Court Opinion

ID: 4132079
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:22:46.794059+00
Date Added: 2024-06-11T14:33:34.259279
License: Public Domain

The Attorney               General of Texas
                                           December   22,    1978
JOHN L. HILL
Attorney General

                   Honorable Joseph N. Murphy, Jr.                  Opinion No. H- 1203
                   Executive Director
                   Employees Retirement System                      Re: Whether the state or a
                     of Texas                                       political subdivision may estab-
                   P. 0. Box 12337, Capitol Station                 lish a special program to make
                   Austin, Texas 78711                              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:

                                                 P-   5129
Honorable Joseph N. Murphy, Jr.      -   Page 2        (H-1303)

           [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 specif-
           ically 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 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:

            [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.”

&at993.     (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

                                         P-     5130
Honorable Joseph N. Murphy, Jr.    -   Page 3      (H-13031

           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 per-
           formed 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:

                                       P-   5131
Honorable Joseph N. Murphy, Jr.    -    Page 4     (H-1303)

           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.

                                            Attorney General of Texas

APPROVED:

Opinion Committee   ’

                                       P-   5132