# The Attorney General of Texas

November 30, 1981
MARK WHITE Attorney General

Supreme Court Suildlng P. 0. Box 12546 Austin, TX. 76711 512/475-2501 Telex 9101674.1367 Telecopier 5121475.0266

1607 Main St., Suite 1400 Dallas, TX. 75201 2141742-8944

4624 Alberta Ave., Suite 160 El Paso, TX. 79905 9151533.3464

1220 Dallas Ave., Suite 202 Houston. TX. 77002 713/650-0666

606 Broadway, Suite 312 Lubbock, TX. 79401 6061747-522-9

4309 N. Tenth, Suite B McAllen, TX. 79501 5121662-4547

200 Main Plaza, Suite.400 San Antonio, TX. 79205 512/2254191

An Equal Opportunity/ Affirmative Action Employer Honorable ErnieW. Tullis Administrator Texas EmploymentCommission T.E.C. Building Austin, Texas 78778

Dear Mr. Tullis: OpinionNo. Mw-397

Re: Definitionof "benefit wage credits" in the Texas UnemploymentCompensationAct and relatedquestions

YOU inform us that the TeXS.9 Employment Commission has interpreted article 5221b-l(e), V.T.C.S., of the Texas Unemployment Compensation Act, to prohibit it from considering an individual's wages in excess of the maximum amount of wages as defined in the Federal Insurance ContributionsAct when it determines his right to unemployment benefits. You first ask whether the commission may change its interpretationof this provision topermit considerationof the actualwages paid an individual. You alsowish to know the amount of wages to be used in applying article 5221b-l(e) when the maximum amount of wages defined in the Federal Insurance Contribution Act changesbetween the time thewages are earnedand the time a claim for benefits is filed.
Article 5221b-l(e),V.T.C.S.,provides inpart:

BenefitWage Credits: 'Benefitwage credits'
means thosewages as defined in this subsectionof the Act, which are used in determining an individual's right to benefits.... [Flor the purposes of this Section...,wages received by an individual in any calendaryear shall include all remuneration from each employer for employmentup to the maximum amount of wages as defined in the Federal Insurance Contributions Act

...a* amended....

At the present time, the maximum amount of wages as defined by the Federal InsuranceContributionsAct [hereinafterF.I.C.A.] is $29,700. 42 U.S.C.4430. In answer to your first question, the statute clearly sets out the maximum amount of wages that may be considered in determiningan individual'sbenefits. The commissionmay not consider actualwages in excess of thismaximum. See Teacher Retirement System
v. Duckworth, 260 S.W.2d 632 (Tex.Civ. AK - FortWorth 1953),aff'd

p. 1348Mr. ErnieW. Tullis - Page 2 (Mw-397)

per curiam, 264 S.W.2d 98 (Tex. 1954) (courtswill not accept agency interpretationcontrary to clearmeaning of unambiguous statute).

An unemployed individualmay receivebenefitswith respect to any benefit period only if he meets certain requirements as to income distributionwithin his "baseperiod," definedas "suchperiod of four (4) consecutive completed calendar quarters within the last five (5) completed calendar quarters immediatelypreceding the first day of an individual's benefit year as the Commission may by regulation prescribe." V.T.C.S. art. 5221b-17(a)(2). The applicantmay receive benefits only if he has received total benefit wage credits in his base period of not less than one and one-half times his high quarter benefitwage credits, or if he has receivedwages within at least one quarter equal to two-thirds of the F.I.C.A.maximum wages. V.T.C.S. art. 5221b-2(e).

Under these definitions, some claimants are denied benefits solely because they receive wages in previous quarters totaling the F.I.C.A.maximum. Their compensation for the balance of that year is not considered "wages" for the purpose of determining unemployment benefits.

This problem derives in part from the commission'sinterpretation of the provisions an employee must meet to qualify for unemployment compensation. Although under article 5221b-17(a)(2) the commission may define the "baseperiod" as = four consecutivecalendarquarters within the last five quarters immediately preceding an individual's benefit year, the commissionhas by Rule 1 restricted claimants to the first four. See T.E.C. Rule 1 (1976).

