The Attorney General of Texas 

December 22, 1978 

JOHN L. HILL 

Attorney General 

Honorable Joseph N. Murphy, Jr. 

Executive Director 

Employees Retirement System 

of Texas 

P. 0. Box 12337, Capitol Station 

Austin, Texas 78711 

Opinion No. H- 1203 

Re: Whether the state or a 

political subdivision may establish a special program to make 

payments to an employee on 

account of sickness. 

Deer Mr. Murphy: 

You ask: “May the State or any of its political subdivisions establish a 

special, separate, program to make payments to an employee on account of 

sickness, such payments not being e continuation of wages?” Your question 

pertains to the relationship of sick pay to “wages” as that term is used in the 

Social Security Act and as it has been interpreted by the Secretary of the 

Department of Health, Education, and Welfare. The inclusion or exclusion of 

amounts paid public employees as “wages” determines the contribution to be 

made by public employers end employees, and the rate of benefits to be 

received ,by the employee. 

The Social Security Act defines wages of public employees to exclude 

sick pay as follows: 

[Tlhe term “wages” means remuneration paid . . . for 

employment . . . except that . . . such term shall not 

include - 

. . . . 

fb) The amount of any payment . . . made to . . . en 

employee . . . under a plan or system established by an 

employer which makes provision for his employees 

generally . . . on account of . . . sickness or accident 

disability. . . . 

42 U.S.C. S 409. 

The Secretary of Health, Education, and Welfare has interpreted this 

exclusion as follows: 

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[Playments made by a governmental entity to en employee 

on sick leave are excluded from “wages” only if there is 

legal authority for the employer to make payments specifically on account of sickness es distinguished from 

authorization to merely continue salary payments during 

periods of absence due to illness. 

SSR 72-56 (19721. (Compere the Commissioners of Internal Revenue’s Rev. Rul. 

65-275 (19651, applicable to exclusion of sick pay in <private sector). The 

Secretary’s interpretation of the sick pay exclusion in this manner was upheld in 

State of New Mexico v. Weinberger, 517 P.2d 989 (10th Cir. 1975), cert den., 423 

U.S. 1051 (1976). The court interpreted the Secretary’s interpretation and clarified 

the matter as follows: 

&at993. 

[Tlo be excluded from “wages”, sick leave payments must be 

paid solely s account g sickness. Such payments by a 

State - as opposed to e mere continuation of wages during 

periods of absence due to illness - would allegedly amount 

to an improper “donation” of State funds absent express 

w authority for the State to appropriate funds for such 

use. . . . 

. . . . 

If . . . the State here has no authority to make “payments 

on account of sickness” such es would qualify to be excluded 

from “wages” under the Act, we hold thet the Secretary has 

the nuthority to bar the exclusion from “wages” of such 

payments irregerdless of how they ere denominated or 

treated under the State’s “plan.” 

(Footnote omitted, emphasis in original). 

With this clarification of the context in which your question is posed, we look 

to Texas law on the subject. Pertinent provisions of article 3 of the Texas 

Constitution are as follows: 

Sec. 44. The Legislature shall provide by law for the 

compensation of all officers, servants, agents and public 

contractors, not provided for in this Constitution, but shall 

not grant extra compensation to any officer, agent, servant, 

or public contractors, after such public service shall have 

been performed or contract entered into . . . : nor grant, by 

appropriation or otherwise, any amount of money out of the 

Treasury of the State, to any individual, on a claim, real or 

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pretended, when the same shell not have been provided for 

by pre-existing law. . . . 

Sec. 51. The Legislature shall have no power to make eny 

grant or authorize the making of any grant of public moneys 

to any individual, association of individuals, municipal or 

other corporations whatsoever. . . . 

Sec. 52. inhe Legislature shall have no power to authorize 

any county, city, town or other political corporation or 

subdivision of the State to lend its credit or to grant public 

money or thing of value in aid of, or to any individual, 

association or corporation whatsoever. . . . 

Sec. 53. The Legislature shall have no power to grant, or to 

authorize any county or municipal authority to grant, any 

extra compensation, fee or allowance to e public officer, 

agent, servant or contractor, afler service has been 

rendered, or a contract has been entered into, and performed in whole or in pert; nor pay, nor authorize the 

payment of, any claim created against any county or 

municipality of the State, under any agreement or contract, 

made without authority of law. 

It is well established that these constitutional provisions do not prohibit the 

payment of benefits to employees under the terms of e contract of employment, or 

the expenditure of pub1 v. City of Dallas. 6 

S.W.2d 738 (Tex. 1928); 36 S.W.2d 653 (Tex. 

Civ. App. - Corpus Ch alveston v. Landrum, 

533 S.W.2d 394 (Tex. Civ. App. ref’d n.r.e.); Devon 

v. City of San Antonio, 443 S.W.?d 598 (Tex. Civ. App. - Waco 1969, writ a 

City of Orange v. Chance, 325 S.W.2d 838 (Tex. Civ. App. - Beaumont 1959, no 

writ); Attorney General Opinions H-797, H-786 (1976); H-336 (1974); M-836 (19711; 

ww-215 0957); O-4140 (i94i). 

It is our opinion that sections 44, 51, 52, or 53 of article 3 of the Texas 

Constitution do not prohibit legislative authorization of an employment agreement 

between the state or R political subdivision and its employees for payment to be 

made’ to en employee under a plan or system established by the employer which 

makes provision for the employees or e class of employees generally on account of 

sickness or accident disability. 

In City of Orange v. Chance, the issue was whether section 53 of article 3 of 

the Constitution prohibits payment of money for accumulated sick leave under a 

statute after severance of employment. The court described “sick leave” as 

follows: 

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It wes an emolument or grant which would help the 

employee if during his employment he was unable to work 2 

account of sickness. . . . 

Id. et 841. (Emphasis added). The court also said that the method or time of 

payment wes not significant. Thus, we believe it is clear that the Constitution does 

not prohibit the establishment of a public employee sick leave plan or system which 

meets the precise requirements of the Secretary of Health, Education, end 

Welfare’s interpretation in SSR 72-56 (1972). 

SUMMARY 

Sections 44, 51, 52, or 53 of article 3 of the Texas 

Constitution do not prohibit the state or a political 

subdivision from establishing a plan or system for sick leave 

payments for its employees. 

APPROVED: 

Attorney General of Texas 

Opinion Committee ’ 

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