Can a Texas county pay performance bonuses to only some of its employees?

TX AG Opinion GA-0492: Can a Texas county pay bonuses to only some of its employees?

Plain-English summary

Smith County Criminal District Attorney D. Matt Bingham, writing on behalf of a county commissioner, asked whether a proposed Smith County incentive bonus plan for certain county employees would comply with article III, section 53 of the Texas Constitution. That provision bars the legislature from granting, or authorizing a county to grant, extra compensation to a public officer, agent, servant, or contractor after the service has been rendered. In plain terms, a county cannot pay a bonus for work that is already finished.

Under the proposed plan, full-time employees in departments reporting directly to the Commissioners Court would be eligible for bonuses if they had at least a year of service, a favorable annual performance rating, and were employees in good standing when checks were distributed, with an additional requirement that department heads have an approved, fully implemented business plan. The plan stated that bonuses were provided at the discretion of the Commissioners Court, which reserved the right to administer, modify, or terminate the plan with or without notice. Some commissioners questioned whether those discretionary features, and the fact that the plan would not cover every county employee, created constitutional problems.

The opinion concluded that the plan would not offend article III, section 53 so long as the county did not pay bonuses for work performed before the plan was adopted. A bonus plan approved before the work is done is permissible, and a plan that merely makes payments possible (contingent on the Commissioners Court's approval or on available funds) does not violate the provision. The discretion to modify or terminate the plan was likewise acceptable, provided no modification ended up paying for services already rendered without new consideration. As for excluding some employees, the opinion explained that a commissioners court has statutory authority to set employee compensation, including bonus plans, and that providing different benefits to different employees is not, as a matter of law, an abuse of discretion. The opinion then declined several questions: whether the plan was genuinely "tied to" performance, whether the particular eligibility conditions were an abuse of the commissioners court's discretion, and whether the classification survived equal-protection review were all fact questions that the opinion process cannot answer. It did note that the classification was not based on a suspect class and did not burden a fundamental right, so a court would apply only rational-basis review, but whether the plan met that standard remained a fact question.

Currency note

This opinion was issued in 2006. 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 constitutional and statutory provisions discussed here, including the Local Government Code sections on commissioners court compensation authority, may have been amended since 2006, and later opinions or court decisions may bear on the analysis. Anyone evaluating a county bonus plan today should check the current law rather than relying on this 2006 opinion.

Who this opinion affected (as of 2006)

Commissioners courts and county officials: The opinion told counties that a forward-looking incentive bonus plan, adopted before the covered work is performed, does not violate article III, section 53, and that making bonuses discretionary or reserving the right to modify or end the plan does not by itself create a constitutional defect, as long as no payment compensates work already done without new consideration.

County employees: The opinion meant that a bonus plan need not cover every employee to be lawful, and that giving different employees different benefits is not automatically an abuse of discretion or an equal-protection violation. It did not resolve whether this particular plan's exclusions were valid, because that depended on facts.

The requesting district attorney and commissioners: On the questions about whether the plan was tied to performance and whether the eligibility conditions abused the court's discretion or denied equal protection, the opinion expressly declined to decide, explaining that those are fact questions outside the opinion process.

Common questions

Does a county bonus plan violate the Texas Constitution's ban on extra compensation?
Not if it is adopted before the work it rewards is performed. The opinion concluded the plan would comply with article III, section 53 unless the county paid bonuses for work rendered before the plan's adoption.

Can the county make the bonuses discretionary or reserve the right to cancel the plan?
Yes. The opinion concluded that conditioning bonuses on the Commissioners Court's approval, and reserving the right to modify or terminate the plan, did not make it unconstitutional, so long as no modification resulted in paying for services already rendered without new consideration.

Does a bonus plan have to include every county employee?
No. The opinion explained that a commissioners court has authority to set employee compensation and that providing different benefits to different employees is not, as a matter of law, an abuse of discretion. Whether this plan's particular exclusions were valid was a fact question it did not resolve.

Did the Attorney General decide whether the plan was fair or tied to performance?
No. The opinion declined to decide whether the plan was tied to performance, whether the eligibility criteria abused the court's discretion, or whether the classification was rationally related to a legitimate purpose, holding that all of these are fact questions the opinion process cannot answer.

