The state Department of Public Welfare runs a federal Title V Economic Opportunity Act program out of its offices. The administrative staff (supervisors, social workers, foremen, clerks) draw paychecks through the state. The trainees in the work-experience projects receive maintenance-needs payments rather than wages. Do we have to cover both groups under the state Workmen's Compensation Plan?
Plain-English summary
Title V of the federal Economic Opportunity Act of 1964 (H.R. 10440, 88th Congress, Second Session) was a federally funded work-experience and training program for people unable to support or care for their families. South Dakota administered Title V through the state Department of Public Welfare, with the federal government providing 100% of the funds. The state acted as the federal government's agent in running the program.
The program had two groups of people:
Group 1: Administrative staff. Supervisors, coordinators, consultants, project foremen, social workers, and stenographic-clerical workers. They were hired subject to state qualification requirements, paid through the state payroll on warrants issued by the State Auditor, and subject to suspension and discharge under the same rules as any other state employee. Importantly, they were expressly exempted from the legislature's overall headcount limit for the Department of Public Welfare (because their salaries came from federal funds rather than state appropriations).
Group 2: Work trainees. People participating in the work-experience projects. They received monthly money payments calculated on the basis of their maintenance needs and family size, not as wages for services performed. The payments resembled public assistance payments more than wages.
Federal law required Workmen's Compensation or comparable coverage for both groups. The Department wanted to confirm whether state law agreed.
The AG worked through the South Dakota Workmen's Compensation Act framework:
SDC 1960 Supp. 64.0102 defined "employer" broadly to include the state, municipal corporations, and any individual, firm, or corporation "using the service of another for pay."
SDC 1960 Supp. 64.0102(2), as amended by Chapter 262 of the 1966 Session Laws, defined "employee" as "every person in the service of another under any contract of employment," with limited exceptions (including officials elected or appointed for a regular term of office).
The state Supreme Court had developed a control-based test in Brandt v. Co-op Elevator Co. of Revillo (1942): "the test of employer-employee relationship within the Workmen's Compensation Act, is the right of the employer under the contract to control the manner and continuance of the particular service and the final result." In Gulbrandson v. Town of Midland (1949), the court had extended Workmen's Compensation coverage to a private citizen killed while responding to a peace officer's request for assistance.
Multiple AG opinions had built out the rules:
- 1961-62 AGR 124 (civil defense volunteers pressed into service could be covered)
- 1963-64 AGR 16 (state officials not appointed for a definite term and serving at the pleasure of the appointing power were covered)
- AG opinion of July 21, 1965 to Richard Larson (employees of the State Agency for Surplus Property were state employees)
- AG opinion of January 7, 1966 to E. B. Coacher (students receiving educational funds from the Board of Regents could be employees and eligible)
- AG opinion of August 13, 1965 to Matthew Furze (the State Department of Public Welfare was authorized to administer Title V projects)
Applying this framework, the AG reached two answers:
Group 1 (administrative staff): YES, covered. They satisfied every traditional indicator of state employment: state qualifications, state payroll, state discipline procedures, state-controlled supervision. They came directly within Brandt's control test. But because the program was 100% federally funded and the state was acting as the federal government's agent, any Workmen's Compensation expenditures attributable to Title V administrative staff should be reimbursed to the state by the federal government. The state should not bear the financial cost of providing coverage for what was substantively a federal program.
Group 2 (work trainees): NO, not covered. Their monthly payments were maintenance allowances tied to family need, not wages. They were not paid for services rendered; the services were the training opportunity provided to them. They were more analogous to apprentices or trainees, which the Workmen's Compensation Act exempted. The university-student-employee analogy (where students hired by a university to do specific work were employees) did not apply because the relationship was structurally different. Title V trainees were participating in a public assistance program with a work-experience component, not selling their labor for wages.
Currency note
This opinion was issued in 1967. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. The federal Economic Opportunity Act Title V program has been replaced by successor federal workforce programs (notably the Workforce Innovation and Opportunity Act and predecessor programs). The South Dakota Workmen's Compensation Act has been substantially recodified into modern SDCL Title 62 (Workers' Compensation). Modern questions about Workers' Compensation coverage for federal-program participants should be addressed under current SDCL provisions and recent decisional law on the employer-employee relationship and trainee/participant status.
