Does Texas law require public works contracts to count fringe benefits as part of the prevailing wage?

Texas AG Opinion JM-1164: Must Fringe Benefits Count Toward the Prevailing Wage?

Plain-English summary

Senator Chet Brooks, chairman of the Senate Health and Human Services Committee, asked the Attorney General to reconsider Attorney General Opinion H-350 (1974) and hold that V.T.C.S. article 5159a, the state's prevailing-wage law for public works contracts, requires public bodies to count the value of fringe benefits when calculating the prevailing wage rate. The request grew out of the University of Texas System's current practice of not including fringe benefits in its wage tables for public works contracts in some localities.

The Attorney General declined to change course. Article 5159a's section 4 leaves the determination of the "general prevailing rate of per diem wages" to the public body awarding the contract, and Attorney General Opinion H-350 had already concluded that determination is discretionary and final, not subject to judicial review (citing Texas Highway Comm'n v. El Paso Building & Construction Trades Council). The University of Texas System explained that its wage tables actually did include fringe benefits in localities where union contractors represented the prevailing workforce, since paying fringe benefits was the prevailing practice there, and excluded them where open-shop work predominated and fringe benefits weren't the local norm, meaning the System's tables tracked prevailing local practice rather than ignoring fringe benefits altogether. The opinion also noted that several legislative attempts over the years to amend article 5159a to expressly require counting fringe benefits had all failed, which supported reading the existing statute as not requiring it. The Attorney General concluded a public body isn't required to include fringe benefits in every locality's prevailing-wage calculation, but should do so where paying fringe benefits actually is the prevailing local practice for similar work.

Currency note

This opinion was issued in 1990. 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.

Who this opinion affected (as of 1990)

Public bodies awarding public works contracts (including the University of Texas System): The opinion confirmed their prevailing-wage determinations, including whether to count fringe benefits, are final and largely left to their own factual assessment of local practice.

Construction contractors bidding on public works contracts: The opinion meant that whether their bids needed to account for fringe benefits as part of the prevailing wage depended on the specific locality's practice as the contracting public body determined it, not a fixed statewide rule.

Common questions

Does Texas's prevailing-wage law for public works require fringe benefits to be counted?
No, according to this opinion. The public body awarding the contract has discretion to include fringe benefits in the calculation, and should do so only where that reflects the prevailing local practice for similar work.

Why did the University of Texas System stop including fringe benefits in some of its wage tables?
Because, as it explained to the Attorney General, its tables tracked prevailing local practice: fringe benefits were included where union contractors represented the prevailing workforce and paying benefits was standard there, and excluded where open-shop work predominated and benefits weren't the norm.

Can a court review a public body's decision about how to calculate the prevailing wage?
No, according to this opinion, which relied on the earlier Attorney General Opinion H-350 and Texas Highway Comm'n v. El Paso Building & Construction Trades Council for the conclusion that the public body's determination under article 5159a is final and not judicially reviewable.

Has the legislature ever tried to require fringe benefits to be counted?
Yes. The opinion noted several unsuccessful legislative attempts, in the 63rd, 64th, and 68th sessions, to amend article 5159a to expressly include fringe benefits in the prevailing-wage calculation, none of which passed.

Background and statutory framework

V.T.C.S. article 5159a, section 1, requires that "not less than the general prevailing rate of per diem wages" be paid to laborers, workmen, and mechanics employed on public works for the state or its political subdivisions. Section 4 defines the "general prevailing rate of per diem wages" as the rate determined by the public body awarding the contract or authorizing the work, whose decision "shall be final." Attorney General Opinion H-350 (1974) had already addressed whether fringe benefits could be included in that calculation, concluding the public body's determination was discretionary and not judicially reviewable (citing Texas Highway Comm'n v. El Paso Building & Construction Trades Council, 234 S.W.2d 857 (Tex. 1950)), and that a public body had discretion to consider fringe benefits in setting the prevailing wage.

This opinion declined the senator's request to convert that discretion into a requirement. It accepted, as a factual matter not appropriate for the opinion process to second-guess, the University of Texas System's account of its own practice: fringe benefits were included in wage tables for localities where union contractors represented the prevailing workforce (because paying fringe benefits was the prevailing local practice there) and excluded where open-shop work predominated and fringe-benefit payment wasn't customary. Since the System's practice already tracked local prevailing conditions, the opinion found the senator's premise, that the System had simply stopped accounting for fringe benefits, did not accurately describe what was happening. The opinion reasoned that requiring fringe benefits to be included even where local practice didn't support it would force contracting authorities to pay above the actual prevailing rate, contrary to the statute's purpose. It also noted that several legislative attempts to amend article 5159a to expressly mandate counting fringe benefits, in 1973, 1975, and 1983, had all failed to pass, a fact that, while not conclusive, supported reading the existing statute as not already requiring it.

