OFFICES AND OFFICERS ‑- EMPLOYEES ‑- STATE ‑- INSTITUTIONS ‑- SALARIES ‑- USE OF STATE‑OWNED OR LEASED AUTOMOBILES
(1) The governing body of a state institution may not, in the exercise of its statutory authority to employ and fix the salaries and duties of the various administrative officers and employees of that institution, provide those officers and employees with the unrestricted use of an automobile owned or leased by the institution for that purpose.
(2) Where the statutory authority of a state institution is to "employ," or "employ and compensate" its necessary officials or employees, that institution may, in the exercise of this authority, contract to provide the unrestricted use of an automobile leased by the institution for that purpose, but it may not so contract in the case of a state‑owned automobile in view of WAC 82-28-200 which provides that state cars shall be used only for official business.
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July 25, 1974
Honorable A. N. Shinpoch
Chairman, Legislative Budget Committee
361 Maple Avenue N.W.
Renton, Washington 98055
Cite as: AGO 1974 No. 15
By letter previously acknowledged you have requested the opinion of this office on two questions which we have paraphrased as follows:
(1) May the governing body of a state institution, in the exercise of its statutory authority to employ and fix the salaries and duties of the various administrative officers and employees of that institution, provide certain of those administrative officers or employees with the unrestricted use of an automobile owned or leased by the institution for that purpose?
[[Orig. Op. Page 2]]
(2) Would the answer to question (1) be different if, instead of being vested with the authority to employ and fix the salary of its administrative officers and employees, the governing body of a state institution or agency were simply authorized to "employ" or to "employ and compensate" such officials or employees?
For the reasons set forth in our analysis, we answer question (1) in the negative; question (2) is answered in the affirmative with respect to leased automobiles and in the negative with respect to state‑owned automobiles.
We begin our response by noting that there are two separate sets of issues whose resolution is material to the ultimate disposition of this opinion request. First, we must consider the issues expressly raised by your letter; i.e., whether or not the statutory authority of the governing body of a state institution to employ, or to employ and fix the salaries or compensation1/ of its administrative officers, allows it, in the absence of anything to the contrary, to provide those officers or employees with the unrestricted use of an automobile for both official and personal purposes. And then it will also be necessary, in order to completely answer your second question, for us to consider the scope and effect of two current regulations of the state office of program planning and fiscal management (OPP&FM) relating to the use of state automobiles for nonofficial purposes.
A.Inclusion of Automobile as Part of Salary or Compensation.
As indicated inState ex rel. Holcomb v. Armstrong, 39 Wn.2d 860, 239 P.2d 545 (1952), state agencies and institutions may only exercise those powers that have been expressly granted to them by the constitution or statutes, or, absent such an express grant, ". . . those powers necessarily or fairly implied in or incident to the powers expressly granted [[Orig. Op. Page 3]] or those essential to the declared objects and purposes of . . ." the agency in question. Accord,State ex rel. Eastvold v. Maybury, 49 Wn.2d 533, 304 P.2d 663 (1956), and cases cited therein. It is further well settled that the words "necessary" and "essential," as used in the foregoing rule enunciating the doctrine of implied powers, refer to legal rather than to practical necessity. State ex rel. State Board Etc. v. Clausen, 84 Wash. 279, 283, 146 Pac. 630 (1915). To amplify upon this point, implied powers are such as are necessary to carry into effect those powers which have been expressly granted to an agency and which must, therefore, be presumed to have been within the intention of the legislative grant. City of Madison v. Daley, 58 Fed. 751 (1893).
In considering the extent of authority to be derived from a statute authorizing a state agency to fix the "salary" of its officers or employees, we must be guided by the fundamental principle that words in a statute are presumed to have their ordinary and customary meaning, in the absence of any expression of legislative intent to the contrary. State v. Vosgien, 82 Wash. 685, 144 Pac. 947 (1914). Thus, turning to Black's Law Dictionary, 4th Ed., we find therein the following definition of "salary":
". . . a fixed periodical compensation paid for services rendered; a stated compensation, amounting to so much by the year, month, or other fixed period, to be paid to public officers and persons in some private employments, for the performance of official duties or the rendering of services of a particular kind, more or less definitely described, involving professional knowledge or skill, or at least employment above the grade of menial or mechanical labor. State v. Speed, 183 Mo. 186, 81 S.W. 1260. A fixed, annual, periodical amount payable for services and depending upon the time of employment and not the amount of services rendered. In re Information to Discipline Certain Attorneys of Sanitary Dist. of Chicago, 351 Ill. 206, 184 N.E. 332, 359. It is synonymous with 'wages,' except that 'salary' is sometimes understood to relate to compensation for [[Orig. Op. Page 4]] official or other services, as distinguished from 'wages,' which is the compensation for labor. Walsh v. City of Bridgeport, 88 Conn. 528, 91 A. 969, 972, Ann.Cas. 1917B, 318. See, also, Fee."
