The Honorable Jackie W. St. Clair 

Commissioner 

Opinion No. H- 358 

Texas Dept. of Labor 81 Standards 

Box 12157, Capitol Station 

Austin, Texas 78711 

Re: Whether it is permissibl,e 

under the prevailing Wage 

Statute, Art. 5159a,, to include 

fringe benefits. 

Dear Commissioner St. Clair: 

Your request for an opinion on the above rubject matter poses 

the question of whether a public body, awarding any contract for public 

work on behalf of the State, or on behalf of any county, city or other 

political subdivision under Art. 5159a may include the comt of employee 

fringe benefits, such as group life insurance, group hospitalization, 

disability benefits, medical care and pensions in determining the general 

prevailing rate or per diem wager? 

.Article 5159a,Section 2,V. T. C. S., provides: 

The public body awarding any contract for public 

work on behalf of the State, or on behalf of any county, 

city and county, city, town, district or other political 

sub-division thereof, or otherwise undertaking any 

public work, shall ascertain the general prevailing 

rate of per diem wages in the locality in which the 

work is to be performed for each craft or type of workman or mechanic needed to execute the contract and 

shall specify in the call for bids for said contract, 

and in the contract itself, what the general prevailing 

rate of per diem wages in the said locality is for 

each craft or type of workman needed to execute 

p. 1628 
The Honorable Jackie W. St. Clair page 2 (H-350) 

. 

the contract, also the prevailing rate for legal 

holiday and overtime work, and it shall be mandatory upon the contractor to whom the contract is 

awarded, and upon any subcontractor under him, 

to pay no less than the said specified rates to all 

laborers, workmen, and mechanics employed by 

them in the execution of the contract. 

Section 4 defines three terms, one of which is “general prevailing 

rate of per diem wages. ” 

The term ‘general prevailing rate crf per diem 

wages’ shall be the rate determined upon as such 

rate by the public body awarding the contract, or 

authorizing the work, whose decision in the matter 

shall be final . . . . Nothing in this Act, however, 

shall be construed to prohibit the payment to any 

laborer, workman or mechanic employed on any 

public work as aforesaid or more than the said 

general prevailing rate or wages. 

The Supreme Court of Texas has held that the decision of a public 

body fixing the prevailing wage rate for a locality is final and may not be 

revi.ewed judicially. Texas Highway Commission V. El Paso Building & 

Construction Trades Council, 234 S. W. 2d 857 (Tex. 1950). 

The primary purposes of the statute are: 

. . . [T]o inform the bi&der the wage rate to be paid 

his employees and especially to protect workmen, 

laborers and mechanics from being required, if they 

accept employment to work for less than the prevailing wages paid in the county for the same class 

and character @M&Texas Highway Commission 

v. El Paso Building and Construction Trades Council, 

supra. at p. 861. 

p. 1629 
The Honorable Jackie W. St. Clair page 3 (H-350) 

In 1933, when Article 5159a was enacted, fringe benefits were 

essentially unknown. That fact alone does not, in our opinion, foreclose 

the discretionary right of a public body to determine that “fringe benefits” 

have become an important factor in determining the prevailing wage. As 

found by the United States Senate, “Fringe benefits such as group life 

insurance, group hospitalization, disability benefits, medical care, and 

pensions, were not important wage factors until World War II. . . [since 

then] welfare and pension plans have experienced a phenomenal growth, ” 

and in 1964 almost 110 million persona were relying on benefits from such 

plans. Senate Report No. 963, 2 U.S. Code Cong. and Adm. News, (88th 

Cong. 2d sess.) p. 2339 (1964) at p. 2341. The same Senate Report found 

that in many areas of the country the great majority of contractors compensate their employees in two forms; cash, and fringe benefits and that the 

“fringe benefits clearly constitute a form of wages. ” 

Therefore, the Congress specifically provided in the Davis-Bacon 

Act that the Secretary of Labor in making prevailing wage determinations 

shall include, “The rate of contribution”t&~~a welfare and pension 

pl ans. 40 U. S. C.A. Sec. 2760. An amendment to the Davis-Bacon Act 

was necessary in order to accomplish inclurion of such fringe benefits 

,because~ of the Act’s requirement that wages be paid “unconditionally. ” 

See Senate Report 963, supra. at pp. 2341-2342. The Texas Statute does 

not require that “wages ” be paid Qnconditionally, ” and hence a statutory 

amendment is not, in our opinion, essential to the establishment of ,$he 

discretionary right of a public body to determine that fringe benefits can 

be considered as properly includable within the term “wages” in Article 

5159a. 

Therefore, a public body may properly consider “fringe benefits” 

in determining a prevailing wage rate for a particul8r locale. 

The statutory definition of “prevailing wage rate” certainly does 

not per se impose restraint on the judgment of the public body in,this 

matter. 

p. 1630 
. . , 

The Honorable Jackie W. St. Clair page 4 (H-350) 

. 

Indeed there are many examples of the term “wages” being construed - 

to include employer contributions to group employee pension and welfare 

plans. Thus, in Inland Steel v. N. L. R. B., 170 F. 2d 247 (7th Cir. 1948), 

aff’d., 339 U.S. 382 (1950), the Court held that contributions to retirement 

and pension plans were included within the term “wages” within the meaning 

of Sec. 9 of the National Labor Relations Act. 29 U.S. CA., Sec. 159. 

In a similar fashion, Article 8309, V. T. C. S., a part of the Texas workmen’s 

compensation laws, defines “average weekly wages” to include an “advantage 

which can be estimated in money which the employee receives from the 

employer as a part of his remuneration.” 

An early Texas case, Byrd v. Citv of Dallas, 6 S. W. 2d 738 (Tex. 

1928) held: 

The right to participate in such a fund [pension] 

is therefore not a gratuity or donation in any sense. 

It is as much a part of the agreed compensation as 

is the mmtliystipend. (6 S. W. 2d at 741). 

Two fairly recent California Supreme Court decisions, Dunlar, v. 

Tremavne. 398 P. 2d 774 (Cal. 1965) ahd Tracy v. Contractor’s State 

License Board, 407 P. 2d 865 (Cal. 1965) reach a similwconclusion. 

See also, People v. Vetri, 131 N.E. 2d 568 (N.Y. 1955);~Educational 

Fund of Electrical Industry v. U.S., 305 F. Supp. 317 (S.D.N. Y. 1969); 

United Brick & Clay Werkers of America. AFL-CIO v. International Union 

of Diat. 50 UMW of A, 439 F. 2d 311 (8th Cir. 1971). 

SUMMARY 

Article 5159a, V. T. C. S., gives the public body 

involved in letting a contrrct for public works the 

responsibility fsr determining the “prevailing wage 

rate” in its locale for a particular class and character 

p. 1631 
,. . 

I 

. . 

. ’ 

The Honorable Jackie W. St. Clair page 5 (H-350) 

. 

of work.. In its discretion the wage set may 

include the value of “fringe benefits”’ available 

to employees of the area engaged in similar 

kinds of libor. 

Very truly yours, 

u Attorney General of Texas 

DAVID M. KENDALL, Chairman 

Opinion Committee 

.r 

p. 1632