                      The Attorney              General                of Texas
                                                                                     ----,
                                            June    16,        1978       r-=-   Thnic *icic;l      I

JOHN L. HILL
Attorney General


                   Honorable A. R. Schwartz                            Opinion No. H- 1186
                   Chairman
                   Senate Jurisprudence Committee                      Re: Authority of state agency
                   State Capitol                                       to enter Into conciliation agree-
                   Austin, Texas 797ll                                 ment providing back wages to
                                                                       person who claims employment
                                                                       discrimination.

                   Dear Senator Schwartz:

                          You ask whether certain sections of the Texas-Constitution     prohibit a
                   state agency from agrcelng to pay back wages to persons who claim to have
                   been subject to employment discrimination in violation of Title VII at the 1964
                   Civil Rights Act, 42 U.S.C. SS 2000e - 2OOOe-17. A person who believes he
                   has been terminated or denied employment or promotion on the basis of race,
                   color, religion, sex, or national origin may file a charge against his employer
                   with the Equal Employment Opportunity Commission. 42 U.S.C. SS 2OOOe-2,
                   2000~S(b).    If the commission finds reasonable cause to believe that the
                   charge is true, it will attempt to eliminate unlawful employment     racticcs by
                   informal methods such as conciliation.      42 U.S.C. S 2OOOedb. P Sn cases
                   where no acceptable conciliation sgreement can be reached, the Attorney
                   General of the United States or the person aggrieved may sue the state
                   agencY* 42 U.&C.. S 2OOOe-5(f). If the court finds that the agency has
                   intentionally  engaged In an unlawful employment practice, it may order
                   rehirimr. backbav. and other eouitable relief.         42 U.S.C. S 2OOOe+(nl:
                   Albem&le Pap&“& v. Moody, 422 U.S. 405 (1975).

                          You inquire whether ‘article 3, section 44 of the Texas Constitution
                   prohibits a state agency from entering into a conciliation          agreement
                   providing back wages to a complainant. Thii provision reads in part:

                              ‘Ihe Legislature . . . shall not . . . grant, by appropria-
                              tion 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 . . . .




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Honorable A. R. Schwartz     -   Page 2    (H-1186)



This section prevents the legislature from appropriating money to pay any claim
unless some law already in force makes the claim a legal obligation of the state.
Austin National Bank v. Sheppard, 71 S.W.2d 242 (Tex. 1934). Article 3, section 44
reauires %uch an oblization as would form the basis of a judgment azainst the state
in ‘a court of compet&t jurisdiction in the event it should permit itself to be sued.”
Austin National Bank v. Sheppard, s,          at 245. A common law right may
constitute “pre-existing law” within article 3, section 44, Austin National Bank v.
Sheppard, s;      so may federal law, Attorney General Opinions H-502 (197’S),M-
1155 (19721, M-942 (1971).

       In our opinion, Title VII constitutes preexisting law for payment of back
wages to persons who have been the subject of unlawful employment discrimina-
tion. A claim under Title VII can “form the basis of judgment against the state.” It
is thus “pre-existing law” as defined in Austin                            71 S.W.2d
242 (Tex. 1934). Once employment discrimination         is shown, backpay should be
awarded when necessary to -make victims of discrimination         whole. Albemarle
Paper Co. v. Moody, 422 U.S. 405, 421(1975). The absence of bad faith on the part
of the employer is not a sufficient reason to deny backpay. & at 422.

       The state may be compelled to pay back wages for violating Title VII even
though it has not consented to be sued. In Fitzpatrick v. Bitzer, 427 U.S. 445
(19761, the Supreme Court held that Title VII authorized individuals to sue a state.
The enforcement provisions of the fourteenth amendment limited the eleventh
amendment and the principles of sovereign immunity it embodies. I& at 456. Thus
the doctrine of sovereign immunity, which ordinarily bars a federal court from
requiring payment to a litigant of funds from the state’s treasury, see Edelman v.
Jordan, 415 U.S. 651 (19741, is inapplicable to Title VII claims. Whenatate  agency
isfronted       with a well-founded claim of employment discrimination,       it can
reasonably expect that the state will ultimately have to pay back wages to the
claimant.

       It is clear that article 3, section 44 does not bar the legislature from paying
claims for back wages arising under Title VII. Nor do we believe it bars state
agencies from entering into conciliation agreements to settle such claims. In two
prior opinions, we dealt with the authority of public entities to provide back wages
during suspension or severance pay on termination.       Attorney General Opinion H-
 402 (1974) involved a county employee who was suspended without pay following
indictment and later reinstated.     We determined that the county could not give him
backpay for the period of suspension unless a previously adopted policy authorized
backpay in such situations. We also said:

               If, then, a county commissioners court has authority to
            hire employees, by implication it has the authority to set the
            terms of their employment.     One such term which may be




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Honorable A. R. Schwartz     -   Page 3   (R-1186)



           possible is that if an employee is indicted he will be
           suspended with the understanding that he will be reinstated
           with back pay if he is subsequently exonerated. A policy of
           this kind would be a condition of employment no different
           than the rate of compensation or amount of vacation an
           employee is to receive.

