### 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, 510,63rd Legislature You have asked our opinion concerning the extent to which the University of Houston may expend funds appropriated in Item 2ofits appropriation or any other item for payment ofgroup insurance premiums, authorized by $10of Article V ofthe current Appropriations Act, “on behalf ofthose employees ofvarious auxiliary enterprises ofthe University ofHouston 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 ofthe 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 ofthe enterprise. The Constitution of Texas requires, as a prerequisite to the appropriation of any funds, the existence ofpre-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 3.51ofthe Insurance Code, as amended in 1967and 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 ofits political, governmenta, and administrative subdivisions

. . . and the governing boards and authorities ofeach 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 1974and 1975 (House Bill 139, 63rd Leg.), provides as part of $10ofArticle V (p.V-38):

“State departments and agencies covered by this A,ct (Articles Ithrough 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 2ofthe appropriation to the University ofHouston (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 §10quoted above as items out ofwhich 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 ofpremiums 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 toassist you inyour 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, !j1. 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 ofthe employer to control the details of the manner ofperforming the work. Newspapers Inc. v. Love, 380S.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 ofgroup life insurance had been issued, was an employee of the Board ofPublic Utilities ofthe City ofTexarkana, Arkansas. In the course ofits opinion, the court made various statements which, we believe, should be ofaid in answering your question. It said:

“An employee is one who works for an employer;

a person working for a salary or awage. The word is applied toanyone 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. 822The Honorable Philip G. Hoffman, page 4 (H-180)

same rules whether a claim lies within the field of common law liability or arises out ofthe Workmen’s Compensation Statutes. . . .‘I (383 S.W. 2dat 809- 810) The government ofthe University ofHouston is vested in a Board of Regents. Education Code, $111.11,Vernon’s Texas Civil Statutes. It is our opinion therefore that the Board ofRegents ofthe University ofHouston has the authority and the funds appropriated to it to pay all or part ofthe premiums for group policies for its employees, as defined in Article 3.51ofthe 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 tothe details ofhis work. If some separate entity intervenes, he may not be an employee. However, the mere fact that the Board ofRegents may entrust to a separate committee or board the management ofa particular affair and that that affair is financed separately, does not remove its employees from the status of employees ofthe University so long as the Universi,ty Regents retain the ultimate right to control the details of doing the work. Exercise oft.heright is merely evidence and is not determinative. Newspapers Inc. v. Love, supra.

Our answer toyour first question therefore is that the University of Houston may expend funds of line 1t:em 2ofits appropriation or other, so long as they are not funds appropriated for personal services to purchase group insurance for employees ofvarious auxiliary enterprises ofthe University ifthose employees legally qualify as employees ofthe Universi,ty as we11.Our answer to the first question render.s an answer toyour second question unnecessary.

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

SUMMARY A state university may expend funds for payment ofgroup insurance premiums onbehalf of employees of various ofits auxiliary enterprises so long as they legally qualify as employees ofthe University. Very truly yours,

APPROVED: r7,: \.

DAVID M. KENDALL, Cha&tnan Opinion Committee

p. 824