Court Opinion

ID: 4132876
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:31:26.583465+00
Date Added: 2024-06-11T14:33:56.074864
License: Public Domain

January     22,   1975

The Honorable Kenneth D. Caver.    M. D.               Opinion No.   H-   502
Commissioner,    Texas Department
of.Mental Health and Mental Retardation                Re:    Whether residents and
Box 12668. Capitol Station                                    patients at MHMR faci-
Austin,  Texas 78711                                          lities are entitled to the
                                                              benefits of state employees
                                                              when they engage in institu-
Dear   Dr.   Gaver:                                           tion-maintaining   labor

     You have asked several questions       related to the status of patients of
state hospitals and residents     of state schools for the mentally retarded
(hereafter collectively    referred to as “patient-worker-d’)    as employees    of
the state for the purpose of receiving the “fringe” benefits of regular state
employment.     You state correctly     that under the decision of Souder v.
Brennan.   367 F. Supp. 808 (D. C. 1973), patient-workers        of non-federal
hospitals,  homes and institutions     for the mentally retarded and mentally
ill are “employees”     covered by the minimum wage and overtime compen-
sation provisions   of the Fair Labor Standards Act (FLSA),         29 U.S. C. A.
sections 201-219    and the regulations    promulgated   thereunder,   29 C. F. R.
section 524 (providing for special minimum wages for certain handicapped
workers).    You then ask:

         1. Will patients of State Hospitals and residents of
         State Schools for the Mentally Retarded,     who are
         engaged in institutionlnaintaining    labor, be employees
         of the State of Texas and. as such, subject to the laws,
         rules and regulations    and entitled to the rights, privi-
         leges and ‘fringe’ benefits of regular State employees?

         2. Will patients of State Hospitals and residents        of
         State Schools for the Mentally Retarded,       who are engaged
         in work activities   of a Sheltered Workshop or Work Acti-
         vities Center that are not institution-maintaining     labor,
         be employees     of the State of Texas and, as such, subject
         to laws,   rules and regulations   and entitled to the rights,
         privileges   and ‘fringe’ benefits of regular State employees?

                                     p.   2260
The Honorable      Kenneth   D.       Gaver,    page 2     (H-502)

         3.  What funds are available for the use of MHMR             to
         pay wages,    overtime pay, and/or ‘fringe’ benefits
         to patient-workers?

     Your first question assumes       that the patient-workers       are engaged in
labor activity covered under the FLSA,           (“institution-maintaining”     labor)
and thus are “employees”      for FISA purposes of wages and overtime pay,
as decided in Souder.      However,     the FLSA does not preempt Texas law
in the area of establishing    entitlements     to the rights, privileges     and
“fringe” benefits of state employment.           The FLSA has been described          as
a declaration   of policy of the United States as to what constitutes          fair
labor standards and determines        minimum standards for hours and wages,
[Timberlake    v. Day & Zimmerman,          Inc. t 49 F.Supp.      28, 33 (S. D. Iowa
1943)], designed to accomplish       the statutory purpose of eliminating           ” . . .
labor conditions detrimental      to the maintenance of the minimum standard
of living necessary    for health, efficiency,       and general well-being     of
workers . . . ‘I[29 U.S. C. A. 5 202 (a)].         While the FLSA deals with
child labor, equal pay, and age discrimination,             none of the provisions
of the FLSA address employee “fringe” benefits.                Thus, regarding such
benefits,  it cannot be said that the FLSA attempts to supersede the exer-
cise of state law.

     Thus,    to determine  state law in the area of fringe benefits for patient-
workers,      we must consider the text of the various state statutory pro-
visions.

    Some of the rights, privileges         and “fringe” bs nefits of “state
employment”     include:    state woriunen’s      compensation     insurance  (V. T. C. S.,
art. 8309g); unemployment         compensation      (V. T. C. S., art. 5221b-1,    et
seq. ); sick leave,    vacations,    holidays,    emergency    leave (V. T. C. S.,
art. 6252-8a);    retirement     (V. T. C.S.,    art. 6228a); and federal old age
and survivors    insurance     (V. T. C.S.,    art. 695h).

