# THEA~TORNEYGENERAL OF TEXAS
AUSTIN. T-s 78711

September 19, 1974

The Honorable Henry Rothell Administrator Texas Employment Commission Austin, Texas 78778 Opinion No. H- 404
Re: Effect of guaranteed 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 Compensation Act, Art. 5221b.-1,et seq., V. T. C.S. Before answering the five questions you have asked, a brief description ofthe plan is in order.
In 1971an association of employers operating deep sea and coastal vessels out of Texas ports entered into a collective bargaining agreement with aunion 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 minimum number ofhours ofemployment 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 ofpaid 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 ontheir behalf. Payments, if due, are made quarterly with a final adjustment at the end ofthe year. Overpayments are deducted from the individuals future guaranteed annual payments.

p. 1884The Honorable Henry Rothell, page 2 (H-404)

You first ask whether anindividual who is covered by the guaranteed annual income plan would be eligible to receive unemployment compensation benefits during aperiod &en he is out ofwork and consequently is not actually performing services for an employer. The Texas Unemployment Compensation Act provides that before an individual is entitled to receive unemployment compensation during anybenefit 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 beunemployed in order to receive benefits during abenefit period. Art. 5221b-2 (f), V. T. C.S. The Act provides that “[a]n individual shall be deemed ‘totally unemployed’ in anybenefit period during which he performs noservices and with respect towhich nowages 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 anymedium other than cash. ‘I Art. 5221b- 17 (n), V. T. C.S.
An individual who is notworking manifestly is performing no services and therefore satisfies the first part ofthe “total unemployment” definition. Butunder the guaranteed annual income plan aunion member who is out ofwork 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) aquestion very similar to the oneyou have asked was presented to this office. A collective bargaining agreement between a company and aunion required the company to create andmaintain a trust fund out ofwhich payments were to be made to union members who has been laid off in order to supplement the state unemployment compensation benefits they would receive. An opinion was requested as towhether receipt ofthese supplemental unemployment benefits would render individuals who hadbeen laid off ineligible for state unemployment compensation. This office had nodifficulty in determining that the supplemental unemployment benefits were wages and, as such, must be allocable to some period during which the employee performed services for the company. An employee performs noservices for the company during aperiod when-he is laid off.

p. 1885The Honorable Henry Rothell, page 3 (H-404)

Thus., this office concluded that’the supplemental unemployment benefits were wages butwere 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 compensation was, sought. Accordingly, this prior Attorney General’s Opinion’ determined that anindividual who was rec’eiving supplemental benefit payments during aperiod when he‘was laid off was nevertheless “totally unemployed” so as to be eligible to receive state unemployment compensation. The rationale employed and the conclusion reached in Attorney General Opinion WW-13 are consistent with the case law onthe..subject. See, e.g. Western Union Tel. Co. .v. Texas Emplovme~nt Commission, 243S.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, 237So. 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 benefits considered in Attorney~General Opinion WW-13, insofar as theirimpact onan individual’s eligibility for state unemployment compensation is,concerned. They too are paid~in recognition of services rendered prior’to the time ofunemployment. In fact the exact amount anindividual 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 ofthe plan. In light ofthese precedents and legal authorities, we do not feel at liberty to characterize these payments, as wages paid with respect to aperiod 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 duehim under the guaranteed annual wage. Your second question is: Ifthe individual is entitled tounemployment insurance benefits during periods whe.nhe is notworking, will subsequent payments under the guaranteed annual income plan be applied retroactively in establishing an overpayment in the individual’s unemployment benefit account?

p. 1886The 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 anindividual who had been discharged from herjob applied for andwas granted state unemployment compensation benefits. In subsequent grievance proceedings it was determined that her discharge had been wrongful, and shewas reinstated with back pay for the period ofher discharge. The Texas Employment Commission (TEC) then ordered her to repay the unemployment compensation shehad received. The court upheld this order reasoning that the back pay was wages payable with respect to theperiod ofher discharge and receipt ofbenefits. Since wages payable with respect to her benefit period had been received, the individual was not “totally unemployed” during this period andwas 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 onanindividual’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 andhave encountered difficulty in resolving, in our own minds, its applicability here. Our legal research has led us to noadditional case authorities thatwould 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 notallocable 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’ndare allocable toperiods ofactual employment. Therefore the,receipt ofthem does not, in our opinion , render anindividual liable for the repayment ofany unemployment compensation previously received when outof work.
In your third question you ask whether the TEC is required to furnish the association administering the plan onbehalf ofthe employers with information as to the amount ofunemployment 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. 1887The Honorable Henry Rothell. page 5 (H-404)

The TEC is a “governmental body” as that term is defined in theAct and, as such, is required to disclose all information it~maintains in pursuit ofits official business unless one ofthe exceptions set outin Sec. 3(a) ofthe Act is applicable.
Section 3(a)(l) ofthe **Act** excepts from mandatory disclosure information deemed confidential by law. Under~Art. 5221b-9(e) ofthe Texas Unemployment Compensation Act the TEC is authorized to secure from employers any information about their employees deemed necessary to the effective administration ofthe Act and, if deemed necessary, to keep such information confidential. Information ofthis kind would be excepted from the mandatory disclosure requirements ofthe Open Records Act by Sec. 3(a)(l).
But information as to the amount ofunemployment compensation benefits paid particular individuals or groups ofindividuals does not fall into this category. It is notinformation about employees collected from employers, and therefore the TEC is not authorized to keep it confidential by Art. 5221b-9(e) ofthe Texas Unemployment Compensation Act. To our knowledge noother law makes information ofthis kind confidential, nor does it fall within any ofthe other exceptions set outin Sec. 3(a) ofthe Open Records Act. In our opinion, then, information as to the amount ofunemployment compensation 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 Unemployment Compensation Act, for purposes oflevying the unemployment tax and for purposes of crediting 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 ofall remuneration paid in anymedium other than cash. I’ Art. 5221b-17(n), V. T. C.S. Guaranteed annual payments clearly fall within this definition. They are paid in recognition of prior services rendered, and the amount ofthem depends onthe number

p. 1888The Honorable Henry Rothell, page 6 (H-404)

ofhours actually worked during years prior to adoption ofthe plan. American Sugar Co. v. Doyal, supra; see also Friedman v. American Surety Co. of New York, 151S.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 oflevying the unemployment tax, Art. 5221b-5, V. T. C.S., and should be credited to employees when determining their entitlement tounemployment compensation benefits, **Art.** 5221b-1. V. T. C.S.
Your final question is:
Ifthe payments made under the guaranteed annual income plan are deemed to bewages, who is the employer?
The Texas Unemployment Compensation Act provides that anindividual 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 organisation.

. . 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 ofpayments from the fund. Instead it is the individual members ofthe association whose contributions create and sustain the fund and for whom services are performed byunion members. In these circumstances it is our opinion that the individual members ofthe association, rather than the association itself, are the “employers ” for purposes of collecting theunemployment 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 ofactual employment does not render anindividual who is out ofwork and performing no services for an employer ineligible

p. 1889The Honorable Henry Rothell, page 7 (H-404)

for state unemployment compensation. Nor does receipt of such payments render anindividual liable for repayment of state unemployment compensation benefits previously received during a period of actual unemployment. Guaranteed annual wage payments are “wages” as that term is defined in the Texas Unemployment Compensation Act. Information as to the amount ofunemployment compensation benefits paid anindividual is public information and, upon request, must be disclosed by the Texas Employment Commission. Very truly yours,



# u Attorney General of Texas
APPROKED:

DAVID M. KENDALL, Chairman Opinion Committee

p. 1890