You cite, for example, a case involving a January 15, 1979. claim. According to Rule 1, the claimant'sbase period consisted of the fourth quarter of 1977 and the first three quarters of 1978. His reported wages were $1620.89 for the second quarter of 1978 and $5376.99 for the third quarter of 1978. These reported payments did not meet the "one and one-half times" requirement of article 5221b-2(e),although testimonyat the hearing showed that the claimant received actual wages of $5850.92 in the fourth quarter of 1977. If these were allowed to be considered as benefit wage credits, the claimant would have met the "one and one-half times" requirement and would have qualified for unemployment compensation. However, earlier in 1977 claimanthad received from the same employer,who paid him the $5850.92,wages in excess of $16,500, the then F.I.C.A.maximum wage. Sinceboth paymentswere in the same calendaryear althoughnot in the
same base period, the $5850.92 payment in the fourth quarter of 1977
was not considered by the commission ag "wages." Claimant did not qualify under the alternative provided in article 5221b-2(e) for persons receivingwithin at least one quarter of the base periodwages equal to two-thirdsof the F.I.C.A.maximum.

If the commission had used the last four consecutive calendar quarterswithin the last five calendar quarters immediatelypreceding

p. 1349Mr. ErnieW. Tullis - Page 3 (MW-397)

the claimant'sbenefityear in determiningthebase period, instead of the first four now specifiedby Rule 1, the claimant'spositionmight have been changed,depending on hiswages in the last quarter of 1978.

We find nothing in the statutes to prevent the commission from specifyingby regulation that thebase periodwill consist of the four consecutive quarters of the five that will yield the greatest amount in benefit wage credits in regard to each claim. Further, it is expressly within the authority of the commission to prescribe "equivalents" for "calendar" quarters that might more equitably distribute benefit wage credits within the base period by the simple expedient of consideringequivalentquarters ending on days other than the last days of the calendar quarters.

_ See V.T.C.S. art. 5221b-17(a)(3).

Another situation with which you are concerned involves an initial claim filed in the second quarter of a year in which the F.I.C.A. maximum had been increased. The base period involved consists of the four calendar quarters of the preceding year. The claimant did not meet the "one and one-half times" requirement of article 5221b-2(e) because he earned the large majority of his qualifyingwages in the first quarter of that year. In applying the alternativequalifyingprovision of article 5221b-2(e),the commission used the F.I.C.A. maximum wage in effect for the year in which the claim was filed instead of that in effect in the year in which claimant's high quarter fell. The difference in the maximum wages used in such cases can determinewhether or not a claimant qualifies for unemploymentbenefits.

In answer toyour secondquestion,we believe that the commission in determining the eligibility of a claimant should use the maximum wage in effect when claimant earned and receivedhis qualifyingwage. This would not be contrary to any express provision in the Texas Unemployment Compensation Act and would seem to be within the commission'sadministrativepowers.

Our conclusion that the commission shouldapply the law in effect when the employee's wages were earned even though the federally defined maximum wage has increased by the time the commission determineshis eligibility for benefits, derives from the rule of law forbidding a retroactive construction of statutes so as to deprive a party of a substantialright. See 12 Tex. Jur. 2d ConstitutionalLaw 55121, 122. The commission'sapplication of the law in effect at the time of the hearing often injures the employeebecause of increases in the F.I.C.A. maximum wage prior to the hearing. We believe the commission has power to construe the eligibility statute so that it will operate fairlyand justly to all claimants for benefitsunder the Texas UnemploymentCompensationAct.

SUMMARY
Article 5221b-l(e), V.T.C.S., of the Texas Unemployment Compensation Act does not consider

p. 1350Mr. ErnieW. Tullis - Page 4 (MN-397)

actual wages paid an individual in excess of the maximum wages defined in the Federal Insurance Contributions Act as a determining factor for unemploymentbenefits. Otherwise, the act itself authorizes the commission to prescribe rules for the equitable determination of benefit wage credits for each claimant. The maximum wages to be considered for unemployment benefits are the wages received by the employee not in excess of themaximumwages defined in the Federal Insurance ContributionsAct at the time theywere earned.

MARK WHITE Attorney General of Texas

JOHN W. FAINTER, JR. FirstAssistantAttorney General

RICHARD E. GRAY III ExecutiveAssistantAttorney General
Preparedby Bob Lattimore AssistantAttorney General

APPROVED: OPINION COMMITTEE

Susan L. Garrison, Chairman Jon Bible Rick Gilpin Bob Lattimore Jim Moellinger

p. 1351