Honorable Orville S. Carpenter Opinion No. O-2248 

Chairman and Executive Director Re: Whether or not money paid by 

Texas Unemployment Compensation Commission an employer under the "Annuities, 

Austin, Texas Insurance and Savings Program" and 

the "Accident and Sick Benefit Plan" 

and "Dismissal Wages“ constitute 

"wages" under the Texas Unemployment 

Compensation Act and the regulations 

of the Unemployment Compensation ComDear Sir: mission in pursuance thereof. 

We received your letter dated April 17, 1940, which.is self explanatory 

and reads as follows: 

"The definition of 'wages' .found in the Texas Unemployment Compensation Act (Article %21b-l7poi) is the same definition which was 

found prior to the Act's amendment on April 1, 1939. Under this 

definition of wages the Comnilssion on July 2, 1937,- adopted its ReguI.&ion 36, 'Items Included as Wages'. .Regulation 36 was superseded 

by the present Regulation 38, 'Wages,' which beca& effective by 

adoption on September 5, 1939* It, is under the statutory provision 

cited, as well as under the regulations applicable to the periods of 

time indicated, that your opinion is requested with respect to the 

fact situations which are to be presented. Does money paid by the 

corporations which are the employers, under the 'Annuities, Insurance,.and Savings Program' andthe 'Accident and Sick Benefit Plan' 

and a6 'Dismissal Wages' constitute Iwages' under‘the Texas Unemployment Compensation Act and regulations in pursuance thereof? 

This question contemplates money paid into the Fundb or Plans as 

well as money paid to individuals. 

"Annuities, Insuraucej and Saving Program 

"On January 1, 1938, the Ethyl Gasoline Corporation adopted an 

'Annuities,.Insurance, and Savings Program' for the benefit of all 

employees of the Company who were in active service on January 1, 

1938. Participation in the plan was, and is, voluntary. For the 

purposes of this program the company established a trust fund, such 

trust fund being administered by a corporate trustee. 

"Under the planall participating employees contributes by salary 

deduction authorizations asum of money not 1es.s than three per.cent 

nor more than ten per cent of current salary. To this amount the 

corporation contributes an equal sum. From these funds each 
Honorable Orville S. Carpenter, Page 2 (0-2248) 

participant allots a sum not less than two-thirds of the total 

thereof for annuities. The balance, if any, called 'savings,' 

remains as a credit in the employee's account In the trust fund. 

"A group annuity contract was entered into by the Company 

with a Life Assurance Society, under which annuities ere purchased by the Company-with the amounts allotted for such purposes by the employee. Group annuities purchaeed for a participant belong solely to him. The amount of annuity income 

payable at retirement depends, or will depend, upon the age at 

which such allotments are paid to the Assurance Society, the 

age at retirement, the form of annuity selected, and other pertinent factors. 

"Upon termination of employment, an'employee receives, or 

will receive, such paid-up deferred annuity a8 was, or shall have 

been, purchased with his own contribution, or he may elect to receive in lieu thereof cash equal to the sum of his own contributions plus interest. With respect to t&e employing company's 

coqtribution, the participant receives, or &all receive, a paidup deferred annuity which annuity has no cash surrender value. 

'90 the extent that a participant's credit balance in his 

savings account permits, it may all be used by him to purchase 

insurance or it may be withdrawn in cash; provided, however, that 

the cash withdrawal option may be exercised only after the completion of one year's continuous participation in the plan, and 

thereafter at intervals of not less than twelve months. 

"Accident ana Sick Benefit Plan 

"Under this voluntarily established plan, the company provides for the payment to eligible employees, absent on account 

of illness or accident, of benefite.equa1t.o their normal salary 

or wages for periods ofweeks ranging from one to thirteen, depending upon the employees' number of years of service. In addition to the benefits paid in accordance with the provisions of 

the plan, the company, a6 a matter of general policy, extends 

further benefits in certain meritorious cases. The company 

charges benefits paid under the plan to 'Accident and Sick Benefits - eupplemental.' 

"Thus, two types of benefitis are'avallable to.the employees: 

(1) benefits paid in accordance with the plan, and (2) the supplemental benefits paid in accordance with the. CompanY's policy. 

This plan 'is presented l,n detail in the'attached,four-page mimeographed instrument. 