     These statutes do not contain a general definition of~“state employ-
ment”; each has its own definition of the “employee”      or “employments”
entitled to benefits under it.   Thus, instead of a single general definition
of “state employee, ” our statutes contain a patchwork of “employee”
descriptions,   each having specific exclusions    and exceptions.   Except for
federal old age and survivors     insurance,   and unemployment    compensation
insurance,    none of these statutes expressly   exclude patient-workers   from
the persons eligible for benefits,    and none expressly   include any cate-
gory of patient-workers.

                                  ,            p.   2261
The Honorable          Kenneth D.     Gaver.       page 3     (H-502)

    A.    Workman’s         Compensation          Insurance   for State Employees.

Article   83096,       section   1 defines    “employee”      as:

              .    .   . a person
                              in the service of the state
          under an appointment or express contract of
          hire, oral or written, whose compensation      is
          paid by warrant issued by the Comptroller,
          except a person employed by the State Highway
          Department or by an institution of higher edu-
          cation subject to a separate workman’s  com-
          pensation law.

    B.    Retirement        System   for State Employees.
                              ..-
Section 3(c)(l) of article 6228a describes that the “membership”   of the
Texas Retirement    System shall be composed (in part) as follows:

               Any person who becomes an appointive officer
          or employee on or after the effective date of this
          Act shall become a member      of the Retirement                   ,
          System on the first day of employment     as a con-
          dition of employment.~   The term appointive of-
          ficer or employee shall mean a person paid a
          monthly or hourly salary from the funds of the
          State and the position occupied by such person
          must be one that subjects that person to the laws,
          rules and regulations  of the State as applicable
          to its employees.

    C.    Accumulated        Vacation    or Sick Leave.

Section 1 of article 6252-8a  provides                yet another   definition   of employees
entitled to the benefits under it:

               ‘Employee’ as used in this Act means any
          appointed cfficer or employee in a department   of
          the State who is employed on a basis or a position
          normally requiring   not less than 900 hours per
          year, but shall not include members   of the Legis-
          lature or any incumbent of an office normally

                                             p.   2262
The Honorable     Kenneth   D. Gaver,     page 4     (H-502)

        filled by vote of the people; nor persons on
        piecework basis: nor operators          of equipment or
        drivers of teams whose wages are included in
        rental rate paid the owners of said equipment or
        team: nor any person who is covered by the Judi-
        cial Retirement    System of The State of Texas;
        nor any person who is covered by the Teacher
        Retirement    System of Texas,       except persons
        employed by the Teacher Retirement            System,
        the Central Education Agency,          the Texas Rehabilita-
        tion Commission,       and classified,    administrative,
        and professional     staff members      employed by a
        State institution of higher education who have
        accumulated     vacation or sick leave,      or both,
        during such employment.

   D.   Federal   Old Age and Survivors          Insurance     for State Employees
        (OASI)

Section 1 of article 69511 defines “Employment”              and “State   Employee”   at
subsection (b) and (c) respectively.

             (b) The term ‘Employment’     means any service
        performed    by a State employee  except (1) service
        which in the absence of an agreement    entered into
        under this Act shall constitute ‘employment’     as
        defined in the Social Security Act; or (2) service
        which under the Social Security Act may not be
        included in an agreement    between the State and
        the Secretary   of Health, Education and Welfare
        entered into under this Act.

             (c)  The term ‘State Employee’ in addition to
        its usual meaning shall include elective      and
        appointive officials    of the state; and shall not
        include those persons      rendering services   in posi-
        tions the compensation      for which is on a fee basis.
        The term ‘State Employee’ shall not include any
        employees    in positions    subject to the Teacher

                                     p.   2263
The Honorable      Kenneth       D. Gaver,     page 5       (H-502)

         Retirement System except those employed by
         state departments,    state agencies, and state
         institutions as construed in their usual meaning.