Accord,State ex rel. Jaspers v. West, 13 Wn.2d 514, 125 P.2d 694 (1942), wherein our court, quoting from Cox v. Homes, 14 Wash. 255, 44 Pac. 262 (1896), spoke of the payment of compensation bysalary ‑ as distinguished from other methods of compensation. From this definition it thus seems apparent that the authority of a state agency or institution to "fix the salary" of its officers and employees does not encompass the power to permit the unrestricted use of a state‑owned or leased automobile for the reason that the term "salary" denotes a certain limited kind of compensation paid in the form of money or its equivalent at fixed intervals. Accordingly, if the only statutory authority of a given agency with respect to the compensation of its officers and employees is to fix and pay them a "salary," it necessarily follows that such a provision may not be included in the employment contract. For this reason we must answer your first question, as above set forth, in the negative.
Having so concluded, however, and before turning to your second question (which anticipates the foregoing answer and asks whether it would be different if the agency's power is, instead, to "employ" or "employ and compensate") we should add a brief cautionary remark with respect to the effect of this initial conclusion on existing employment contracts and/or automobile lease agreements entered into by those state agencies to which this aspect of our opinion is applicable. While it is our opinion that any such existing employment contracts as purport to include the unrestricted use of a state‑owned or leased automobile as a part of an employee's "salary" are erroneous, it does not necessarily follow that the employing agencies must immediately terminate those contracts or any related leases and thus risk lawsuits for breaches of contract. The problem is not whether the amount of the compensation was earned or properly bargained for. Rather, as we see it, the situation is one in which the employing agency has agreed to pay and has paid earned compensation in an erroneous form, but in good faith based upon an honest misinterpretation of the applicable statute authorizing the payment of a "salary." Thus, while a civil action to invalidate such a contractual provision or related lease would probably succeed, the likely and equitable result would most likely [[Orig. Op. Page 5]] be a judgment ordering the agency in question to pay an equivalent balance in money to the employees affected ‑ in lieu of the benefit actually bargained for and earned. For that reason, we would suggest that any agency affected by this portion of our opinion should merely terminate any such contracts or leases at its earliest possible opportunity to do so, consistent with the terms of the contract in question ‑ and then, obviously, enter into no new contracts or leases of like substance in the future unless sanctioned by later legislation.
In contrast to the above definition of "salary," the term "compensation," as also defined in Black's Law Dictionary, supra, means:
"The remuneration of wages given to an employee or, especially, to an officer. Salary, pay, or emolument. Christopherson v. Reeves, 44 S.D. 634, 184 N.W. 1015, 1019; Higgins v. Glenn, 65 Utah, 406, 237 P. 513, 515. The ordinary meaning of the term 'compensation,' as applied to officers, is remuneration, in whatever form it may be given, whether it be salaries and fees, or both combined. State v. Bland, 91 Kan. 160, 136 P. 947, 949. It is broad enough to include other remuneration for official services; State ex rel. Emmons v. Farmer, 271 Mo. 306, 196 S.W. 1106, 1108; such as mileage or traveling expenses; Leckenby v. Post Printing & Publishing Co., 65 Colo. 443, 176 P. 490, 492; and also the repayment of amounts expended. Compare, however, People v. Chapman, 225 N.Y. 700, 122 N.E. 240; McCoy v. Handlin, 35 S.D. 487, 153 N.W. 361, 371, L.R.A. 1915E, 858, Ann.Cas. 1917A, 1046. But the term is not necessarily synonymous with 'salary.' See People v. Wemple, 115 N.Y. 302, 22 N.E. 272; Com. v. Carter, 21 Ky.L.Rep. 1509, 55 S.W. 701; Crawford County v. Lindsay, 11 Ill. App. 261; Kilgore v. People, 76 Ill. 548."
Because this is a broader term than the word "salary,"2/ [[Orig. Op. Page 6]] a statute which authorizes an agency to "fix the compensation" of its employees has been construed by this office to authorize the payment of certain fringe benefits in addition to salaries. See, Ago 63-64 Nos. 81 [[to Don Miles, State Representative on January 28, 1964]]and 97 [[to Cliff Yelle, State Auditor on April 8, 1964]], copies enclosed. As stated in the latter,
". . . Municipal corporations have an implied power to hire employees to carry out their necessary functions and to fix compensation and terms of employment. Christie v. The Port of Olympia, 27 Wn. (2d) 534, 179 P.(2d) 294 (1947). Of course, there are limitations on this rule, as is evident from the nature of theChristie case itself and such cases asState ex rel. Jaspers v. West, 13 Wn.(2d) 514, 125 P.(2d) 694 (1942). But in its general application, according to the reasoning of theChristie case, the power to compensate those who are classified as employees of a municipal corporation must be considered as very broad. It should be considered broad enough to cover, as a general rule, such additional benefits as vacation time, sick leave, and possibly even insurance plans, unless the power, once delegated by express or implied legislative grant, is limited by some other legislative expression . . ."
In so advising, however, we further noted the possibility of finding such alimitation on the basis of,
". . . a pattern of legislation expressly granting certain types of fringe benefits, thus indicating that the legislature meant the power to exist only pursuant to express legislative grant."
