   OFPKEOFTHEATTORNEY
                   GENERAL.
                         STATE
                             OFTEXAS
   JOHN    CORNYN




                                        November    16, 1999



The Honorable Florence Shapiro                      Opinion No. JC-0144
Chair, Committee on State Affairs
Texas State Senate                                  Re: Interpretation    of section 143.073, Local
P.O. Box 12068                                      Government Code       (RQ-0006-K)
Austin, Texas 78711


Dear Senator Shapiro:

        You have asked this office to consider a particular statute, section 143.073(a) of the Local
Government Code, which requires that police and tire fighters injured in the line of duty receive full
pay while incapacitated, in the light of a dispute between the City of Plano, Texas (the “City”) and
a member of its police force. Because this office does not determine facts in the opinion process,
we will consider here the questions of law involved in the matter, and in particular the question of
which statutes apply here. With regard to the facts of the dispute, as there appears to be no
controversy regarding them, we rely on the account provided by the City in its brief.

         As we understand it then, the facts are these. A police officer employed by the City was
injured in the line of duty in 1996. He remained off duty for nine weeks. During that time, he
received both his regular pay check, from which the ordinary income tax deductions were taken, and
a workers’ compensation income benefit check in the amount of $480.00 a week to which he was
not entitled. This error, according to the city, was not the fault of the officer. Supplemental Brief
from the City ofPIano, to HonorableFlorence     Shapiro, Senator (Jan. 12,1998) (on file with Opinion
Committee).

         The officer has returned the amount he received in workers’ compensation benefits.
However, the City, as we understand its argument, takes the view that, had it been possible for it to
construe the payment of his salary to the officer as, in some measure, non-taxable workers’
compensation benefits, it would have saved the tax on that portion of the payment which could be
characterized as workers’ compensation.    It seeks repayment of this putative tax saving from the
officer.

         The City’s argument appears to be based on the view that the payments it made to the officer
 during the period of his incapacitation were not subject to federal income taxation. The gross
 income of a taxpayer does not include “amounts received under workmen’s compensation acts as
 compensation for personal injuries or sickness.” 26 U.S.C. 5 1.04(a)(l) (1994). Accordingly, any
 such amounts are not subject to taxation, or to withholding.      However, it must be possible to
 characterize such payments as workers’ compensation for section 1.04(a)(l) to apply.
The Honorable Florence Shapiro      - Page 2      (JC-0144)




       In our view, the City has misconstrued the statutory framework here. The statutes which
must be read together to resolve the issue in this case are not sections 143.073(a) of the Local
Government Code and 408.003(a)(2) of the Labor Code, but rather section 143.073(a) and section
504.051(a)(l)(A) of the Labor Code.

        The City argues that, while it was required by section 143.073(a) of the Local Government
Code to provide the officer “a leave of absence       with full pay,” for the period in question, that
requirement could effectively have been fulfilled by construing its payments to him as combining
workers’ compensation benefits with the supplemental provision of section 408.003 of the Labor
Code.

        Section 408.003(a) of the Labor Code provides:

                (a) After an injury, an employer may:

                       (1) initiate benefit payments, including medical benefits; or

                        (2) on the written request or    agreement of the employee,
                supplement income benefits paid by       the insurance carrier by an
                amount that does not exceed the amount    computed by subtracting the
                amount ofthe income benefit payments      from the employee’s net pre-
                injury wages.

TEX. LAB. CODE ANN. 5 408.003(a) (Vernon 1996) (emphasis added).

         In the City’s view, as we understand it, had it been able to construe its payments in the
manner described, it would have derived tax benefits thereby. Because it was unable to derive such
benefits, it seeks to recoup them from the officer.

        We note first that any such construction of the payments, even could it have been effective,
would have required the consent of the officer, as the supplemental benefits provision requires “the
written request or agreement of the employee.” Id. 5 408.003(a)(2). However, we do not believe
such a construction is possible, because any workers’ compensation payments to which the officer
might have been entitled would already have been offset by section 504.051 of the Labor Code,
which provides in relevant part that:

                (a) Benefits provided under this chapter shall be offset:

                        (1) to the extent applicable,   by any amount for incapacity
                received as provided by:

                (A) Chapter 143, Local Government Code;

                            : and
The Honorable   Florence Shapiro     - Page 3       (JC-0144)




                       (2) by any amount paid under Article III, Section 52e, of the
                Texas Constitution, as added in 1967.

Id. § 504.051 (emphasisadded).    Chapter 143, andspecificallysection    143.073(a),governspayments
to municipal tire and police employees injured in the line of duty. Article III, section 52e “as added
in 1967”-a phrase intended to distinguish this section from another so designated which concerns
the issuance of road bonds by Dallas County-provides       that any county or precinct law enforcement
official who is injured in the line of duty is to be paid “his maximum salary” while hospitalized or
incapacitated.   TEX. CONST. art. III, 5 52e. The section is thus parallel to section 143.073 of the
Local Government Code.

