Can South Carolina set up a state employee payroll deduction to pay for a workplace wellness program?

Official title

Opinion addressing whether state employee payroll deductions of the cost of a wellness plan are authorized under S.C. Code Section 8-11-80.

Requester

Requested by The Honorable Bill Herbkersman, Member, South Carolina House of Representatives.

Plain-English summary

A state representative asked whether the South Carolina Comptroller General could create a new payroll deduction so state employees could pay for a "Total Wellness Program" out of their paychecks, using the authority in S.C. Code § 8-11-80. That statute lets the Comptroller General set up deductions, on the request of 250 employees, for "premiums for life, hospital, and other types of insurance plans."

The Attorney General gave a split answer. On the threshold question, it declined to decide whether the wellness program is "insurance." The program was described both as "a Health and Accident Plan, not a fixed indemnity plan," and Title 38 defines insurance as a contract to "indemnify another or pay a specified amount upon determinable contingencies." Those descriptions point in opposite directions, and the AG said its office "does not have the authority of a court or other fact-finding body" to resolve that factual conflict. That question goes to the Comptroller General, who administers the statute and is owed deference on its reasonable interpretation.

What the AG would say flatly is the background rule: state employee payroll deductions can be taken only where the Legislature has expressly authorized them. The office traced that rule through decades of its own opinions, going back to a 1976 opinion and continuing through 2017. If the wellness program does not fit within § 8-11-80 or another statute, the deduction cannot be created without new legislation. The AG also declined to opine on whether the request forms attached to the letter satisfy the Comptroller General's criteria.

What this means for you

State agencies and payroll administrators: The opinion restates that you cannot withhold money from a state employee's wages for a purpose the Legislature has not authorized, no matter how many employees sign up for it. The number of willing participants does not create the authority; the statute does.

The Comptroller General's office: The AG framed the live question, whether a preventative-health "wellness" plan fits the "insurance" language of § 8-11-80, as one for the Comptroller General to resolve, because that office administers the statute and a court would defer to its reasonable reading.

State employees and program vendors: If you want a paycheck deduction for a benefit that is not clearly an authorized "insurance plan," this opinion signals the path runs through the Legislature, not through gathering signatures. The AG said outright that absent statutory authorization or a change in law, the deduction cannot be made.

Common questions

Did the Attorney General say the wellness deduction is legal?
No. It declined to decide the central question, whether the program qualifies as "insurance" under § 8-11-80, and pointed that question to the Comptroller General. It did say that if the program is not authorized by statute, legislation would be needed.

Why couldn't the AG just answer it?
The office said it cannot act as "a court or other fact-finding body" and cannot adjudicate factual questions. Whether this particular plan is "insurance" turns on facts about how the plan operates, and the statute is administered by the Comptroller General, whose reasonable interpretation courts defer to.

What is the basic rule on state payroll deductions in South Carolina?
Deductions from state employee wages can be made only for purposes expressly authorized by statute. The AG has held this consistently, citing examples where deductions for charity contributions, association dues, property and casualty insurance, and IRAs were not permitted because no statute authorized them.

If enough employees sign a petition, does that authorize the deduction?
No. Section 8-11-80 requires a request from 250 employees as one condition, but the underlying type of deduction still has to be one the Legislature has authorized. Signatures alone do not create the legal authority.

Background and statutory framework

S.C. Code § 8-11-80 authorizes the Comptroller General to make deductions from state employee payrolls, on the request of 250 employees, "for the payment of premiums for life, hospital, and other types of insurance plans" in force on the act's effective date. The "type of insurance" limitation was added by 1978 Act No. 644 and the statute was last amended by 1985 Act No. 201.

Title 38 supplies the competing definitions the AG flagged. Section 38-1-20(25) defines "insurance" as "a contract where one undertakes to indemnify another or pay a specified amount upon determinable contingencies." Section 38-1-20 also defines "Accident and health insurance" broadly enough that a "Health and Accident Plan" might fall inside the insurance code, which is why the AG saw the descriptions as conflicting.

The opinion situates all of this against the office's long line of payroll-deduction opinions. The Legislature has from time to time responded by expressly authorizing particular deductions, for example credit union payments and charities under S.C. Code §§ 8-11-70 and -99. The throughline is that each authorized deduction traces to a specific statute.

Citations

• S.C. Code § 8-11-80 (Comptroller General payroll deductions for insurance premiums on request of 250 employees)
• S.C. Code § 38-1-20(25) (definition of "insurance")
• S.C. Code § 38-1-20 (definition of "Accident and health insurance")
• S.C. Code §§ 8-11-70, -99 (specific authorized payroll deductions, including credit union payments and charities)

Source

• Landing page: https://www.scag.gov/opinions/opinions-archive/opinion-addressing-whether-state-employee-payroll-deductions-of-the-cost-of-a-wellness-plan-are-authorized-under-s-c-code-section-8-11-80/
• Original PDF: https://www.scag.gov/media/krxb0fek/03546103.pdf

Original opinion text

Alan Wilson
attorney General

March 29, 2024

The Honorable Bill Herbkersman
Member

South Carolina House of Representatives
308-C Blatt Building
Columbia, SC 29201

Dear Representative Herbkersman:

Attorney General Alan Wilson has referred your letter to the Opinions section. Because
your letter states, “time is of the essence” and requests a prompt reply, it has been considered on
an expedited basis.
The letter describes a “Total Wellness Program ... focused on preventative health
initiatives.”