Background and statutory framework

Article III, section 53 forbids the legislature from granting, or authorizing a county to grant, extra compensation, a fee, or an allowance to a public officer, agent, servant, or contractor after the service has been rendered or the contract has been entered into and performed in whole or in part. A county therefore may not pay additional compensation for work already performed, but it may provide performance bonuses if it approved the bonus plan before the recipients performed the covered work (Tex. Const. art. III, § 53; City of Orange v. Chance, 325 S.W.2d 838, 840 (Tex. Civ. App.-Beaumont 1959, no writ); Rhoads Drilling Co. v. Allred, 70 S.W.2d 576, 582 (Tex. 1934); Tex. Att'y Gen. Op. Nos. GA-0204 (2004), JM-1253 (1990)).

A commissioners court has the power to set the amount of compensation paid to county employees out of county funds, and compensation includes incentive or bonus plans; its authority is reviewed under an abuse-of-discretion standard, and providing different benefits to different employees is not an abuse of discretion as a matter of law (Tex. Loc. Gov't Code Ann. §§ 152.011 (Vernon 1999), 111.008; Tex. Att'y Gen. Op. Nos. JM-1253 (1990), JM-1160 (1990), GA-0156 (2004)).

On the equal-protection questions, the opinion noted that both the federal and Texas constitutions guard against discrimination between classes of persons, but equal protection does not entitle every citizen to equal benefits whenever government money is spent; a classification that does not burden a fundamental right or rest on a suspect basis such as race or national origin is reviewed only for a rational relationship to a legitimate government purpose. Whether the proposed plan met that standard was a fact question the opinion process could not resolve (Tex. Const. art. I, § 3; U.S. Const. amend. 14, § 1; Richards v. League of United Latin Am. Citizens, 868 S.W.2d 306, 310-11, 312 (Tex. 1993); Weber v. City of Sachse, 591 S.W.2d 563, 567 (Tex. Civ. App.-Dallas 1979, writ dism'd); Mass. Bd. of Ret. v. Murgia, 427 U.S. 307, 312 nn.3 & 4 (1976); Tex. Att'y Gen. Op. No. GA-0156 (2004)).

Citations

Statutes and constitutional provisions:

• Tex. Const. art. III, § 53; art. I, § 3
• U.S. Const. amend. 14, § 1
• Tex. Loc. Gov't Code Ann. §§ 152.011 (Vernon 1999), 111.008

Cases:

• City of Orange v. Chance, 325 S.W.2d 838, 840 (Tex. Civ. App.-Beaumont 1959, no writ)
• Rhoads Drilling Co. v. Allred, 70 S.W.2d 576, 582 (Tex. 1934)
• Richards v. League of United Latin Am. Citizens, 868 S.W.2d 306, 310-11, 312 (Tex. 1993)
• Weber v. City of Sachse, 591 S.W.2d 563, 567 (Tex. Civ. App.-Dallas 1979, writ dism'd)
• Mass. Bd. of Ret. v. Murgia, 427 U.S. 307, 312 nn.3 & 4 (1976)

Attorney General opinions referenced:

• Tex. Att'y Gen. Op. Nos. GA-0204 (2004), GA-0156 (2004), JM-1253 (1990), JM-1160 (1990), JC-0383 (2001)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0492
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2006/ga0492.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain - the linked PDF is authoritative.

ATTORNEY GENERAL OF TEXAS

GREG ABBOTT

December 15, 2006

The Honorable D. Matt Bingham
Smith County Criminal District Attorney
Smith County Courthouse
100 North Broadway, 4th Floor
Tyler, Texas 75702

Opinion No. GA-0492

Re: Whether a proposed Smith County incentive bonus plan for certain county employees complies with article III, section 53 of the Texas Constitution (RQ-0486-GA)

Dear Mr. Bingham:

On behalf of a Smith County Commissioner, you ask whether a proposed Smith County incentive bonus plan for certain county employees complies with article III, section 53 of the Texas Constitution.

You inform us that the Smith County Commissioners Court (the "Commissioners Court") is considering adopting an incentive bonus plan for employees in departments that report directly to the Commissioners Court, that is, employees of the Commissioners Court, the records service, the veterans service, the physical plant, personnel, the probate court or courts, purchasing, the fire marshal, pre-trial, and road and bridge. See Request Letter, supra note 1, at 2; Smith County Incentive Plan, attached to Request Letter as Exhibit B, at 1 [hereinafter Incentive Plan]. Under the proposed incentive plan, employees whose annual job performance has been meritorious would be eligible for bonuses if they meet the following criteria:

• Full time employee with a minimum of one year [of] service at the end of the fiscal year.