The State of Texas is a party to an agreement   with the Secretary of
Health, Education and Welfare (HEW) to provide coverage        of State
and local employees under the Federal OASI pursuant to 42 U.S. C.
section 418. 42 U.S. C. section 418 provides a list of services which
would be approved for coverage    (if requested by the State), but it
excludes patient-workers.    42 U.S. C. section 418(c)(b)(B) provides:

         (6)   Such agreement        shall exclude      -

             . . . (B) service performed   in a hospital, home
         or other institution by a patient or inmate thereof.
         . . .

It appears that 42 U.S.C.      section 418 (c)(6)(B), in conjunction with
article 695h (1) (b)(2), V. T. C. S. , excludes Texas patient-workers     from
the OASI agreements      entered into by Texas with the Secretary     of HEW.

    E.   Unemployment           Compensation     Act.

   Article     5221b-17(f)(6)     defines    “employer”       in part as:

         (f)   ‘Employer’       means:

               . . .

               (6) A hospital or an institution of higher
               education (or a group of such organizations)
               l.ocated in this State and operated by this
               State or by this State and one (1) or more
               other states or by an instrumentality    thereof
               for which services     are performed  which consti-
               tute employment     . . .

However,    the same statute contains            a provision that excludes the
service performed by patient-workers               from its definition of “employment.   ”
Article  5221b-17(g)(5)(U) states:

                                            p. 2264
The Honorable     Kenneth   D.   Gaver,        page 6    (H-502)

         (5)   The term   ‘employment’         shall   not include:

               . . .

               (U) Service performed     in the employ             of a
               hospital,  if such service is performed              by a
               patient of such hospital.

Attorney   General   Opinion H-75 (1973) can be construed as suggesting that the
specific exclusion of patient-workers       in the above section was overriden by
the general election made in article 5221b-22d,        which covers all services
performed   for the state: however,     it should be noted that the portion of the
opinion which lends itself to that construction      is dicta, and special note
should be made that the Legislature       , evincing  a legislative  intent not to
treat the services    that patient-workers     render as employment,      did exclude
them from the employees       eligible for unemployment       compensation   in
article 5221b-17(g)(5)(U).

    G.   The Texas     Mental    Health Code.

The Texas Mental Health Code, article 5547-1,     et seq.,  does not address
itself to any employment   relationship between the State and any of the
patients or residents described in this opinion.   Section 2. OlA of article 554’
202, V. T. C. S., provides for employees    for MHMR:

             . . . The number of employees    and the salaries
         shall be as fixed in the general appropriations  Bill.

If the Legislature had intended to provide for patient-workers     as “employees
it could have done so by way of the general appropriations    bill, in confor-
mity with article 5547-202.

     This survey of the various fringe benefit statutes shows that the Legis-
lature has not created a general definition of “state employee”            or otherwise
defined that employment       relationship.     The most logical explanation for
legislative inaction on the question of patient-worker         eligibility for benefits
is that the Legislature    never considered      patient-workers    to be State employe
and therefore,    had no reason to deal with them in that capacity.           The Legis-
lature did consider patient-workers         in their capacity as patients but not as
employees,     in article II, se&Ion 3(d) of the Appropriations         Act for fiscal

                                          p.    2265
The Honorable    Kenneth D.   Gaver,        page 7   (H-502)

year 1974-1975,  (Acts 1973, 63rd Leg.,  ch. 659,~.            1786 at 1885) which
provides a limited gratuity to such persons:

             d. Patient or Student Assistance.       Subject to the
        approval and rules and regulations      of the governing
       .boards covered by this Section,patients       or students
        in any state hospital or special school under the juris-
        diction of the boards, who are assisting       in the oper-
        ation of the institutions as part of their therapy,
        may receive gratuities out of any funds available to
        the respective   institutions  in amounts not to exceed
        five dollars ($5) per week for each such student or
        patient participating.      (Emphasis added)