Citations

Statutes:

• V.T.C.S. art. 5159a §§ 1, 4

Cases:

• Texas Highway Comm'n v. El Paso Building & Construction Trades Council, 234 S.W.2d 857 (Tex. 1950)

Related opinions (Texas Attorney General):

• H-350 (1974)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/jim-mattox/jm-1164
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/1990/jm1164.pdf

Original opinion text

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

Honorable Chet Brooks
Chairman
Health and Human Services Committee
Texas State Senate
P. O. Box 12068
Austin, Texas 78711

Opinion No. JM-1164

Re: Inclusion of fringe benefits in calculating the prevailing wage under article 5159a, V.T.C.S. (RQ-1857)

Dear Senator Brooks:

You ask whether article 5159a, V.T.C.S., requires the inclusion of fringe benefits in the calculation of the prevailing wage. That article governs the payment of wages for the construction of public works on behalf of the state or its various political subdivisions. Section 1 provides in part:

Not less than the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed, and not less than the general prevailing rate of per diem wages for legal holiday and overtime work, shall be paid to all laborers, workmen and mechanics employed by or on behalf of the State of Texas, or by or on behalf of any county, city and county, city, town, district or other political subdivision of the State, or any officer or public body thereof, shall be deemed to be employed upon public works . . . .

Section 4 of the article provides in part:

The term 'general prevailing rate of per diem wages' shall be the rate determined upon as such rate by the public body awarding the contract, or authorizing the work, whose decision in the matter shall be final.

In Attorney General Opinion H-350 (1974) this office was asked about the permissibility of including fringe benefits in the calculation of the prevailing wage. That opinion noted that a governing body's determination fixing the prevailing wage rate was final and not judicially reviewable. See Texas Highway Comm'n v. El Paso Building & Construction Trades Council, 234 S.W.2d 857 (Tex. 1950). The opinion concluded that a public body had discretion under the statute to consider fringe benefits in determining a prevailing wage rate.

You ask us to modify the holding of Attorney General Opinion H-350 and to construe the statute to require the inclusion of the value of fringe benefits in the determination of the prevailing wage rate. You tell us that this request is prompted by the current practice of the University of Texas System to no longer include fringe benefits in its wage table calculations for its construction contracts in given localities.

In its response to your request, the University of Texas System indicates that in those areas where union contractors represented the prevailing work force in a given locality, its wage tables included fringe benefits, because the payment of fringe benefits is not prevailing practice in those areas. In those areas where open-shop work represents the prevailing work force, we understand that the University System's wage tables do not include fringe benefits. Thus, the University System's wage tables appear to reflect the prevailing practice in a given locality.[1] Consequently, your question does not accurately describe the practice as described by the University of Texas System.

In our opinion, the inclusion of the value of fringe benefits in a governmental body's determination of the prevailing wage must be a matter for the governmental body. If the entity determines that wages in a given locality for similar work typically include fringe benefits, that factor should be considered in the calculation. It would be inconsistent, in our opinion, to read the statute as requiring the inclusion of fringe benefits when the prevailing practice in the locality is otherwise. As indicated in the brief filed by the University of Texas System, the inclusion of fringe benefits in such a locality would compel the contracting authority to pay wages at a rate that is higher than the prevailing rate.

We note that several attempts to amend article 5159a to expressly include fringe benefits have been unsuccessful.[2] While this fact alone does not preclude an interpretation that fringe benefits are mandated by the current language, it supports this office's earlier reading of the statute in Attorney General Opinion H-350. We are not persuaded that the University of Texas System's method of determining the prevailing wage for a given locality is inconsistent with article 5159a. Therefore, we decline to modify Attorney General Opinion H-350. In our opinion, a governing body is not required by article 5159a to include the value of fringe benefits in its calculation of the prevailing wage in a given locality. It is proper for the governing body to include the value of fringe benefits in its calculation if it determines that payment of fringe benefits is the prevailing practice in the locality.

SUMMARY

A governing body is not required by article 5159a, V.T.C.S., to include the value of fringe benefits in its calculation of the prevailing wage in a given locality.

JIM MATTOX
Attorney General of Texas

MARY KELLER
First Assistant Attorney General

JUDGE ZOLLIE STEAKLEY
Special Assistant Attorney General

RENEA HICKS
Special Assistant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Karen C. Gladney
Assistant Attorney General

Footnotes

1. We accept the University System's description as accurate, because this is a factual matter not appropriately determined in the opinion process.

2. Legislation introduced in the 63rd, 64th, and 68th Legislative Sessions would have amended article 5159a to include fringe benefits in the rate of pay calculated under that article. None of these amendments was adopted, however. See S.B. 329, 63d Leg. (1973); H.B. 936, 63d Leg. (1973); S.B. 804, 64th Leg. (1975); S.B. 1259, 64th Leg. (1975); S.B. 950, 68th Leg. (1983); H.B. 1399, 68th Leg. (1983).