• Annual performance evaluation rating of ["]meets expectations["] or above. Department Heads must have an annual performance evaluation rating of ["]exceeds expectations["] or above.

• Be an employee in good standing on the date incentive checks are distributed.

• Department Heads must have a fully implemented business plan approved by the Commissioners Court.

Incentive Plan, supra at 1. Incentive payments will be distributed in the first quarter of the fiscal year based on performance in the prior fiscal year. See id. You also inform us that the Incentive Plan would stipulate that it "is provided at the discretion of the Commissioners Court" and further, that the Commissioners Court "reserves the right to administer, modify or terminate the Plan with or without notice." Request Letter, supra note 1, at 2.

Certain Smith County Commissioners question the Incentive Plan's constitutionality. See id. You thus ask whether the Incentive Plan "meet[s] the requirements of [a]rticle III, [s]ection 53 of the Texas Constitution and what is the effect if any of an incentive bonus plan that does not include all county employees." Id. at 1.

Article III, section 53 forbids the legislature "to grant, or to authorize any county . . . to grant . . . any extra compensation, fee or allowance to a public officer, agent, servant or contractor, after service has been rendered, or a contract has been entered into, and performed in whole or in part." Tex. Const. art. III, § 53. Consistently with article III, section 53, a county may not pay additional compensation to employees for work already performed. See City of Orange v. Chance, 325 S.W.2d 838, 840 (Tex. Civ. App.-Beaumont 1959, no writ) (citing Rhoads Drilling Co. v. Allred, 70 S.W.2d 576, 582 (Tex. 1934)). But a county may provide bonuses based on performance if the county approved a bonus plan before employee recipients performed the work for which the bonuses are given. See Tex. Att'y Gen. Op. No. GA-0204 (2004) at 3-4; Tex. Att'y Gen. Op. No. JM-1253 (1990) at 2-3.

Your specific concern about the Incentive Plan's validity relates to the stipulation that the Plan "is provided at the discretion of the Commissioners Court" and that the Commissioners Court reserves "the right to administer, modify or terminate the Plan with or without notice." Incentive Plan, supra at 2; see Request Letter, supra note 1, at 2. You ask whether, given these stipulations, the Incentive Plan is "approved as part of an employee's compensation prior to the employee rendering service." Request Letter, supra note 1, at 2.

The fact that the Incentive Plan makes the award of bonuses and administration of the plan a matter within the Commissioners Court's discretion does not render the Incentive Plan unconstitutional under article III, section 53. Article III, section 53 does not prohibit payments made for work performed under a contract or employment policy that provides merely for the possibility of such payments. See Tex. Att'y Gen. Op. No. GA-0204 (2004) at 3 (quoting Tex. Att'y Gen. Op. No. JC-0383 (2001) at 2). Thus, this office determined in 2004 that a school district could offer to certain teachers bonuses that were contingent on the availability of earmarked funds. See id. at 3-4. Similarly, Smith County may, without running afoul of article III, section 53, provide for employee bonuses that are conditioned on the Commissioners Court's approval.

Under the same analysis, the fact that the Commissioners Court can modify or terminate the Incentive Plan does not render the Incentive Plan unconstitutional under article III, section 53, provided that, absent the receipt of new consideration, no modification of the Incentive Plan results in a payment for services rendered prior to such modification. See id. at 3.

You also ask whether, "if the incentive plan is totally at the discretion of the commissioners court, . . . the plan [is] tied to [an] employee['s] performance." Request Letter, supra note 1, at 2. Whether a particular plan is "tied to" employee performance is a question that requires the resolution of fact issues and is thus beyond the purview of the opinion process. Cf. Tex. Att'y Gen. Op. No. GA-0156 (2004) at 10 (stating that fact questions cannot be answered in the opinion process). Further, article III, section 53 does not distinguish between bonuses based on merit and bonuses based on other criteria. Thus, an incentive plan that is not tied to an employee's performance does not necessarily contravene article III, section 53.

