for an employer ineligible
p. 1889
The Honorable Henry Rothell, page 7 (H-404)
for state unemployment compensation. Nor does
receipt of such payments render an individual liable
for repayment of state unemployment compensation
benefits previously received during a period of
actual unemployment. Guaranteed annual wage pay-
ments are “wages” as that term is defined in the
Texas Unemployment Compensation Act. Inform-
ation as to the amount of unemployment compensation
benefits paid an individual is public information and,
upon request, must be disclosed by the Texas Employ-
ment Commission.
Very truly yours,
u Attorney General of Texas
APPROKED:
DAVID M. KENDALL, Chairman
Opinion Committee
p. 1890