The program is further described as “a Health and Accident Plan, not a fixed

indemnity plan.” You ask:

1) In the event enough employees decide to ‘sign on the line’ asking our Comptroller General
to set up a payroll deduction to cover the cost of any wellness program under S.C. Code §
8-11-80, is it your opinion that such a plan is a type of program that the Comptroller

General could approve for this deduction?
2)

If it is your opinion that our Comptroller General has this authority, is it also your opinion

that the materials attached as Exhibit D would sufficiently support the addition of this state
employee payroll deduction so long as enough state employees sign the petition section of

it, and in compliance with S.C. Code § 8-1 1-80?
Law/Analysis

It is this Offices opinion that S.C. Code § 8-11-80 authorizes the Comptroller General to
make deductions from state employee payrolls, upon the request of two hundred fifty employees,
“for the payment of premiums for life, hospital, and other types of insurance plans as are in force

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The Honorable Bill Herbkersman
Page 2

March 29, 2024

and a member of the deduction system on the effective date of this act.”1 As described in the
attachments to your letter, it is unclear if such a plan could be fairly categorized as “insurance.”
Title 38 of the South Carolina Code of Laws defines “insurance” as “a contract where one

undertakes to indemnify another or pay a specified amount upon determinable contingencies.” S.C.
Code § 38-1-20(25). It seems unlikely that a wellness program focused on preventative health
initiatives could fairly be interpreted to come within this definition, particularly when it is stated
not to be “a fixed indemnity plan.” However, this program is also described as “a Health and

Accident Plan.” Title 38, of the South Carolina Code includes “Accident and health insurance”

within the insurance code.2

This Office’s opinions cannot anticipate how these seemingly

conflicting descriptions will be resolved. See Op. S.C. Att'y Gen., 2006 WL 1207271 (April 4,

2006) (“Because this Office does not have the authority of a court or other fact-finding body, we
are not able to adjudicate or investigate factual questions.”). This question is better addressed to
the Office of the Comptroller General for determination as it is charged with administering the
statute. See Op. S.C. Att’y Gen., 2022 WL 1286845, at 2 (April 20, 2022) (“It is this Office's long

standing policy, like that of our state courts, to defer to an administrative agency's reasonable
interpretation of the statutes and regulations that it administers.”).

We note that this Office has consistently advised state employee payroll deductions may
only be made for those purposes authorized by statute. For instance, in 1976 we explained that a

court had found the City of Charlotte “had no standards for approving or disapproving deductions”
and as a result “it could not refuse to make deductions for labor union dues upon request.” 1 976
S.C. Op. Att'y Gen. 129.

The opinion highlighted that, although South Carolina had a statute

addressing deductions, “it is not uniformly complied with. Some agencies have in the past, and I
presume are now making deductions from wages for various purposes, such as credit union
payments, and perhaps charities.” Id.

To avoid a similar ruling, Attorney General McLeod

suggested that “it will be appropriate to make sure that only allowable deductions are made from
payrolls.”

The Legislature responded by specifically permitting deductions for credit union

payments, charities, and other purposes. See S.C. Code §§ 8-11-70, -99 (authorizing payroll

deductions for specific purposes).

Subsequent opinions have stated more directly that state

employee payroll deductions cannot be made except where authorized by statute.
In

1980,

we

addressed whether the

Comptroller General

may take

deductions from State employee wages for contributions to a particular charity. Op.

1 The emphasized language restricting the “type of insurance” to those then in the deduction system was initially added
in 1978 by Act No. 644 Part II § 21. The statute was last amended by 1985 Act No. 201, Part II, § 74.

2 “Accident and health insurance” is defined as “insurance of human beings against death or personal injury
by accident, and each insurance of human beings against sickness, ailment, and any type of physical
disability resulting from accident or disease, and prepaid dental service, but not including coverages
required by the Workers' Compensation Law of this State.” S.C. Code § 38-1-20.

The Honorable Bill Herbkersman
Page 3
March 29, 2024

S.C. Atty. Gen., August 29,

1980. We noted that although State Personnel

Regulations allow solicitations by charitable organizations, these regulations do not

“include authorization for deduction of contributions from the State employees'
payroll, which may be permitted only by statute.” Id. In numerous other opinions,
this

Office

similarly

concluded

that

payroll

deductions

require

statutory

authorization. Sec Op. S.C. Atty. Gen. June 27, 2002 (finding a public service

district could not make deductions from employees' wages

for association

membership dues because such a deduction was not authorized by statute); June 21 ,
1988 (determining that payroll deductions for property and casually insurance are
not permitted because no statutory authority exists); January 4, 1982 (concluding
that payroll deductions for Individual Retirement Accounts arc not permitted due
to lack of statutory authorization). Accordingly, to answer your question, we do not
believe that deductions can be taken from a State employee's wages absent express
authorization by the Legislature.
Op. S.C. Att'y Gen., 201 1 WL 380161 (January 1 8, 201 1) (emphasis added). In the absence of a
change in law, it remains this Office’s opinion that deductions cannot be taken from a state

employee's wages unless it is expressly authorized by the Legislature. Op. S.C. Att’y Gen,, 2017
WL 5203263 (October 31, 2017) (“This Office recognizes a long-standing rule that it will not
overrule a prior opinion unless it is clearly erroneous or there has been a change in applicable
law.”).

If the proposed wellness program is not found to be authorized under the terms of S.C.

Code § 8-1 1-80 or other statute, legislation would be necessary to authorize it as a new type of
deduction.

Finally, your letter asks whether the attached materials would sufficiently support the
addition of a payroll deduction in the event that the statutory minimum number of state employees

elect to do so. The attached materials are titled “Request Form,” “State of SC Individual Employee
Request Form.” and a “State of SC Multiple Employees Request Form by Agency.”

Although

these attachments appear tailored to address S.C. Code § 8-11-80, this Office cannot offer an
opinion on whether these forms satisfy the criteria for the Office of the Comptroller General.
Sincerely,

Matthew Houck
Assistant Attorney General
REVIEWED AND APPROVED BY:

Robert D. Cook
Solicitor General