Finally, you ask "what is the effect if any of an incentive bonus plan that does not include all county employees." Request Letter, supra note 1, at 1. You are concerned in particular with the stipulation in the Incentive Plan that "Department Heads must have a fully implemented business plan approved by the Commissioners Court." Incentive Plan, supra at 1; Request Letter, supra note 1, at 3. You suggest that because of this stipulation an employee whose department head has not implemented an approved business plan would not be eligible for a bonus under the Incentive Plan. See Request Letter, supra note 1, at 3. You also express concern that an elected official could choose to exclude from the Incentive Plan employees in the official's office who would otherwise be eligible to participate. See id. at 2-3.

The fact that the Incentive Plan excludes employees whose department heads have not implemented approved business plans or have otherwise chosen not to participate does not necessarily render the proposed plan invalid as a matter of law. You have not named any statute that would restrict a commissioners court's authority to condition eligibility for bonuses in part on such a criterion, and we are not aware of any. A commissioners court has the power to "set the amount of the compensation" paid to county employees out of county funds. Tex. Loc. Gov't Code Ann. § 152.011 (Vernon 1999); see id. § 111.008. Compensation includes incentive or bonus plans. See Tex. Att'y Gen. Op. No. JM-1253 (1990) at 2. In general, a commissioners court's authority to set employee compensation is subject to review on an abuse-of-discretion standard, and providing different benefits to different employees does not constitute an abuse of discretion as a matter of law. Cf. Tex. Att'y Gen. Op. No. JM-1160 (1990) at 2 ("The fact that one employee may receive greater sick leave than another employee would appear to be permissible so long as the additional benefits conferred under the guidelines are not dependent upon factors that might constitute an abuse of discretion."). Whether this particular criterion constitutes an abuse of a commissioners court's discretion is a question of fact that cannot be resolved in the opinion process. Cf. Tex. Att'y Gen. Op. No. GA-0156 (2004) at 10 (stating that fact questions cannot be answered in the opinion process).

While "[b]oth the federal and Texas constitutions safeguard against . . . discrimination between classes of persons," "[e]qual protection does not entitle every citizen to receive equal benefits each time government money is spent." Richards v. League of United Latin Am. Citizens, 868 S.W.2d 306, 312 (Tex. 1993); Weber v. City of Sachse, 591 S.W.2d 563, 567 (Tex. Civ. App.-Dallas 1979, writ dism'd); see U.S. Const. amend. 14, § 1; Tex. Const. art. I, § 3. Rather, a court generally will require only that a classification "be rationally related to a legitimate state purpose." Richards, 868 S.W.2d at 310-11.

The general rule gives way, however, when the classification impinges on the exercise of a fundamental right, or when the classification distinguishes between people, in terms of any right, on a "suspect" basis such as race or national origin. In those instances, the state action is subjected to strict scrutiny, requiring that the classification be narrowly tailored to serve a compelling government interest.

Id. at 311 (citations omitted).

Among full-time employees who are eligible for bonuses because they have had favorable work evaluations, the Incentive Plan, in your view, may distinguish between those whose department heads have implemented an approved business plan and those whose department heads have not. This is not a suspect classification; nor does the inability to receive a bonus infringe upon a fundamental right. Cf. Mass. Bd. of Ret. v. Murgia, 427 U.S. 307, 312 nn.3 & 4 (1976) (listing rights that courts have identified as fundamental and classifications that courts have identified as suspect). Consequently, the classification established by the proposed Incentive Plan must, as a matter of law, be only rationally related to a legitimate state purpose. Whether the proposed Incentive Plan is rationally related to a legitimate state purpose is a fact question that cannot be resolved in the opinion process. Cf. Tex. Att'y Gen. Op. No. GA-0156 (2004) at 10 (stating that fact questions cannot be answered in the opinion process).

SUMMARY

The Incentive Plan proposed by the Smith County Commissioners Court for certain county employees does not contravene article III, section 53 of the Texas Constitution unless employees are provided bonuses for work rendered before the plan's adoption. The fact that the proposed plan stipulates that bonus awards are within the Commissioners Court's discretion does not itself render the plan unconstitutional.

The opinion process cannot determine whether the commissioners court would abuse its discretion or violate constitutional equal protection guarantees if employees' eligibility for benefits under the proposed plan is contingent on their department heads' actions.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

KENT C. SULLIVAN
First Assistant Attorney General

ELLEN L. WITT
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Kymberly K. Oltrogge
Assistant Attorney General, Opinion Committee

Footnotes

1. See Letter from Honorable D. Matt Bingham, Smith County Criminal District Attorney, to Honorable Greg Abbott, Attorney General of Texas, at 1 (May 11, 2006) (on file with the Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].