     The Texas Legislature   used the same language in the Appropriation
Acts for fiscal years 1970-71 and 1972-73.       Before 1970-71,  the Legis-
lature employed different language to provide for patient or student
assistance.    For example,   the language of the Appropriation    Act for
fiscal 1968-69   (Acts 1967, 60th Leg.,   R. S.,  ch. 784, p. 2097 at 2137)
is:

             Sec. 18. Patient or Student Employment.         Subject
        to the approval and rules and regulations      of the governing
        boards,   patients or students in any State Hospital or
        Special School under the jurisdiction    of the board, who are
        assisting  in the operation of the institutions,    may be paid
        out of any funds available to the respective     institutions an
        amount not to exceed Two Dollars ($2) per week for each
        working student or patient.    (Emphasis     added)

     Thus, before fiscal 1970-71,  patient-workers    were paid a “compen-
sation” for “Patient or Student employment”      instead of a gratuity.     Patient-
workers were paid this “compensation”       for “Patient or Student employ-
ment” instead of a gratuity.    Patient-workers    were paid this “compensation”
beginning with fiscal. 1960-61 (the first time the Legislature    appropriated
money for patient-workers)    and again in fiscal years 1962-63,     1964-65,
1966-67,  and 1968-69.   The switch from a compensation      to a “gratuity”
is evidence that the Legislature   intended to treat patient-workers     as
non-employees    by removing all doubt about their non-employee       status.

                                       p.   2266
The Honorable   Kenneth D.    Gaver,        page 8   (H-502)

     We note that article II, section 3d of the current Appropriations  Act
limits only the amount of the gratuity a patient-worker   can receive.   That
section does not, in our opinion, affect the status of patient-workers   as
“employees’.’ for FLSA purposes of wage and overtime      compensation,   nor
limit their compensation    under FLEA standards to $5 per week.

    Section 3d is a clear expression  of the legislative intent of treating
patient-workers   as non-employees   and supports the conclusion that
although Souder brings them within FLSA for wage and hour purposes,
they do not thereby become “employees ” for the purpose of statutory
fringe benefits of state employment.

    Furthermore,    to the extent that the fringe benefit statutes are ambiguous
we believe they are subject to the rule of statutory construction    stated
in State v. Arkansas   Dock and Channel Co.,     365 S. W. 2d 220, 224 (Tex.
Civ. App.,  -- San Antonio 1963, err. refd. ) that:

        Where an Act of the Legislature      is ambiguous,  the
        Courts are inclined to follow the administrative
        construction    of the Act over a long period of time
        by the officials charged with its administration.

    The Department of Mental Health and Mental Retardation has consistently
taken the position that no patients of state hospitals or students of state
schools are state employees     for fringe benefits purposes.

     In addition, there has been a long standing custom of treating Texas
patient-workers    as non-employees.      The authority of the State to utilize
patient labor has been judicially    recognized  since Clough v. Worsham,
74 S. W. 350 (Tex. Ct. App. --1903,     writ refd).

     Thus, given the expression   of legislative   intent in several appropriations
acts and the long standing administrative      construction,   it is our opinion that
patient-workers   engaged in institution-maintaining      labor are not employees
of the State for fringe benefits purposes.

    For reasons outlined above in response to your first question,       we
also answer your second question negatively.      Patient-workers    engaged in
work activities   of a Sheltered Workshop or Work Activities     Center that
are not institutionmaintaining   labor are not state employees    for fringe
benefit purposes even though they may be considered as employees          for

                                       p.   2267
The Honorable      Kenneth D.     Gaver,    page 9     (H- 502)

purposes of the FISA and the regulations promulgated               thereunder.
29 C. F. R. 5 525 (Employment of Handicapped Clients              in Sheltered
Workshops).

    The answer to your final questionis     that the necessary specific
appropriations    for the payment of wages and overtime pay to FLSA-
covered patient-workers     are available to MHMR from a number of
appropriated   items in the current Appropriations    Act.

