Honorable

OrvilleS. 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 BenefitPlan" 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 letterdatedApril 17, 1940, which.isself explanatory and reads as follows:

"The definition

of 'wages'

.found in the Texas UnemploymentCompensation

Act (Article

%21b-l7poi) is the same definition which was foundprior 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 .Regulation 36 was superseded by the present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 periodsof time indicated,

that your opinionis 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 BenefitPlan' 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 SavingProgram
"On January 1, 

### 1938, the Ethyl Gasoline Corporation

adoptedan 'Annuities,.Insurance, and Savings

Program' for the benefitof 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 programthe company established

a trust fund, such trust fund being administered by a corporate

trustee.
"Underthe planall participating employees

contributes

by salary deduction

authorizations

a sum of money not 1es.s than three per.cent nor more than ten per cent of currentsalary. To this amount the corporation

contributes

an equal sum. From these funds eachHonorable OrvilleS. Carpenter, Page 2 (0-2248)

participant

allotsa sum not less than two-thirds of the total thereof for annuities. The balance,if any, called 'savings,' remainsas a credit in the employee's account In the trust fund.

"A group annuitycontract was enteredinto by the Company with a Life Assurance Society,

underwhich annuities ere purchased by the Company-with the amounts

allotted

for suchpurposes by the employee. Group annuities purchaeed

for a participant belong solelyto him. The amount of annuity income payableat 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 otherpertinent factors.
"Upontermination

of employment,

an'employee

receives,

or will receive,such paid-updeferred annuity

a8 was, or shallhave 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 respectto t&e employing company's coqtribution,

the participant

receives,

or &all receive,

a paidup deferred

annuity

which annuityhas no cash surrender value.
'90 the extentthat 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 completionof one year's continuous participation

in the plan, and thereafter

at intervals

of not less than twelvemonths. "Accident

ana Sick Benefit

Plan
"Underthis voluntarily established

plan, the company

provides for the paymentto eligible employees,

absent on account of illness

or accident,

of benefite.equa1t.o their normal salary or wages for periods ofweeks rangingfrom one to thirteen,depending

upon the employees' number of years of service. In additionto 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-pagemimeographedinstrument.
"Dismiesal Wages. .>

Honorable

OrvilleS. Carpenter, Page 3 (o-2248)

"'Dismissal

wages'are amountsof 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 lengthof his service recordwith 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 UnemploymentCompensation Act, same being Acts 1936, 44th Legislature, 3rd C.S.,Page 1993, Ch. 482, definesthe word "wages" as follows: fl'Wages'

means all remuneration payable for perso&l services, including

commissions and bonusesand cash value of all remuneration

payablein any medium other then cash. Gratuities customarily

received

by an individual

in the course of his employmentfrom personsother than his employing unit shall

be treatedas wages payable by his employing

unit. The reasonable cash'value

.of remuneration

payable in any medium other than cash, and the reasonable

amountof gratuities, shallbe estimat'ed

and determined

in accorrlqn.ce

with rulesprescribed 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) Premiumson Life Insurance. Geneially ppemiuma

paid by en employer

on a policy of life. ins!xanFe

covering

the life of en employeeconstitute,wages If the emplpyeris not a beneficiary

under the policy. However, premiuma

paid by an employer on policiesof 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 premiumainsteadof accepting th6 insurance end has no'equityin 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 silentupon.thesubject of whether or not.accident and sick benefits, diemissa!$

wages, or premiums paid on insurance

policies

are wages. Under the Annuities, Instiance~and

Savings

Programwe fitid

that upon termination

of employment,

en empioyee

receives

a paid-updeferred annuity

which was paid for with the.employee's own contribution,

or the employee.may elect to

.Honorable OrvilleS..

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-updeferred

annuity

which has no cash surrender value and which is not assignable.

To the extentthat an employee's credit balance in his savingsaccountpermits,it may all be used by him-topurchaseinsurance or it may be withdrawnin 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 personalservices. Even though the employer imposescertain additional

conditions

to enablethe employee to receivethe benefitsfrom 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 opinionthat the employer'scontributions to the trust fund are wages within the meaningof 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

whetherthis contribution would be wages sincewe do not know the particulars pertaining

to such contributions; If the employee

receives

additional

annuities,

insurance, or savingsfrom this additional

contribution

made by the employer, said contribution

would probably be wages. If the contribution is for the purposeof supplying the money to meet the expenses

of the actualadministration of the trust fund, said contributionwould 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 profitson investments and dividends received

from the insurance

compar;iea,

are not wages within the meaningof the Act and are not taxableas such.

We find nothing in the Regulations promulgated

by the Commission which are contrary to our conclusion

above stated,
The Accidentand Sick BenefitPlan 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 serviceof 1 year Full salary will be allowedfor 1 week 2 years 2 weeks 3 years 3 weeks 4 years 4 tieeks 5 years 5. weeksHonorable OrvilleS. 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 allowedfor' 6 weeks 7 weeks ~9weeks 11 weeks 13 weeks

It appearsto us that the payments under consideration are made as a result of the personalservices rendered

to the employer

by the individual receiving

them. The abovebenefits are determined

end made in accordance with a. fixedpolicy of the employer. An employer would not pay these benefits to one who had not renderedsome service to him. We conclude that accident

and sick benefits,

as described

above,are wages withinthe meaningof 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 statesthat the employer'extends furtheraccident

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

. As to these special benefits,

if they are not'wages withinthe 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'theemployer to pay every employee certain

di-amissal

wages.upon

terminatlon of.

emp+yment. It appearsthat 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 personalservice 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 OrvilleS. Carpenter, Page 6 (o-2248)

"Ordinarily,

facilities

or privilege6

furniehed

by an employer to individuals in his employ are not deemedto be wages if such facilities

or privileges

are offeredor furnished by the employer

merely as a convenience to the employer

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

We do not believethat 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

merelyas a convenience

to his workersor as a means of promoting their health,good will or efficiency; * * *"
Other states

have adopteda similar regulation

as to facilities

or privileges

furnished

by the employer

and none seem to have included accident and sickbenefitsor dismissal wages within the meaningof such regulation. It is not our purposehere to determine what particular"facilities or privileges"are included withinRegulation

No. 38. We merelyhold that saidRegulationhas no application to the "Accident

end Sick BenefitPlan" or to "DismissalWages."

We trust that this Is the information desired.

Yours very truly

APPROVED

JUL 11, 1940

ISI GroverSellers
FIRSTASSISTART ATTORNFX

GENERAL A!M!ORREYGENERALOFTEXAS

By /s/ GlennR. Lewis

GlennR. Lewis Assistant

By /s/ Lee Shoptaw

Lee Shoptaw
L5i:eaw:l.m
THIS OPINION CONSIDERED

AND APPROVED IN LIMITED CONFERENCE