"Dismiesal Wages 
. .> 

Honorable Orville S. Carpenter, Page 3 (o-2248) 

"'Dismissal wages' are amounts of money paid to employees 

of the company upon the termination of their employment. The 

company pays a discharged individual, upon his discharge, a 

sum of money over and above his regular wages, which varies in 

amount directly with the length of his service record with the 

company. There is no legal obligation on the part of the company, contractual or otherwise, to pay these dismissal wages." 

Section (0) of Article 5221b-17 of the Texas Unemployment Compensation Act, same being Acts 1936, 44th Legislature, 3rd C.S., Page 1993, Ch. 482, 

defines the word "wages" as follows: 

fl'Wages' means all remuneration payable for perso&l services, including commissions and bonuses and cash value of all 

remuneration payable in any medium other then cash. Gratuities 

customarily received by an individual in the course of his employment from persons other than his employing unit shall be 

treated as wages payable by his employing unit. The reasonable 

cash'value .of remuneration payable in any medium other than cash, 

and the reasonable amount of gratuities, shall be estimat'ed and 

determined in accorrlqn.ce with rules prescribed by the~Commiesion." 

Under the above definition of gg@s the'Commi$sion, on July 2, 1937, 

adopted Re&.ation No. .36 which reads, in-part, as.follows: 

"(2) Diemissal Wages. Payment 

dismissal wages, vacation allowance, 

Wages. 

to an employee of so-called 

or sick pay, constitutes 

“(4) Premiums on Life Insurance. Geneially ppemiuma paid 

by en employer on a policy of life. ins!xanFe covering the life 

of en employee constitute,wages If the emplpyer is not a beneficiary under the policy. However, premiuma paid by an employer 

on policies of group life l.qumnce covering the lives of his 

.employees are not wages, if the employee has no tiption to take 

the amount of the premiuma instead of accepting th6 insurance 

end has no'equity in the pol$cy {su& aB the right of assignment or the right to the surrender value on termi+ation of his 

employment." 

Regulation No. 36 was superseded by Regulation No:38 on September 

5, 1939. Regulation No., 38, contrary to Regulation.36, is silent upon.the subject of whether or not.accident and sick benefits, diemissa!$ wages, or premiums 

paid on insurance policies are wages. 

Under the Annuities, Instiance~and Savings Program we fitid that upon 

termination of employment, en empioyee receives a paid-up deferred annuity which 

was paid for with the.employee's own contribution, or the employee.may elect to 

. 
Honorable Orville S.. Carpenter, Page 4 (0-2248) 

receive in lieu thereof cash equal to the sum of the employee's own contribution: With respect to the employer's contribution, the employee receives a 

paid-up deferred annuity which has no cash surrender value and which is not 

assignable. 

To the extent that an employee's credit balance in his savings account permits, it may all be used by him-to purchase insurance or it may be 

withdrawn in cash; provided, however, that the cash withdrawal does not exceed 

one-half (l/2) of the amount in his savings account. 

As is seen from the above quoted statute, wages includes all remuneration payable for personal services. Even though the employer imposes certain 

additional conditions to enable the employee to receive the benefits from the 

employer's contribution to the trust fund, nevertheless, in view of the broad 

definition of wages as defined by statute, we are of the opinion that the employer's contributions to the trust fund are wages within the meaning of the 

above quoted statute and such contributions are subject to thexnemployment 

compensation +x+x. 

It seems that the employer, In addition to matching the employee's 

contribution, may from time to time make additional cc+trlbutions to the trust 

fund. We are unable to determine definitely whether this contribution would 

be wages since we do not know the particulars pertaining to such contributions; 

If the employee receives additional annuities, insurance, or savings from this 

additional contribution made by the employer, said contribution would probably 

be wages. If the contribution is for the purpose of supplying the money to 

meet the expenses of the actual administration of the trust fund, said contribution would not be wages. 

Under the plan in questio!i, we are of the opinion that the earnings 

of the trust fund, such a8 interest and profits on investments and dividends 

received from the insurance compar;iea, are not wages within the meaning of 

the Act and are not taxable as such. 

