OF TEXAS 

The Honorable Philip G. Hoffman 

President 

University of Houston 

Houston, Texas 77004 

Dear President Hoffman: 

Opinion No. H- 180 

Re: Funds available to 

purchase group 

insurance under 

House Bill 139, 

Article V, 5 10, 63rd 

Legislature 

You have asked our opinion concerning the extent to which the University 

of Houston may expend funds appropriated in Item 2 of its appropriation or any 

other item for payment of group insurance premiums, authorized by $10 of 

Article V of the current Appropriations Act, “on behalf of those employees 

of various auxiliary enterprises of the University of Houston who are being 

paid from auxiliary enterprise funds and who are covered by a University group 

policy or policies”? 

Your second question, conditioned upon a negative answer to the first, 

asks the effect this would have upon an employee whose salary is paid partially 

from appropriated funds and partially from funds of the auxiliary enterprise. 

You note that the enterprises about which you inquire are such as the 

operation of the University Center (student union), the residence dormitories, 

the educational television station, and various research grant programs. You 

state that employees working in these enterprises customarily are paid in whole 

or in part with funds generated from the operation of the enterprise. 

The Constitution of Texas requires, as a prerequisite to the appropriation 

of any funds, the existence of pre-existing Law. Article 3, $44. The pre-existing law authorizing a state agency to purchase group insurance for the benefit of 

its employees is Article 3. 51 of the Insurance Code, as amended in 1967 and 1969. 

It provides, in part: 

p. 820 
. . 

The Honorable Philip G. Hoffman, page 2 (H-180) 

“Sec. 1. (a) The State of Texas and each of its 

political, governmenta, and administrative subdivisions 

. . . and the governing boards and authorities of each 

state university. . . are authorized to procure contracts 

with any insurance company authorized to do business in 

this state insuring their respective employees. . . or 

any class or classes thereof under a policy or policies 

of group health, accident, accidental death and dismemberment, disability income replacement and hospital, 

surgical and/or medical expense insurance or a group 

contract providing for annuities. . . . The premium 

for the policy or contract may be paid in whole or in 

part from funds contributed by the employer or in whole 

or in part from funds contributed by the insured employees 

. . . . 

“The term employees as used herein in addition to 

its usual meaning shall include elective and appointive 

officials of the state.” 

The AppropriationsA,ct for fiscal 1974 and 1975 (House Bill 139, 63rd 

Leg.), provides as part of $10 of Article V (p. V-38): 

“State departments and agencies covered by this 

A,ct (Articles I through VI) shall utilize funds other than 

those for personal services, from any item which includes 

operating expenses, and shall use these funds to pay employee premiums on policies containing group life, health, 

accident, accidental death and di~smemberment, disability 

income replacement and hospital, surgical and/or medical 

expense insurance. . . .‘I 

Item 2 of the appropriation to the University of Houston (Appropriations 

Act, p. IV-60) includes a sizeable appropriation for “Staff Group Insurance 

Premiums. ” There are a number of other items “other than those for personal 

services” which do include operating expenses and which would fit the language 

of § 10 quoted above as items out of which premiums might be paid. 

p. 821 
. . 

The Honorable Philip G. Hoffman, page 3 (H-180) 

It therefore appears that there is ample statutory authority as well 

as funds appropriated for the payment of premiums on group insurance 

for employees of the University. The question then is whether those engaged 

in the operations which you have described are or are not employees. While 

we do not have sufficient information to definitively answer this question as 

applied to particular individuals, we do cite you to some general legal principles to assist you in your determination of “employee” status. 

The “usual” meaning of “employee ” is one who works for another, 

usually for wages, and usually below the executive level. See Webster’s 

New International Dictionary, Third Edition. Throughout the statutes, the 

term “employee” is variously defined, See, for example, Article 6235a-1, 

§ 3(4); A,rticle 6228g, § 2, Subsection 6; Article 8309, !j 1. It is said that the 

crucial test to determine whether one is on the one hand, an employee or, on 

the other, an independent contractor is the right of the employer to control 

the details of the manner of performing the work. Newspapers Inc. v. Love, 

380 S. W. 2d 582 (Tex. 1964). And see Attorney General Opinion H-94 (1973). 

In Northwestern National Life Insurance Co. v. Black, 383 S. W. 2d 

806 (Tex. Civ. App., Texarkana, 1964, err. ref’d., n. r. e.), the question before 

the court was whether a decedent,to whom a certificate of group life insurance 

had been issued, was an employee of the Board of Public Utilities of the City 

of Texarkana, Arkansas. In the course of its opinion, the court made various 

statements which, we believe, should be of aid in answering your question. It 

said: 

“An employee is one who works for an employer; 

a person working for a salary or a wage. The word is 

applied to anyone so working, but usually only to clerks, 

workmen, laborers, etc., and but rarely to officers of 

a government or corporation. . . . 

“The relation of employer and employee is contractual . . . . It may be oral or written, express or implied 

. . . . The words ‘servant’ and ‘employee’ are in most 

cases practically synon,ymous. . . . Also the word 

‘employee’ in its general significance is governed by the 

p. 822 
The Honorable Philip G. Hoffman, page 4 (H-180) 

same rules whether a claim lies within the field of 

common law liability or arises out of the Workmen’s 

Compensation Statutes. . . .‘I (383 S. W. 2d at 809- 

810) 

The government of the University of Houston is vested in a Board of 

Regents. Education Code, $ 111.11, Vernon’s Texas Civil Statutes. 

It is our opinion therefore that the Board of Regents of the University 

of Houston has the authority and the funds appropriated to it to pay all or 

part of the premiums for group policies for its employees, as defined in 

Article 3. 51 of the Insurance Code to include elective and appointive officials. 

Whether or not a person is an employee will depend primarily upon whether 

he has been employed by the University pursuant to a contract of employment, 

oral or written, express or implied, and is subject to the control of the 

University officials as to the details of his work. If some separate entity 

intervenes, he may not be an employee. However, the mere fact that the 

Board of Regents may entrust to a separate committee or board the management of a particular affair and that that affair is financed separately, does 

not remove its employees from the status of employees of the University so 

long as the Universi,ty Regents retain the ultimate right to control the details 

of doing the work. Exercise of t.he right is merely evidence and is not determinative. Newspapers Inc. v. Love, supra. 

Our answer to your first question therefore is that the University of 

Houston may expend funds of line 1t:em 2 of its appropriation or other, so 

long as they are not funds appropriated for personal services to purchase 

group insurance for employees of various auxiliary enterprises of the University if those employees legally qualify as employees of the Universi,ty as 

we 11. 

Our answer to the first question render.s an answer to your second 

question unnecessary. 

p. 823 
The Honorable Philip G. Hoffman, page 5 (H-180) 

SUMMARY 

A state university may expend funds for payment 

of group insurance premiums on behalf of employees of 

various of its auxiliary enterprises so long as they legally 

qualify as employees of the University. 

Very truly yours, 

APPROVED: 

r7, : \. 

DAVID M. KENDALL, Cha&tnan 

Opinion Committee 

p. 824