What the opinion meant at the time
For the state Department of Public Welfare, the opinion gave a clear administrative answer. Title V administrative staff went into the state Workmen's Compensation roll alongside other state employees. The Department would have processed their wage information for the assessment calculation and routed any claims through the state Workmen's Compensation Fund. The Department would then have billed the federal government for reimbursement of any actual claims paid out, consistent with the federal funding structure.
For Title V work trainees, the opinion meant they were outside the state Workmen's Compensation system. If federal law nonetheless required some form of comparable coverage, the federal program had to provide it directly (federal occupational injury benefits, for example, or contracted private coverage paid from federal program funds). The state was not on the hook to extend its system to people who were not state employees.
For state employees generally, the opinion reinforced the Brandt control test as the touchstone. The "employer-employee" analysis turned on control, not on the source of the funds, the formality of the appointment, or the legislative headcount status. Someone hired under state qualification rules and paid through the state payroll was almost certainly an employee for Workmen's Compensation purposes.
For federal programs administered through state agencies more broadly, the opinion gave a structural answer: the state could absorb federal-program staff into its own personnel systems (including Workmen's Compensation) but should arrange for federal reimbursement of actual costs. The structure protected the state's fisc while letting the state's personnel infrastructure handle the administrative work.
For Title V trainees, the opinion meant they should not have been promised state Workmen's Compensation benefits if they were injured during the work-experience component. Their financial protection had to come from the federal program's own provisions or from private coverage funded by the federal program.
Common questions
Q: What was Title V's policy purpose?
A: Title V was designed to expand opportunities for construction work experience and other training or basic education for people unable to support or care for their families. It targeted adults in or near public assistance who could benefit from job training. The work experience was meant to develop employability rather than to deliver services for hire.
Q: Why didn't the trainees' work for the program count as services for pay?
A: The trainees received maintenance-needs payments rather than wages. The payment formula was based on the trainee's and family's needs, not on hours worked or value delivered. The legal characterization of the payment as a public assistance grant (rather than as wages) controlled the Workmen's Compensation analysis.
Q: What if a trainee was injured while on a project?
A: The opinion left the trainee outside the state Workmen's Compensation system. Federal Title V provisions or contracted private coverage funded by the federal program would have been the trainee's source of injury benefits.
Q: Did the analysis change if a trainee was paid hourly wages on top of the maintenance allowance?
A: The opinion did not address that scenario. If a trainee received both maintenance payments and hourly wages for productive work, the wages-for-services component could have triggered Workmen's Compensation coverage under the Brandt test. But pure maintenance allowances did not.
Q: How was federal reimbursement of state Workmen's Compensation costs supposed to work?
A: The opinion did not specify the mechanics. The standard pattern would have been state Workmen's Compensation paying out on a claim, the state Department of Public Welfare booking the expense to the Title V program account, and the state's federal drawdown of Title V administrative funds including reimbursement for the Workmen's Compensation cost.
Q: What if the federal government refused to reimburse?
A: The opinion presupposed federal cooperation. A federal refusal would have created a state budget problem the legislature would have had to address, but it would not have changed the underlying Workmen's Compensation coverage question.
Q: Were the administrative staff at risk of being deemed non-employees because they were exempt from the legislative headcount?
A: No. The legislature's headcount exemption was about budget mechanics, not about employee status. The headcount exemption let the Department hire federal-funded staff without expanding the state's general fund payroll, but the staff were still state employees in every operational sense.
Background and statutory framework
The federal Economic Opportunity Act of 1964 was the foundational legislation of the War on Poverty. Title V (Work Experience Programs) was one of several titles, providing federal funds for state and local programs that combined work experience with public assistance for adults who lacked stable employment. The program ran through the federal Office of Economic Opportunity (OEO).
South Dakota implemented Title V through the state Department of Public Welfare. The federal grant covered both program costs (trainee payments, equipment, supervision) and administrative costs (state payroll for Title V staff). The state's role was administrative; the federal government provided the substantive direction and the money.
