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


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    The Honorable Jackie W. St. Clair        page 2 (H-350)

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                   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.


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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.




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        The Honorable Jackie W. St. Clair        page 4   (H-350)

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                 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




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                   The Honorable Jackie W. St. Clair    page 5     (H-350)
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                                 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




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