         In 1993, this office considered a question similar to the one now before us, regarding whether
a county could “‘reduce the amount paid to a deputy or law enforcement official under Article 3,
Section 52e      . to a sum less than the employee’s maximum salary because a portion of all of the
monies paid the deputy/official are not subject to income tax.“’ Tex. Att’y Gen. LO-93-63, at 3-4.
In interpreting article 8309h of the Revised Civil Statutes, the statutory predecessor to section
504.051 ofthe Labor Code, this office pointed out that one ofthe statute’s purposes “was to prohibit
‘double dipping.“’ Id. at 4. As the opinion pointed out, “Prior to 1987 [when the statute was
adopted], an injured county law enforcement official was eligible to receive both his full salary and
his statutory workers’ compensation benefit, and no offset was permitted.”              Id. (emphasis in
original). The opinion cited the legislative history of the statute, which indicates that the legislature
proposed to stop thepracticeofdouble-dipping“byreducingtheamount            ofworkers[‘] compensation
by the amount of salary paid through Article III, Section 52e of the Texas Constitution.”               Id.
Answering in the negative the question as to whether the deputy’s pay could be reduced, the opinion
noted that “[nlothing in the constitutional history of article III, section 52e, nor in the legislative
history of article 830911, offers even the slightest evidence that the legislature intended that the
injured official’s federal tax status should play any role in determining his benefits.” Id.

        The provision ofsection 504.05 l(l)(A) applicable to amunicipal law enforcement employee
is, as we have noted, parallel to that of section 504.051(2), and accordingly is to be interpreted in
pari materia with it. Its manifest intent is to prevent double dipping, and to that end it reduces
workers’ compensation benefits by the amount “received as provided by . . . Chapter 143, Local
Government Code.” TEX. LAB. CODE ANN. 5 504.051(a)(l)(A) (Vernon 1996). Because under
section 143.073(a) of the Local Government Code the officer in question is entitled to full pay, any
workers’ compensation is entirely set off by this provision.

         We note that it may be the case that the payment of the officer’s full salary pursuant to
section 143.073, while not a payment of workers’ compensation under chapter 408 of the Labor
Code, may be a payment “under a statute in the nature of a workmen’s compensation act,” as the
Income Tax Regulations use that phrase. 26 C.F.R. 5 1.104-l(b) (1999). What constitutes such a
statute, as the Journal ofTaxation has pointed out, “is, in Professor Bittker’s delightful phrase, ‘hazy
around the edges.“’ 71 J. Tax’n 407 (1989). A relatively early Tax Court ruling, Blackburn v.
Commissioner, 15 T.C. 336 (1950), held that the payment of ml1 pay to a California Highway
Patrolman injured in the line of duty was “not . . analogous to workmen’s compensation but . . a
The Honorable Florence Shapiro      - Page 4       (JC-0144)




continuation of regular pay during a period of incapacity in a manner similar to any other provision
for sick leave.    .” Id. at 340. However, in that case a key fact was that the injured patrolman could
and did file for workers’ compensation in addition to his regular salary-the      very “double-dipping”
which section 504.05 1 ofthe Labor Code forbids. As we understand the present state ofthe law, for
a statute to be of the sort section 1.104-l(b) contemplates, “such statute would have to limit the
disability benefits to job-related injuries.    Furthermore, a statute must also preclude an employee
from filing an independent claim for workmen’s compensation benefits to be in the nature of a
workmen’s compensation act.” Clause Y. Commissioner, 69 T.C.M. (CCH) 2546 (1995).

        Whether the payment of the officer’s full salary was pursuant to a statute of that sort, and
hence whether income tax deductions from his gross pay were unwarranted, is a question for the
officer and his counsel to determine in consultation with the Internal Revenue Service, and is not
within the purview of this offtce. In any event, following Attorney General Letter Opinion 93-63,
such income tax overpayments from his gross pay would belong to the officer, not to the City of
Plano.

         As we understand it, the officer has repaid the entire amount of workers’ compensation he
received. Unless there are other considerations besides the interpretation of section 143.073(a) of
which we have not been made aware, such payment was all he owed in this situation to the City of
Plano.
The Honorable   Florence Shapiro    - Page 5       (X-0144)




                                         SUMMARY

                        Any workers’ compensation benefit to which a municipal
                police officer injured in the line of duty may be entitled under chapter
                504 of the Labor Code is offset by the provision of section 143.073(a)
                of the Local Government Code which entitles him to full pay during
                his incapacity, continuing if necessary for a fall year.




                                                Attorney General of Texas



ANDY TAYLOR
First Assistant Attorney General

CLARK RENT ERVIN
Deputy Attorney General - General Counsel

ELIZABETH ROBINSON
Chair, Opinion Committee

 James E. Tourtelott
 Assistant Attorney General - Opinion Committee