    Article   3.   section   44 of the Texas    Constitution   provides   in part
that:

             The Legislature    shall.   . . [not] grant. by
        appropriation    or otherwise,    any amount of
        money out of the Treasury       of the State, to any
        individual,   on a claim,   real or pretended,
        when the same shall not have been provided for
        by pre-existing    law; nor employ anyone in the
        name of the State, unless authorized by pre-
        existing law.

The pre-existing  law for payment of minimum wages and overtime
pay to FLSA-covered    patient-workers      is supplied by the FLSA. See
Attorney General Cpinion M-341      (1969).

    Section 6 of article 8 of the Texas Constitution provides that
no money shall be drawn from the Treasury       but in pursuance of specific
appropriations  made by law.     However,   in National Biscuit Co. v. State,
135 S. W.2d 687, 693 (Tex.Sup.     1940). the Court stated:

             . . . , one of the provisions of Section 6 of
         Article 8 of our Constitution requires  all appropria-
         tions of money out of the State Treasury    to be
         specific.  It is settled that no particular    form of
         words is required to render an appropriation         specific
         within the meaning of the constitutional      provision
         under discussion.     It is sufficient if the Legis-
         lature authorizes   the expenditure by law, and specifies
         the purpose for which the appropriation       is made . . .

                                           p. 2268
The Honorable   Kenneth   D.   Gaver,        page 10   (H-502)

    The necessary   items of specific appropriation    for payment of wages
and overtime pay to patient-workers     are available in a number of cate-
gpries of the current Appropriation    Act.   See, for example,   the various
items authorizing  “unclassified  personnel-r       “temporary  labor. ”

    In addition, the special provisions   of article II of the Appropriation
Act  empower the h4HMR Board to allocate funds from a number of very
broad categories,   including the following:  unexpended balances,     gifts,
donations and federal grants, [Acts 1973. 63rd Leg.,      ch. 659, at p. 1880,
sections 2(c)(d)] and line item 13 for the Central Office,    Departments
of Mental Health and Mental Retardation,     (Acts 1973, 63rd Leg. , ch. 659,
at p. 1827).

     The special provisions of article II also provide for the hiring of
hourly workers to be paid out of the appropriations   for salaries  of
classified positions:

            It is further provided that appropriations   for
        salaries   of classified positions may be used to pay
        the wages of hourly workers when the utilization of
        such personnel is in the best interest of an eco-
        nomical and efficient program.      [Acts 1973, 63rd Leg.,
        ch. 659, at p. 1879, ,section 2(a)(4)].

     Thus,  depending on administrative     considerations and the fiscal
condition of MHMR.    sufficient flexibility has been provided by the Legis-
lature for the commitment     of MHMR funds to meet FLSA minimum wage
and overtime pay monetary obligations.       Since, we conclude that such
patient-workers   are not “state employees ” for fringe benefit purposes
we do not need to discuss the source of funding for any such state
benefits.

                          SUMMARY

             The FLSA does not preempt Texas law in the area
        of establishing   entitlements to the rights, privileges   and
        “fringe ” benefits of state employment.      Patient-workers
        of a state hospital or residents of a state school for the

                                        p.    2269
The Honorable   Kenneth D.   Gaver,    page 11 (H-502)

       mentally retarded whether performing      institution-
       maintaining labor or engaged in activities     of a
       sheltered workshop or a work activities      center are
       not state “employees,   ” for fringe benefit purposes.
       The necessary   specific appropriations    for the pay-
       ment of wages and overtime pay to patient-workers
       covered by the FLSA are available to MHMR from a
       number of appropriated     items in the current 1974-1975
       Appropriations  Act.

                                         Very   truly yours,

                                         Attorney   General    of Texas

-..._
APPROVED:

   \
he%&
DAVID M.    KENDALL,    First   Assistant

C. ROBERT HEATH.    Chairman
Opinion Committee .

                                  p.   2270