The South Dakota Workmen's Compensation Act lived in SDC chapter 64. Its core concepts (employer, employee, contract of employment, wages, course of employment) were well established by 1967. The Brandt control test was the standard formulation of the employer-employee question, and the Gulbrandson decision had stretched the act somewhat to cover good-Samaritan citizens performing peace-officer-like service.
The AG had to fit the federally created Title V structure into the state-law Workmen's Compensation framework. The natural approach was to apply the act's existing definitions to each subgroup. The administrative staff fit cleanly within "employee" under any reasonable reading. The work trainees fit cleanly outside, because their payments were not wages and their participation was structurally different from employment.
The federal reimbursement note was an acknowledgment of fiscal reality. The state's Workmen's Compensation system was funded by employer assessments. Forcing the state's general fund to absorb the cost of Title V claims would have been bad accounting and bad federalism. The right answer was for the federal government to reimburse the state for any Title V Workmen's Compensation costs, which the federal funding structure could accommodate.
Citations and references
Federal law:
- Title V of the Federal Economic Opportunity Act of 1964 (88th Congress, Second Session, H.R. 10440, March 16, 1964) (work experience and training program for adults unable to support or care for their families)
Statutes:
- SDC 1960 Supp. 64.0101 (Workmen's Compensation Act; control test for employer-employee relationship)
- SDC 1960 Supp. 64.0102 (employer definition, including state and political subdivisions)
- SDC 1960 Supp. 64.0102(2) (as amended by Chapter 262 of the Session Laws of 1966) (employee definition; exception for officials elected or appointed for a regular term)
Cases:
- Brandt v. Co-op Elevator Co. of Revillo, 69 S.D. 77, 5 N.W.2d 897 (1942) (control test for Workmen's Compensation employer-employee relationship)
- Gulbrandson v. Town of Midland, 72 S.D. 465, 36 N.W.2d 644 (1949) (private citizen killed responding to peace officer's request is eligible for Workmen's Compensation)
Prior AG opinions:
- 1961-62 AGR 124 (civil defense volunteers pressed into service can be covered by Workmen's Compensation)
- 1963-64 AGR 16 (state officials not appointed for a definite term, serving at the pleasure of the appointing power, are covered)
- AG opinion of July 21, 1965 to Richard Larson (State Agency for Surplus Property employees are state employees)
- AG opinion of August 13, 1965 to Matthew Furze (Department of Public Welfare authorized to administer Title V projects)
- AG opinion of January 7, 1966 to E. B. Coacher (students receiving funds from Board of Regents may be employees eligible for Workmen's Compensation)
Source
Original opinion text
Public Welfare Department. Title V of the Federal Economic Opportunity Act and the Workmen's Compensation Act.
You have requested an opinion of this office stating the following facts:
"The Title V program is administered in this state through the Department of Public Welfare by directive of the Administrator of the Economic Opportunity Act. The source of all funds for this program is federal without state participation in financing however, administrative money and program money is received and disbursed from the State Treasury in a manner analogous to the receipt and disbursement of money received from the federal government in connection with the Public Assistance Programs of the State Department of Public Welfare.
"In the operation of the program and administrative staff consisting of supervisors, coordinators or consultants, project foremen, social workers and stenographic-clerical workers are employed, whose salaries are paid through the state payroll mechanism upon warrants issued by the State Auditor. They are hired subject to qualification requirements of the State, and may be suspended or discharged in the same manner as any other state employee. These members of staff are not, however, included within the employee count limited by the legislature by directive for the Department of Public Welfare, but expressly exempted from such limitation.
"Persons participating in the projects under the Title V program as work trainees will receive money payments each month in the same manner as public assistance recipients. Such payments will be predicated upon maintenance needs of the trainee and his family rather than as compensation for services performed.
"By federal law or regulation, we understand that Workmen's Compensation or comparable insurance coverage is required for both administrative personnel and for work trainees under the Title V program."
You then ask the following questions:
"1. Are persons employed in administrative capacities in the positions above mentioned under Title V of the Economic Opportunity Act to be covered under the Workmen's Compensation Plan of the State of South Dakota for its employees?
"2. Are persons receiving work experience training under projects of Title V of the Economic Opportunity Act to be considered as state employees so as to be covered under the Workmen's Compensation Plan of the State of South Dakota for its employees?"
