April 20,200O 

The Honorable Michael P. Fleming 

Harris County Attorney 

1019 Congress, 15th Floor 

Houston, Texas 77002-l 700 

Opinion No. JC-0210 

Re: Whether a member of the board of managers 

of a hospital district must abstain in matters 

involving prevailing wage disputes under chapter 

2258 of the Government Code (RQ-0148-JC) 

Dear Mr. Fleming: 

You ask whether a member of the Harris County Hospital District’s Board of Managers (the 

“Board’) who is President of the Harris County AFL-CIO Council (the “Council”) should abstain 

t?om voting on alleged violations of the prevailing wage law, TEX. GOV’T CODE ANN. ch. 2258 

(Vernon 2000). Chapter 171 ofthe Local Government Code does not apply to the Board member’s 

participation in these matters and therefore does not require him to abstain from voting on alleged 

violations of the prevailing wage law. 

The Harris County Hospital District (the “District”), a countywide hospital district 

established pursuant to chapter 281 of the Health and Safety Code, is a political subdivision. See 

TEX.HEALTH&SAFETYCODEANN. 5 281,02l(c)(Vemon 1992);Tex.Att’yGen. Qp.No.JM-1006 

(1989) at 6. Your question relates to complaints to the Board about violations of the prevailing wage 

act, TEX. GOV’T CODE ANN. ch. 2258 (Vernon 2000), which entitles workers employed on a public 

work by or on behalf of the state or a political subdivision to receive “not less that the general 

prevailing wage rate of per diem wages for work of a similar character in the locality in which the 

work is performed.” Id. 5 2258.021(a). The purpose of this statute is (1) to inform the 

bidder/contractor ofthe wages he must pay his employees engaged in work on public contracts, and 

(2) to protect the workman from working at rates below the prevailing wages in the locality. 

Cullipher v. Weather-by-Godbe Constr. Co., Inc., 570 S.W.2d 161,164 (Tex. Civ. App.-Texarkana 

1978, writ ref d n.r.e.). The public body awarding the contract for a public work determines the 

general prevailing wage rate to be paid by the contractor and subcontractors and includes the wage 

rates in the call for bids and the contract itself. TEX. GOV’T CODE ANN. $9 2258.022; .023 (Vernon 

2000). The contractor who is awarded the contract and its subcontractors must pay not less than the 

prevailing wage determined by the public body to the workers it employs in executing the contract. 

Contractors and subcontractors must keep records of wages paid each employee, and these are open 

for inspection by officers and agents of the public body. Id. $2258.024. 
The Honorable Michael P. Fleming - Page 2 (JC-0210) 

A contractor or subcontractor that violates the prevailing wage requirement must pay the 

public body a monetary penalty of $60 for each worker employed for each calendar day or part of 

a calendar day, and the money collected for this purpose is used to pay the costs of administering 

the law. Id. 5 2258.023. The public body shall “take cognizance” of claims that the contract has 

been violated. Id. 5 2258.05 1. On receiving information, including a complaint by a worker, about 

an alleged violation of the prevailing wage law, the public body “shall make an initial determination 

as to whether good cause exists to believe that the violation occurred,” and shall give written 

notification to the contractor or subcontractor and any affected worker of its initial determination. 

Id. 5 2258.052. The public body must retain any amount due under the contract pending a final 

determination of the violation and shall use these amounts to pay the worker the difference between 

the amount the worker received in wages and the amount he should have received at the prevailing 

wage rate. Id. $9 2258.052, ,056. 

The contractor or subcontractor and an affected employee have until the 15th day after the 

public body makes its initial “good cause” determination to resolve any issues relating to the alleged 

violation of the prevailing wage law. Id. 5 2258.053. If they are unable to resolve an issue by 

agreement, including a penalty owed to a public body or an affected worker, the issue “shall be 

submitted to binding arbitration.” Id. The public body is not a party to the arbitration. Id. The 

arbitrator’s decision and award is final and binding and may be enforced in any court of competent 

jurisdiction. Id. § 2258.055. 

You state that allegations have been made that the prevailing wage law has been violated at 

some District construction sites, and attorneys for some of the contractors have asserted that the 

Board member who is president of the Council has a potential conflict of interest with respect to 

addressing these complaints. Letter from Honorable Michael P. Fleming, Harris County Attorney, 

to Honorable John Comyn, Attorney General of Texas (Nov. 15, 1999) (on tile with Opinion 

Committee) [hereinafter “Fleming Letter”]. You ask whether the Board member has a conflict of 

interest under chapter 17 1 of the Local Government Code so that he must abstain from voting on 

matters involving prevailing wage complaints under chapter 2258 of the Government Code in the 

following cases: 

1. The local labor union is affiliated with the Harris County 

AFL-CIO Council and has tiled a complaint on behalf of an 

affected worker and is pursuing the complaint on the worker’s 

behalfl.] 

2. The local labor union has tiled a complaint on behalf of an 

affected worker and is pursuing the complaint on the worker’s 

behalf, but the union is not affiliated with the Harris County 

AFL-CIO Council[.] 

Id. at 2. 
The Honorable Michael P. Fleming - Page 3 (JC-0210) 

Chapter 171 ofthe Local Government Code regulates the manner in which local government 

officials may transact business with the public agencies they serve. DaNas County Flood Control 

Dist. No. I v. Cross, 815 S.W.2d 271, 277 (Tex. App.-Dallas 1991, writ denied). Members ofthe 

Hospital District Board are “local public officials” within this statute. TEX. LOC. GOV’T CODE ANN. 

