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 faciAustin, Texas 78711 lities are entitled to the 

benefits of state employees 

when they engage in instituDear 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 compensation 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, privileges 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 Activities 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 exercise of state law. 

Thus, to determine state law in the area of fringe benefits for patientworkers, we must consider the text of the various state statutory provisions. 

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 employment”; 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 category 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 education subject to a separate workman’s compensation 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 condition of employment.~ The term appointive officer 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 Legislature 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 Judicial 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 Rehabilitation 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 positions 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 constitute 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 conformity with article 5547-202. 

This survey of the various fringe benefit statutes shows that the Legislature 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 Legislature 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 jurisdiction of the boards, who are assisting in the operation 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 Legislature 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 “compensation” for “Patient or Student employment” instead of a gratuity. Patientworkers were paid this “compensation” for “Patient or Student employment” 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 FLSAcovered 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 preexisting 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 appropriations 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 Legislature 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 categpries 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 economical 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 Legislature 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 institutionmaintaining 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 payment 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