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AGO 1964 No. 97 - April 08, 1964
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John J. O'Connell | 1957-1968 | Attorney General of Washington


MUNICIPALITIES ‑- GOVERNING BODIES ‑- SICK LEAVE FOR EMPLOYEES ‑- AUTHORITY TO PROVIDE SEVERANCE PAY BASED UPON ACCRUED SICK LEAVE ‑- EXCEPTION.

(1) A city of the first class, in the absence of a restriction in its charter, has the authority to adopt by ordinance a plan for granting severance pay to its employees for accrued sick leave in consideration of service to be performed by the employee after the adoption of the ordinance.

(2) Same: Counties and other cities and towns, but not school districts, have the authority to adopt by ordinance or contract provisions a plan granting severance pay to their employees for accrued sick leave in consideration of services to be performed by the employee after the ordinance is adopted or contract is executed.

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                                                                    April 8, 1964

Honorable Cliff Yelle
State Auditor
Legislative Building
Olympia, Washington

                                                                                                                Cite as:  AGO 63-64 No. 97

Dear Sir:

            By letter previously acknowledged you have requested an opinion from this office on two questions which we have paraphrased as follows:

            (1) Does a city of the first class have the authority to adopt by ordinance a plan of granting severance pay to its employees based upon accrued sick leave time?

            (2) Does any other municipal corporation, including cities, towns, counties and school districts, have such authority?

            We answer your first question in the affirmative and your second question as explained in the analysis.

                                                                     ANALYSIS

            Question (1):

            The legislative powers of a first class city are as broad as those of the state, with the exception that its ordinances cannot contravene any constitutional provision or any legislative enactment, or the city's own charter.  See,Winkenwerder v. Yakima, 52 Wn.2d 617, 328 P.2d 873 (1958), and cases cited therein.

             [[Orig. Op. Page 2]]

            The provisions of our state constitution which are pertinent to your inquiry are the following:

            (1) Article II, § 25, which provides:

            "The legislature shall never grant any extra compensation to any public officer, agent, servant, or contractor, after the services shall have been rendered, or the contract entered into, nor shall the compensation of any public officer be increased or diminished during his term of office."

            (2) Article VIII, § 7, which provides:

            "No county, city, town or other municipal corporation shall hereafter give any money, or property, or loan its money, or credit to or in aid of any individual, association, company or corporation, except for the necessary support of the poor and infirm, or become directly or indirectly the owner of any stock in or bonds of any association, company or corporation."

            Thus, the question presented is whether severance pay based upon accrued sick leave conflicts with either the prohibition against "any extra compensation" after the services have been rendered or the prohibition against "giving money or property" to individuals.

            Article II, § 25,supra, prohibiting extra compensation is not limited to action by the legislature.  Everett v. Johnson, 37 Wn.2d 505, 224 P.2d 617 (1950); State ex rel. Port of Seattle v. Wardall, 107 Wash. 606, 183 Pac. 67 (1919).  Thus, this prohibition extends to municipal corporations as well.  However, we are of the opinion that severance pay based upon accrued sick leave would not be violative of these two provisions if by appropriate act of the public body such item was made a part of an employee's contract at the outset before the actual services were rendered.

            We are persuaded by the reasoning of the case of City of Orange v. Chance, 325 S.W.2d 838 (1959), in making this determination.  In that case, a portion of the policeman's civil service act of Texas, authorizing severance pay based on sick leave was contended to be "extra compensation" and a "gratuity" in violation of its constitutional provisions.  The act specifically permitted an employee who left the classified service "for any reason" to remain on the payroll for a period not exceeding ninety days and only  [[Orig. Op. Page 3]] until all his accumulated sick leave was used.

            The court stated at page 840:

            "We do not believe that the accumulated sick leave should be treated as 'extra compensation' within the meaning and prohibition of the above constitutional amendment.  In the present case the contracts of employment between the man and the City were made at times when the Civil Service Act applied to such employees of the City and the provisions thereof, therefore, became and formed a part of their contracts of employment.  [Citations omitted.]  This being so, the employees would not be paid, within the purview of the above constitutional provision, extra compensation, fee or allowance 'after service had been rendered' or a contract had been entered into and performed in whole or in part.  The constitutional prohibition forbids paying extra compensation for past performance or adding additional consideration to the contract already entered into, [citations omitted.]; the prohibition does not apply to payment of any fund or sum based upon the contract of employment nor does it apply to the method or time of payment. . . ."  325 S.W.2d 840.