Attorney General Opinion H-402 (1974).

      In Attorney General Opinion H-786 (1976) we determined            that a state
university may adopt a reasonable policy providing severance pay for terminated
employees. So long as this payment of severance pay under this policy constituted
a term or condition of employment, it did not violate article 3, section 44.

       We believe the provisions of Title VU constitute terms and conditions of state
employment.     See Anderson-Berney Realty Co. v. Saria, 67 S.W.2d 222 (Tex. 1933)
(provisions of Workmen’s Compensation Law become part of employment contract);
Trinity Portland Cement Co. v. Lion Bonding & Surety Co., 229 S.W. 483 (Tex.
Comm’n App. 1921, jdgmt adopted) (provisions of bond statute are by implication
part of public contractors      bond).    Title VII was amended to cover public
employment in 1972. 42 U.S.C. SS ZOOOe(a),2000e(f); Fitzpatrick v. Bitzer, suck,
at 449. Its requirements and remedies then became part of the individual’s
employment relation with the state, and state agencies acquired policies like those
described in H-402 and H-786, without any need for administrative action on their
part.    ln our opinion, state agencies with authority to hire, promote, and fire
employees have implied authority to enter into conciliation agreements providing
for back wages pursuant to the provisions of Title VII.

       The individual agency has discretion to decide whether a particular claim
should be settled by agreeing to pay back wages. It has access to the facts of
employment needed to determine whether a particular claim is valid. Federal
 cases under Title VII offer guidance as to when a claimant is entitled to back pay
and how it should be computed. See Annot., 21 A.L.R. Fed. 472 (1974); Annot., 5
 A.L.R. Fed. 334 (1970) and authorities cited therein.   The agency’s appropriation
 must be examined to determine whether funds are available to pay back wages.
See Tex. Const. art. 8, S 6; National Biscuit Co. v. State, 135 S.W.2d 687 (Tex.
1946). Appropriations for the regular pay of the employee are available for this
purpose. See Attorney General Opinion M-U55 (1972); see also S. & G. Construction
Co. v. BuRik, 545 S.W.2d 953 (Tex. 1977); Attorney General Opinions H-488 (1975);
 H-289 (1974).

     We indicated in Attorney General Opinion H-50 (1973) that state agencies
may not make conciliation agreements unless they have express statutory authority




                                     p.   4779
Honorable A. R. Schwartz     -   Page 4      (~-1186)



to do so. In light of the 1976 Supreme Court decision of Fitzpatrick v. Bitzer,
supra, we now believe the view adopted in Attorney General Opinion H-50 is
incorrect.  In 1973 we could reasonably assume that the state would not be liable
for Title VII claims without legislative consent. See Employees of the Department
of Public Health & Welfare v. Department of PubzHealth        & Welfare, 411U.S. 279
(1973). We therefore looked for a clear sign of legislative intent to make the state
liable for backpay, such as an express grant of authority to settle claims. See
V.T.C.S. art. 6252-19, S 10. Fitzpatrick v. Bitzer, however, nullified our ma
reason for requiring express statutory       authority    to enter into conciliation
agreements.    Attorney General Opinion H-50 is overruled to the extent inconsistent
with this opinion.

       You also ask whether article 3, section 51 of the Texas Constitution prohibits
a state agency from entering into a Title VII conciliation agreement providing for
the payment of back wages. Article 3, section 51 provides in part:

           The Legislature shalI have no power to make any grant or
           authorize the making of any grant of public moneys to any
           individual, association of individuals, municipal or other
           corporations whatsoever. . . .

The purpose of this provision is to prevent the gratuitous grant of public funds to
any person. State v. City of Austin, 331 S.W.2d 737 (Tex. 1960).

       Article 3, section 51 is not violated by the payment of a claim for which the
state is liable. g at 742. See Harris County v. Dowlearn, 489 S.W.2d 140 (Tex.
 Civ. App. - Houston [14th Disn 1976, writ ref’d n.r.e.l (compensation of individual
pursuant to Texas Tort Claims Act does not violate article 3, section 51); Stacy v.
Bridge City Independent School District, 357 S.W.2d 618 (Tex. Civ. A@p. -
Beaumont 1962, no writ) (payment of fuII salary to wrongfully discharged teacher
does not violate article 3, section 511. See also Attorney General Opinions H-786
(19761; H-402 (19741. In our opinion, the payment of back wages pursuant to a
conciliation agreement settling a claim under Title VII does not contravene article
3, section 5L

                                  SUMMARY

           Sections 44 and 51 of article 3 of the Texas Constitution do
           not bar state agencies from entering into conciliation
           agreements providing back wages to a person who asserts a
           valid claim of employment discrimination under Title VII of
           the 1964 Civil Rights Act.




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        Honorable A. R. Schwartz   -   Page 5   (H-1186)



                                                Very truly yours,




                                                 Attorney General of Texas




        Opinion Committee

         jsn




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