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 of the plan is in order. 

In 1971 an association of employers operating deep sea and coastal 

vessels out of Texas ports entered into a collective bargaining agreement 

with a union 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 of hours of employment 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 of paid 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 on their behalf. Payments, if due, are made quarterly with a 

final adjustment at the end of the year. Overpayments are deducted from 

the individuals future guaranteed annual payments. 

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

You first ask whether an individual who is covered by the guaranteed 

annual income plan would be eligible to receive unemployment compensation benefits during a period &en he is out of work 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 any benefit 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 be unemployed in order to receive benefits during a benefit period. 

Art. 5221b-2 (f), V. T. C. S. The Act provides that “[a]n individual shall be 

deemed ‘totally unemployed’ in any benefit period during which he performs 

no services and with respect to which no wages 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 

any medium other than cash. ‘I Art. 5221b- 17 (n), V. T. C. S. 

An individual who is not working manifestly is performing no services 

and therefore satisfies the first part of the “total unemployment” definition. 

But under the guaranteed annual income plan a union member who is out 

of work 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) a question very similar to the 

one you have asked was presented to this office. A collective bargaining 

agreement between a company and a union required the company to create 

and maintain a trust fund out of which 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 to whether receipt of these supplemental unemployment benefits would 

render individuals who had been laid off ineligible for state unemployment 

compensation. This office had no difficulty 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 no services for the company during a period 

when-he is laid off. 

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

Thus., this office concluded that’the supplemental unemployment 

benefits were wages but were 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 an individual who was rec’eiving supplemental benefit payments during a period 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 on the ..subject. See, e. g. 

Western Union Tel. Co. .v. Texas Emplovme~nt Commission, 243 S. 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, 237 So. 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 

on an individual’s eligibility for state unemployment compensation is, concerned. They too are paid~in recognition of services rendered prior’to the 

time of unemployment. In fact the exact amount an individual 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 of the plan. In light 

of these precedents and legal authorities, we do not feel at liberty to 

characterize these payments, as wages paid with respect to a period 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 due him under the guaranteed annual wage. 

Your second question is: 

If the individual is entitled to unemployment insurance 

benefits during periods whe.n he is not working, will 

subsequent payments under the guaranteed annual 

income plan be applied retroactively in establishing 

an overpayment in the individual’s unemployment 

benefit account? 

p. 1886 
The 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 an individual who had been discharged 

from her job applied for and was granted state unemployment compensation 

benefits. In subsequent grievance proceedings it was determined that 

her discharge had been wrongful, and she was reinstated with back pay for 

the period of her discharge. The Texas Employment Commission (TEC) 

then ordered her to repay the unemployment compensation she had received. The court upheld this order reasoning that the back pay was wages 

payable with respect to the period of her discharge and receipt of benefits. 

Since wages payable with respect to her benefit period had been received, 

the individual was not “totally unemployed” during this period and was 

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 on an individual’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 and have encountered 

difficulty in resolving, in our own minds, its applicability here. Our legal 

research has led us to no additional case authorities that would 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 

not allocable 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’nd are allocable to periods of actual employment. Therefore 

the, receipt of them does not, in our opinion , render an individual liable for 

the repayment of any unemployment compensation previously received when 

out of work. 

In your third question you ask whether the TEC is required to furnish 

the association administering the plan on behalf of the employers with 

information as to the amount of unemployment 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. 1887 
The Honorable Henry Rothell. page 5 (H-404) 

The TEC is a “governmental body” as that term is defined in the Act and, 

as such, is required to disclose all information it~maintains in pursuit 

of its official business unless one of the exceptions set out in Sec. 3(a) 

of the Act is applicable. 

Section 3(a)(l) of the Act excepts from mandatory disclosure information 

deemed confidential by law. Under~ Art. 5221b-9(e) of the Texas Unemployment Compensation Act the TEC is authorized to secure from employers 

any information about their employees deemed necessary to the effective 

administration of the Act and, if deemed necessary, to keep such information confidential. Information of this kind would be excepted from the 

mandatory disclosure requirements of the Open Records Act by Sec. 3(a)(l). 

But information as to the amount of unemployment compensation benefits 

paid particular individuals or groups of individuals does not fall into this 

category. It is not information about employees collected from employers, 

and therefore the TEC is not authorized to keep it confidential by Art. 5221b-9(e) 

of the Texas Unemployment Compensation Act. To our knowledge no other 

law makes information of this kind confidential, nor does it fall within any 

of the other exceptions set out in Sec. 3(a) of the Open Records Act. In 

our opinion, then, information as to the amount of unemployment 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 of levying 

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 of all remuneration paid in any medium 

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 of them depends on the number 

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

of hours actually worked during years prior to adoption of the plan. American 

Sugar Co. v. Doyal, supra; see also Friedman v. American Surety Co. of 

New York, 151 S. 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 

of levying the unemployment tax, Art. 5221b-5, V. T. C. S., and should be 

credited to employees when determining their entitlement to unemployment 

compensation benefits, Art. 5221b-1. V. T. C. S. 

Your final question is: 

If the payments made under the guaranteed annual 

income plan are deemed to be wages, who is the 

employer? 

The Texas Unemployment Compensation Act provides that an individual 

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 

of payments from the fund. Instead it is the individual members of the 

association whose contributions create and sustain the fund and for whom 

services are performed by union members. In these circumstances it is 

our opinion that the individual members of the association, rather than the 

association itself, are the “employers ” for purposes of collecting the unemployment 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 of actual employment does 

not render an individual who is out of work and 

performing no services for an employer ineligible 

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

for state unemployment compensation. Nor does 

receipt of such payments render an individual 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 of unemployment compensation 

benefits paid an individual 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