5 17l.OOl(l)(Vemon 1999) (“1ocalpublicofticial”includes amemberofthegovemingbodyofany 

district). Under this law, a local public official with a substantial interest in a business entity is 

prohibited from participating in a vote or decision affecting the business entity if it is reasonably 

foreseeable that the action would economically benefit the business entity. Id. 5 171.004. A 

“business entity” “means a sole proprietorship, partnership, firm, corporation, holding company, 

joint-stock company, receivership, trust, or any other entity recognized by law.” Zd. 5 171.001(2). 

Our threshold question is whether the Board member who is president of the Council has 

a “substantial interest” in a business entity affected by decisions of the Board. The Council is “the 

umbrella organization for unions in the Harris County area.” Brief from Richard Levy, Deats & 

Levy, P.C., to Honorable John Comyn, Attorney General ofTexas, at 1 (Jan. 19,200O) (on file with 

Opinion Committee) [hereinafter “Levy Brief’]. It is composed of delegates from local unions 

affiliated with the AFL-CIO or with certain other AFL-CIO-affiliated entities noted in its 

constitution. See Fleming Letter, Exhibit A, Harris County AFL-CIO Council Constitution, Art. II 

[hereinafter “Council Constitution”]. An executive board, a president, and other officers are elected 

from among the delegates. Id. It is supported by a per capita tax assessed against the member 

unions. Levy Brief, supra, at 2. You state that his union receives membership fees from some of 

the affiliated local unions involved in the prevailing wage dispute. Fleming Letter, supra, at 2. 

We will assume for purposes of this opinion that the Council is a “business entity” within 

chapter 171 oftheLocalGovernment Code. S~~TEX.LOC.GOV’TCODEANN. 5 171.001(2) (Vernon 

1999) (“business entity” includes “any other entity recognized by law”). The Board member will 

have a substantial interest in the Council if he has an ownership interest that exceeds the percentage 

of stock or the dollar amount stated in the statute or if “funds received by the person from 

the business entity exceed 10 percent of the person’s gross income for the previous year.” Id. 

5 171.002(a). See also id. 5 171.002(c) (“substantial interest” of relative within the first degree of 

consanguinity or afftnity is attributed to the local officer). The Council is not subject to ownership 

interests within section 171.002(a) ofthe Local Government Code, and the Board member does not 

receive any compensation for serving as president of the Council. See Fleming Letter, supra, at 2; 

Levy Brief, supra, at 2; Council Constitution, Art. XI (sets salary of Secretary Treasurer and 

provides that delegates representing the Council will be paid for lost time and receive per diem at 

a rate of $25 when out of town and $35 when out of state). Based on the information you have 

provided, we conclude that the Board member in question does not have a “substantial interest” in 

the Council for purposes of chapter 171 of the Local Government Code. 

You note, however, that a public officer may indirectly receive compensation from a business 

entity, citing Cross, 815 S.W.2d 271, and inquire “whether it may still appear that the Board 

Member is indirectly receiving financial benefits from voting on prevailing wage disputes.” Fleming 
The Honorable Michael P. Fleming - Page 4 (JC-0210) 

Letter, supra, at 3. You state that the Board member in question has been actively monitoring 

District construction sites to ensure compliance with the Prevailing Wage Act. Id. 

Cross addressed a conflict of interest under chapter 171 that arose when the Dallas County 

Flood Control Dist. No. 1 bought an easement in land from the district’s president. The president 

recused himself as required by chapter 171 of the Local Government Code, but two members of the 

district board who voted for the purchase had indirectly received large cash payments from the 

president. Cross, 815 S.W.2d at 280-82. Although the president did not make these payments 

directly to the other two officers, the evidence showed that he had “funneled” the money through 

third parties to the other officers. Id. The court determined that the local public officers had a 

substantial interest in the business entity because the evidence showed that the requisite amount of 

funds moved from the entity to the officers. See Cross v. Dallas County Flood Control Dist. No. I, 

773 S.W.2d 49, 55 (Tex. App.-Dallas 1989), appeal after remand, Dallas County Flood Control 

Dist. No. I v. Cross, 815 S.W.2d 271 (Tex. App.-Dallas 1991, writ denied) (considering summary 

judgment evidence). Your request letter does not allege that the Council has transferred, directly or 

indirectly, any money to the Board member in question. Based on the information you have 

provided us, the Board member has no financial interest in the Council and chapter 171 of the Local 

Government Code does not prevent him from participating in “good cause” determinations of 

prevailing wage complaints under chapter 2258 of the Government Code. Chapter 171 does not 

prevent the Board member from participating in and voting on a “good cause” determination, 

regardless of whether the complaining labor union is affiliated with the Council. 
The Honorable Michael P. Fleming - Page 5 (JC-0210) 

SUMMARY 

A member of the Harris County Hospital District Board of 

Managers who is the unpaid President ofthe Harris County AFL-CIO 

Council does not have a “substantial interest” in the Council for 

purposes ofchapter 171 ofthe Local Government Code. Chapter 171 

therefore does not bar him from participating in the Board’s “good 

cause” determinations of complaints under the Prevailing Wage Act, 

TEX. GOV’T CODE ANN., ch. 2258 (Vernon 2000), regardless of 

whether the complaining labor union is affiliated with the Harris 

County AFL-CIO Council. 

Attorney General of Texas 

ANDY TAYLOR 

First Assistant Attorney General 

CLARK RENT ERVIN 

Deputy Attorney General - General Counsel 

ELIZABETH ROBINSON 

Chair, Opinion Committee 

Susan L. Garrison 

Assistant Attorney General - Opinion Committee