The source of this principle, in turn, was another prior opinion of this office, AGO 61-62 No. 18 [[to Ray E. Munson, Prosecuting Attorney, Yakima County on March 21, 1961]],supra, in which this office determined that a fire protection district was then without power to pay part or all of the premiums on a group life insurance policy for certain district personnel absent express statutory authority. The basis for that conclusion was the existence of a pattern of legislation under which such insurance coverage was expressly authorized as a "fringe benefit" for the employees of many other [[Orig. Op. Page 7]] state agencies and political subdivisions, but not for those of a fire protection district.
In the present case, however, there are no statutes expressly authorizing any state agencies or political subdivisions to provide their officers or employees with compensation in the form of an automobile for their unrestricted personal use. Therefore, the rationale of AGO 61-62 No. 18, supra, is inapplicable. In other words, this is not a case where the legislature has made specific provision for some agencies but not all to provide as a "fringe benefit" the personal use of a leased automobile; and thus, there is no basis for an inference that those agencies not so expressly authorized are powerless to do so. Accordingly, it follows that in the absence of anything to the contrary regarding the provision of an automobile as a part of the compensation for services rendered by an administrative officer or employee of a state agency or institution, this "fringe benefit" may be provided if the express power of the particular agency is that of employing, or employing and compensating (rather than the more limited power of employing and fixing thesalaries) of its officers and employees.
B.Impact of OPP&FM Regulation.
The foregoing does not, however, allow us to give you an unqualified affirmative answer to your second question. As noted at the outset, a second problem area exists with respect to this question (but not as to your first question because of our previous negative answer thereto) in view of certain regulations that have been promulgated by the state office of program planning and fiscal management (OPP&FM).
First to be noted is WAC 82-28-200, which unequivocally provides that: ". . . state cars shall be used only on official business." Secondly, WAC 82-28-220, in dealing with the use of rental automobiles, only authorized their use ". . . for official business . . ." and then only under certain designated conditions, including a lack of availability of a state‑owned car.
Statutory authority for the adoption of these regulations is to be found in the state budget and accounting act,3/ [[Orig. Op. Page 8]] together with the specific statutory authority customarily provided in each omnibus appropriation act passed by the legislature. See, e.g., § 120, chapter 137, Laws of 1973, 1st Ex. Sess., which provides, in pertinent part, that the director of OPP&FM may:
"(2) Issue rules and regulations to establish uniform standards and business practices throughout the state service, . . ."
It is thus clear that state agencies subject to fiscal control of OPP&FM with respect to the funds appropriated to them by the legislature must conform their expenditures of these funds to the applicable rules and regulations duly adopted by OPP&FM, including the two above noted. Therefore, because of the provisions of WAC 82-28-200,supra, it follows that even though otherwise authorized to do so in fixing the compensation of its officers or employees, a state agency or institution to which that regulation is applicable may not include in its compensation package the unrestricted use of a state‑owned" automobile.
With respect to rental or leased automobiles, however, the effect of the OPP&FM regulations is somewhat different. As used in WAC 82-28-220,supra, the term "rental car" appears only to contemplate or embrace the rental and use of commercially-rented automobiles on a short-term basis, as on a business trip. This conclusion follows because of the references to car rentals in the context of miscellaneous travel expenses as stated in WAC 82-28-090(1)(a),4/ or in WAC 82-28-220(1)(e), (f) and (g) which discuss the use of credit cards for rental cars, the obtaining of rental cars from firms which offer the service, and documentation concerning the day and purpose of a trip during which a rental car is used. With respect to use of such short-term rental cars, WAC 82-28-220(1) only authorizes their use ". . . for official business . . ." and then only under certain designated conditions.
Nowhere in the regulations of OPP&FM or in the general [[Orig. Op. Page 9]] statutes, however, do we find any express reference to the provision of long-term leased automobiles ‑ much less to the powers of state agencies to make provision for their administrative officers or employees to use such vehicles for their official and personal use. Therefore, as to those types of automobiles we may, notwithstanding these regulations, still answer your second question in the affirmative on the basis of our earlier determination of the meaning of compensation.
We trust that the foregoing will be of assistance to you.
Very truly yours,
RICHARD H. HOLMQUIST
Assistant Attorney General
*** FOOTNOTES ***
1/We will assume, for purposes of this opinion, that the power to "employ" carries with it the implied power to pay some form of "compensation." Thus, the answer to the question of whether the power to "employ" includes the power to supply an automobile will be found in our answer to what the term "compensation" may mean.
2/See, State ex rel. Funke v. Board of Com'rs, 48 Wash. 461, 465, 467, 93 Pac. 9201908), and AGO 61-62 No. 18 [[to Ray E. Munson, Prosecuting Attorney, Yakima County on March 21, 1961]]noted below, a copy of which is enclosed.
3/See, RCW 43.88.160.
4/"Reimbursable expenses include, but are not limited to: (a) taxi fares, car rentals, parking fees, and ferry and bridge tolls."