Untitled Texas Attorney General Opinion

The Honorable Jackie W. St. Clair Opinion No. H- 358 Commissioner Texas Dept. of Labor 81 Standards Re: Whether it is permissibl,e Box 12157, Capitol Station under the prevailing Wage Austin, Texas 78711 Statute, Art. 5159a,, to include fringe benefits. Dear Commissioner St. Clair: Your request for an opinion on the above rubject matter poses the question of whether a public body, awarding any contract for public work on behalf of the State, or on behalf of any county, city or other political subdivision under Art. 5159a may include the comt of employee fringe benefits, such as group life insurance, group hospitalization, disability benefits, medical care and pensions in determining the general prevailing rate or per diem wager? .Article 5159a,Section 2,V. T. C. S., provides: The public body awarding any contract for public work on behalf of the State, or on behalf of any county, city and county, city, town, district or other political sub-division thereof, or otherwise undertaking any public work, shall ascertain the general prevailing rate of per diem wages in the locality in which the work is to be performed for each craft or type of work- man or mechanic needed to execute the contract and shall specify in the call for bids for said contract, and in the contract itself, what the general prevailing rate of per diem wages in the said locality is for each craft or type of workman needed to execute p. 1628 The Honorable Jackie W. St. Clair page 2 (H-350) . the contract, also the prevailing rate for legal holiday and overtime work, and it shall be manda- tory upon the contractor to whom the contract is awarded, and upon any subcontractor under him, to pay no less than the said specified rates to all laborers, workmen, and mechanics employed by them in the execution of the contract. Section 4 defines three terms, one of which is “general prevailing rate of per diem wages. ” The term ‘general prevailing rate crf per diem wages’ shall be the rate determined upon as such rate by the public body awarding the contract, or authorizing the work, whose decision in the matter shall be final . . . . Nothing in this Act, however, shall be construed to prohibit the payment to any laborer, workman or mechanic employed on any public work as aforesaid or more than the said general prevailing rate or wages. The Supreme Court of Texas has held that the decision of a public body fixing the prevailing wage rate for a locality is final and may not be revi.ewed judicially. Texas Highway Commission V. El Paso Building & Construction Trades Council, 234 S. W. 2d 857 (Tex. 1950). The primary purposes of the statute are: . . . [T]o inform the bi&der the wage rate to be paid his employees and especially to protect workmen, laborers and mechanics from being required, if they accept employment to work for less than the pre- vailing wages paid in the county for the same class and character @M&Texas Highway Commission v. El Paso Building and Construction Trades Council, supra. at p. 861. p. 1629 The Honorable Jackie W. St. Clair page 3 (H-350) In 1933, when Article 5159a was enacted, fringe benefits were essentially unknown. That fact alone does not, in our opinion, foreclose the discretionary right of a public body to determine that “fringe benefits” have become an important factor in determining the prevailing wage. As found by the United States Senate, “Fringe benefits such as group life insurance, group hospitalization, disability benefits, medical care, and pensions, were not important wage factors until World War II. . . [since then] welfare and pension plans have experienced a phenomenal growth, ” and in 1964 almost 110 million persona were relying on benefits from such plans. Senate Report No. 963, 2 U.S. Code Cong. and Adm. News, (88th Cong. 2d sess.) p. 2339 (1964) at p. 2341. The same Senate Report found that in many areas of the country the great majority of contractors compen- sate their employees in two forms; cash, and fringe benefits and that the “fringe benefits clearly constitute a form of wages. ” Therefore, the Congress specifically provided in the Davis-Bacon Act that the Secretary of Labor in making prevailing wage determinations shall include, “The rate of contribution”t&~~a welfare and pension pl ans. 40 U. S. C.A. Sec. 2760. An amendment to the Davis-Bacon Act was necessary in order to accomplish inclurion of such fringe benefits ,because~ of the Act’s requirement that wages be paid “unconditionally. ” See Senate Report 963, supra. at pp. 2341-2342. The Texas Statute does not require that “wages ” be paid Qnconditionally, ” and hence a statutory amendment is not, in our opinion, essential to the establishment of ,$he discretionary right of a public body to determine that fringe benefits can be considered as properly includable within the term “wages” in Article 5159a. Therefore, a public body may properly consider “fringe benefits” in determining a prevailing wage rate for a particul8r locale. The statutory definition of “prevailing wage rate” certainly does not per se impose restraint on the judgment of the public body in,this matter. p. 1630 . . , The Honorable Jackie W. St. Clair page 4 (H-350) . Indeed there are many examples of the term “wages” being construed - to include employer contributions to group employee pension and welfare plans. Thus, in Inland Steel v. N. L. R. B., 170 F. 2d 247 (7th Cir. 1948), aff’d., 339 U.S. 382 (1950), the Court held that contributions to retirement and pension plans were included within the term “wages” within the meaning of Sec. 9 of the National Labor Relations Act. 29 U.S. CA., Sec. 159. In a similar fashion, Article 8309, V. T. C. S., a part of the Texas workmen’s compensation laws, defines “average weekly wages” to include an “advantage which can be estimated in money which the employee receives from the employer as a part of his remuneration.” An early Texas case, Byrd v. Citv of Dallas, 6 S. W. 2d 738 (Tex. 1928) held: The right to participate in such a fund [pension] is therefore not a gratuity or donation in any sense. It is as much a part of the agreed compensation as is the mmtliystipend. (6 S. W. 2d at 741). Two fairly recent California Supreme Court decisions, Dunlar, v. Tremavne. 398 P. 2d 774 (Cal. 1965) ahd Tracy v. Contractor’s State License Board, 407 P. 2d 865 (Cal. 1965) reach a similwconclusion. See also, People v. Vetri, 131 N.E. 2d 568 (N.Y. 1955);~Educational Fund of Electrical Industry v. U.S., 305 F. Supp. 317 (S.D.N. Y. 1969); United Brick & Clay Werkers of America. AFL-CIO v. International Union of Diat. 50 UMW of A, 439 F. 2d 311 (8th Cir. 1971). SUMMARY Article 5159a, V. T. C. S., gives the public body involved in letting a contrrct for public works the responsibility fsr determining the “prevailing wage rate” in its locale for a particular class and character p. 1631 ,. . I . . . ’ The Honorable Jackie W. St. Clair page 5 (H-350) . of work.. In its discretion the wage set may include the value of “fringe benefits”’ available to employees of the area engaged in similar kinds of libor. Very truly yours, u Attorney General of Texas DAVID M. KENDALL, Chairman Opinion Committee .r p. 1632