It is the purpose of Title V "to expand the opportunities for construction work experience and other needed training or basic education available to persons who are unable to support or care for their families." (88th Congress, Second Session, H.R. 10440, March 16, 1964.)
This flexibility will also permit states to liberalize eligibility requirements, adopt broader requirements and meet full need as determined by state assistance standards.
We have in the past held that the State Department of Public Welfare is authorized by statute to provide services necessary to develop and administer projects under Title V of the Economic Opportunity Act." (Official Opinion issued August 13, 1965, to Matthew Furze.)
SDC 1960 Supp. 64.0102 provides that an "employer, shall include the state and any municipal corporation within the state or any political subdivision of this state and any individual firm, or corporation... using the service of another for pay..."
SDC 1960 Supp 64.0102 (2) provides that an "employer, (is) every person ...in the service of another under any contract of employment, except: (b) (as amended by Ch. 262 of the Session Laws of 1966) any official of the state or any subdivision of government elected or appointed for a regular term of office. We have written an opinion covering Section 6 above, (1963-64 AGR 16) in which we stated that "those state officials who are not appointed for a definite term or period of time... who hold offices at the pleasure of the appointed power would, of course, be covered by Workmen's Compensation."
Our immediate predecessor held in 1961-62 AGR 124 that volunteers performing civil defense services pressed into service by the county, state or municipal government or any other political subdivision could be covered by the Workmen's Compensation Act.
We have held in our opinion to Mr. Richard Larson, Director of the South Dakota State Agency for Surplus Property of July 21, 1965, that employees of the above agency are state employees; this situation involved the use of Federal Surplus commodities.
In our opinion to Mr. E. B. Coacher, Executive Director of the Board of Regents, January 7, 1966, in which funds are allocated for students for educational purposes, we held that such persons were employees and thus eligible under the Workmen's Compensation Plan.
In Brandt v. Co-op Elevator co. of Revillo et al., 69 SD 77, 5 NW2d 897 (1942), the Supreme Court of South Dakota held that "the test of employer-employee relationship within the Workmen's Compensation Act, is the right of the employer under the contract to control the manner and continuance of the particular service and the final result." (64.0101) Whereas in a more recent case, Gulbrandson v Town of Midland, 72 SD 465, 36 NW2d 644 (1949), the Supreme Court held that where "a private citizen is killed while responding to a peace officers request for assistance on arresting criminals," he is eligible for Workmen's Compensation.
The Title V program is administered in this state through the Department of Public Welfare by directive of the Administrator of the Economic Opportunity Act. The source of all funds of this program is federal, without the state participation in financing; however, administrative money and program money is received and distributed from the State Treasury in a manner analogous to the receipt and disbursement of money received from the federal government.
In the operation of the program an administrative staff consisting of supervisors, coordinators or consultants, project foremen, social workers, and stenographic-clerical workers are employed whose salaries are paid through the state payroll mechanism upon warrants issued by the state. They are hired subject to qualification requirements of the state, and may be suspended or discharged in the same manner as any other state employee.
However, it is important to note that these staff members are not included within the employer count limited by the legislature, by directive of the Department of Public Welfare, but are expressly exempted from such limitations.
It is here to be noted that the first group, described in question No. 1 fall directly under the past decisions of the South Dakota Supreme Court and the opinions of this office. We must hold that group No. 1 qualifies for Workmen's Compensation as they comply with the criteria set forth in the South Dakota Statutes. They are state employees. However, because of the peculiar nature of their employment, and because the program is one of one hundred percent financing by the federal government, the proper state officials acting as agents of the federal government in the operation of such program, it is my opinion that in the event an expenditure of state funds may be necessary in order to furnish the benefits of the Workmen's Compensation Act to any person in such group, that such expenditure should be reimbursed in full to the state by the federal government.
The second group under question No. 2 are not qualified. Your letter states that they will be paid in the same manner as the public assistance recipients, but it is important to observe that they are not employees but merely trainees, and as such may possibly be apprentices but not employees. Consequently, even though students are hired by the University as employees, to do specific work, we do not think the relationship is similar here, inasmuch as trainees or apprentices are exempt from the Workmen's Compensation Plan.
In conclusion, the answer to question No. 1 is "Yes", while the answer to question No. 2 in view of the above mentioned material is "No".