            The court further said at page 841:

            "Appellant argues that unused accumulated sick leave payment at termination of employment would be a 'gratuity'.  But we think that under the terms of the employment and the statute such payment must be considered a part of the employee's over-all compensation.  The fact that a part of the compensation is called 'sick leave' is of no material effect.  Rhoads Drilling Co. v. Allred, supra.  It was an emolument or grant which would help the employee if during his employment he was unable to work on account of sickness, or if during the employment he were not sick or not sick sufficient times to use all of such allowed time, he would be paid a sum at termination of his service which represented the sick leave.  We believe a provision of this kind would tend to keep employees regularly on the job whereas a construction condemning the severance payment as a 'gratuity' would tend to encourage absenteeism.  The legislature by providing that an employee  [[Orig. Op. Page 4]] shall be carried on the payroll of the City until his accumulated sick leave is paid makes it clear to us that the legislative intent requires such sick leave be paid and the fact that the employee would be paid in installments after termination of employment in the way his regular salary had been paid is of no significance to the question in the present case.  However, we call attention to the fact that the latest amendment provides that such accumulated sick leave shall be paid in a lump sum when the employee leaves the service."  (Emphasis supplied.)

            Although the basis for such severance pay was statutory in theChance case,supra, the reasoning of that case is persuasive to us in deciding that such pay does not contravene our state constitutional provisions as cited.  See, also,Hime v. City of Galveston, 268 S.W.2d 543 (1954), where this same provision (relating to severance pay based upon accumulated sick leave) had been previously upheld as validly conferring the right on surviving heirs to collect such amounts upon the death of an employee.

            Our research has failed to disclose any statutes which would be contravened by an ordinance of a first class city establishing a policy of granting severance pay based upon accrued sick leave.  Unless such an ordinance would violate a charter provision of the city itself, it would be legally valid.

            Accordingly, it is our opinion that a first class city does have the power to pass an ordinance granting severance pay based upon accrued sick leave to its employees in the absence of a restriction in its own charter.  Such payment, in our opinion, contravenes neither the cited state constitutional provisions nor any pertinent state statutory provisions which we have examined.

            Question (2):

            You have also asked whether any other municipal corporation, including but not limited to second and third class cities, towns, counties and school districts, have such power.

            In analyzing the problem of whether or not a particular class or type of municipal corporation has a particular power, our court has applied the fundamental rule that a municipal corporation (other than a first class city) has only such powers as have been expressly  [[Orig. Op. Page 5]] granted to it by statute, or as are necessarily implied from the powers expressly granted and has taken the position that if there is doubt as to whether a power has been granted, it must be denied.  Pacific First Federal Savings & Loan Ass'n v. Pierce County, 27 Wn.2d 347, 178 P.2d 351 (1947).

            In a previous opinion of this office to the Honorable Ray E. Munson, Prosecuting Attorney, Yakima County, dated March 21, 1961, AGO 61-62 No. 18 (a copy of which is enclosed), our office determined that a fire protection district was without power to pay part or all of the premium of a group life insurance policy for certain district personnel absent express statutory authority.  The proposal involved there was deemed a "fringe benefit."  Our office concluded that the legislature had adopted a policy of expressing its intent to authorize such expenditures in those areas where such was truly its intent.  A general course of legislative policy to grant the power to pay or provide certain fringe benefits over and above normal and basic compensation only by clear and express language evidencing such intent was discovered in such statues as RCW 28.76.410 establishing life, health and accident insurance for school districts; RCW 36.32.400 health care services and/or group insurance for county employees.  Such policy again evidenced itself in the 1963 legislative session where chapter 75, Laws of 1963, permitting state government departments, divisions or agencies and county, municipality and other political subdivisions to provide for hospitalization and medical aid for its employees, was enacted.

            The facts and the reasoning of that opinion, however, are distinguishable from the present situation.  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.  Such a limitation was found and applied in AGO 61-62 No. supra; where, as noted, we discovered 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.

             [[Orig. Op. Page 6]]

            However, we find no such legislative pattern in the case of severance pay based upon accrued sick leave.  We have, however, discovered that with reference to teachers, school board directors have been denied the power to compensate for accrued sick leave in RCW 28.58.100 (15) (f).  This express denial by the legislature of the power to compensate for accrued sick leave does not exist in any other area of municipal corporation employment.

            If the payment for accrued sick leave is based on an authorized contract with the employee (whether made on an individual basis, or pursuant to some comprehensive pay plan made known to all employees prior to their performance of the requisite services), there is no problem of a conflict with Article II, § 25, or Article VIII, § 7, of our state constitution, supra.  As long as there is no legislative limitation on a particular type of municipal corporation to compensate employees, such as the exception noted above regarding school teachers, or a statute limiting payment to a fixed salary, this general power to compensate should be construed broadly enough to include compensation of the type in question.

            Whether the program or policy of paying compensation in this type of situation is wise or unwise is not for our office to determine.  The question naturally is one for the governing bodies of the cities or towns or other municipal corporations to decide, and it is our opinion that it cannot be said, as a matter of law, that this method of compensation would be an abuse of the discretion granted to such governing bodies.

            In summary, we are of the opinion that cities of the first class have the authority to adopt by ordinance a plan of granting severance pay to their employees based upon accrued sick leave time.  In addition, we are of the opinion that other municipal corporations, including cities, towns and counties, have this authority in the absence of legislative prohibition such as RCW 28.58.100, supra, applicable to school districts.

            We trust this information will be of some assistance to you.

Very truly yours,

JOHN J. O'CONNELL
Attorney General

CHARLES F. MURPHY
Assistant Attorney General

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