We find nothing in the Regulations promulgated by the Commission 

which are contrary to our conclusion above stated, 

The Accident and Sick Benefit Plan works as follows: 

Employees absent from work because of illness or accident will be 

allowed their full normal salary or wages for the number of weeks'specified 

below: 

Upon completion of 

service of 

1 year 

Full salary will be 

allowed for 

1 week 

2 years 2 weeks 

3 years 3 weeks 

4 years 4 tieeks 

5 years 5. weeks 
Honorable Orville S. Carpenter, Page 5 (o-2248) 

Upon completion of 

service of 

6 year? 

7 years 

8 years 

9 years 

10 or more years 

Pull salary will be 

allowed for' 

6 weeks 

7 weeks 

~9 weeks 

11 weeks 

13 weeks 

It appears to us that the payments under consideration are made as 

a result of the personal services rendered to the employer by the individual 

receiving them. The above benefits are determined end made in accordance with 

a. fixed policy of the employer. An employer would not pay these benefits to 

one who had not rendered some service to him. We conclude that accident and 

sick benefits, as described above, are wages within the meaning of Section 

(0) of Article 5221b-17 end contributions are due thereon. 

We find,nothing in the Regulations of the Commission which are contriry to the above holding. 

Your letter states that the employer'extends further accident end 

sick benefits to the employees In certain meritorious cases. As to these 

particular benefits, they may or may not be wages.according to the particular 

facts of each case. Should the employer pay anemployee an additional sum 

of money due to the need of the employee and said sum haa no relation to the 

duration of employment or to the salaryof the employee, It would.seem that 

such benefits would not be wages'for the performance of personal services but 

would be.an outright gift f&m the employer to then employee 

. As to these special benefits, if they are not'wages within the meening of Section (0) of Art. 5221b-17,'then Regulation.No., 36 of the Commission 

would be inapplicable as to these nartirular benefits.. 

Under the facts set out in your letter it seems that it IS the CUStom for'the employer to pay every employee certain di-amissal wages.upon terminatlon of. emp+yment. It appears that the amount of di@issal wages paid to 

a particular employee depends~upon his length of employment and the salary 

or wages that he had received. The employee,.no doubt, contemplates receiving 

these benefits ai remuneration for the personal service that he has rendered 

his employer. Certainly, no employer would pay such'money to one who had not 

rendered.some eervice 'to him. 

We might say,that the Texas Law contain&no exemption of payments 

of dismissal wages exempting then from the inclusive definition of wages. 

We conclude, therefore, that the dlsmiseal wages are ,wages within the mesning 

of the Texas Unemployment Compensation Act and contributions are due thereon, 

: 

It might be said thatSection 3 of Regulation 38, supra, is in conflict wit&what we have heretofore said in'this opinion. .Sai.d section reads 

~88 .followb: 
Honorable Orville S. Carpenter, Page 6 (o-2248) 

"Ordinarily, facilities or privilege6 furniehed by an employer to individuals in his employ are not deemed to be wages 

if such facilities or privileges are offered or furnished by 

the employer merely as a convenience to the employer or as a 

meana of promoting the health, good will, contentment or efficiency of those individuals in his employ." 

We do not believe that the above Section has any reference to the 

particular benefits or wages referred to in this opinion. We quote from a 

ruling of the Utah Unemployment Compensation Commission as follows: 

"Payments not ordinarily considered wages include * * * 

(3) facilities or privileges, such as entertainment, cafeterias, 

restaurants, medical services, or so called 'courtesy discounts' 

on purchases, furnished or offered by an employer merely as a 

convenience to his workers or as a means of promoting their 

health, good will or efficiency; * * *" 

Other states have adopted a similar regulation as to facilities or 

privileges furnished by the employer and none seem to have included accident 

and sick benefits or dismissal wages within the meaning of such regulation. 

It is not our purpose here to determine what particular "facilities or privileges" are included within Regulation No. 38. We merely hold that said Regulation has no application to the "Accident end Sick Benefit Plan" or to "Dismissal Wages." 

We trust that this Is the information desired. 

Yours very truly 

APPROVED JUL 11, 1940 

ISI Grover Sellers 

FIRST ASSISTART 

ATTORNFX GENERAL 

A!M!ORREYGENERALOFTEXAS 

By /s/ Glenn R. Lewis 

Glenn R. Lewis 

Assistant 

By /s/ Lee Shoptaw 

Lee Shoptaw 

L5i:eaw:l.m 

THIS OPINION 

CONSIDERED AND 

APPROVED IN 

LIMITED 

CONFERENCE