Can a Texas city give its employees a pay raise backdated to their last evaluation date?

TX AG Opinion GA-0368: Can a Texas city give employees a pay raise backdated to their last evaluation?

Plain-English summary

A state representative asked, on behalf of the City of Socorro, whether the city's Civil Service Commission could grant municipal employees a pay raise that was effective back to the date of their last performance evaluation. Socorro's own interim city attorney had already concluded the backdated raise would be unconstitutional, and the Attorney General agreed.

The barrier is Article III, section 53 of the Texas Constitution. It forbids the Legislature, and any county or city it authorizes, from granting "extra compensation" to a public employee after the work has been done. The purpose is to stop local governments from handing out public money for services already rendered, where the public gets nothing in return. A pay raise applied backward to cover work an employee already finished is exactly that kind of after-the-fact gift, so section 53 bars it.

The opinion was careful to mark the line between what is forbidden and what is allowed. Section 53 only bans pay that is "extra," meaning in addition to what the law or a contract already provided. So a city can lawfully tie pay to performance if it sets the rule up in advance: a policy adopted before the work that automatically bumps pay from the evaluation date when an employee scores above a set level is not "extra" compensation, because the raise was already part of the deal. A bonus plan approved before services are rendered is fine for the same reason. And a city can always adjust salaries or benefits going forward. What it cannot do is reach back and reward past work that no pre-existing policy promised to pay for. In Socorro, an evaluation was treated only as a "recommendation," and only the City Council could actually grant a raise, so there was no advance policy turning a high evaluation into an automatic backdated raise. That left the backdated increase as prohibited extra compensation.

Currency note

This opinion was issued in 2005. 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 2005)

Cities and civil service commissions: The opinion confirmed that a Texas city could not grant a pay raise effective back to a past date, because Article III, section 53 treats that as prohibited extra compensation for services already rendered. It applied to the Socorro Civil Service Commission specifically but rested on a constitutional rule that reached all municipalities.

Municipal employees expecting merit pay: The opinion explained that a raise recommended after an evaluation could be applied going forward, but not backward, unless the city had already committed in advance to pay it from the evaluation date.

City officials designing pay-for-performance plans: It laid out the lawful path: adopt the performance-pay rule or bonus plan before the work is done, so the resulting pay is a pre-existing term of employment rather than "extra" compensation added afterward.

Lawyers advising local governments: It restated the "extra compensation" test from Dallas County v. Lively (compensation is "extra" if it is in addition to that allowed by law or contract) and collected the exceptions, including back pay owed because a city underpaid what a statute required and the restoration of pay cut during an emergency.

Common questions

Could a Texas city give a retroactive pay raise?
No. Article III, section 53 of the Texas Constitution prohibits a city from granting extra compensation for services that were already rendered, and a backdated raise is extra compensation.

What does "extra compensation" mean here?
The opinion used the test from a 1914 Texas Supreme Court case: compensation is "extra" when it is in addition to what the law or a contract already allowed. Pay an employee was always entitled to is not "extra."

Was there any lawful way to tie a raise to a performance evaluation?
Yes, if the city set it up in advance. A policy adopted before the work that automatically raised pay from the evaluation date for employees who scored above a set level would not be extra compensation, because the raise would already be a term of employment. A bonus plan approved before the services are performed works the same way.

Could the city still raise pay at all?
Yes, going forward. The opinion noted that section 53 does not prevent adjusting salaries or benefits at any time, as long as the change applies to future services. In Socorro, the City Council would have had to approve the prospective raise.

Why didn't Socorro's evaluation process count as a pre-existing policy?
Because, according to the interim city attorney, an evaluation was only a "recommendation" for a raise, not the granting of one, and only the City Council could grant a raise. With no advance commitment to pay from the evaluation date, a backdated increase was extra compensation.

Background and statutory framework

Article III, section 53 of the Texas Constitution provides that the Legislature shall have no power to grant, or to authorize any county or municipal authority to grant, extra compensation, fee, or allowance to a public officer, agent, servant, or contractor after service has been rendered or a contract has been performed in whole or in part. The interpretive commentary explains the purpose as preventing local governments from freely giving away public money for services previously rendered, or for which no valid legal authorization existed, where the public would receive no return (Tex. Const. art. III, § 53).

Texas courts and prior opinions had long applied section 53 to bar retroactive pay raises. A delayed salary increase could not be backdated to the date it would otherwise have taken effect, and a commissioners court could not retrospectively approve a raise for a deputy already employed (Fausett v. King, 470 S.W.2d 770, 774 (Tex. Civ. App.-El Paso 1971, no writ); Pierson v. Galveston County, 131 S.W.2d 27, 29 (Tex. Civ. App.-Austin 1939, no writ)). The key limit is the word "extra." Compensation is "extra" only if it is in addition to that allowed by law or contract (Dallas County v. Lively, 167 S.W. 219, 220 (Tex. 1914)). That limit explains several things section 53 does not forbid: back pay where a city had paid civil service employees less than a statute required, and the restoration of pay that had been cut for emergency spending reasons (City of Wichita Falls v. Cox, 300 S.W.2d 317, 321 (Tex. Civ. App.-Fort Worth 1957, writ ref'd n.r.e.); Taxpayers' Ass'n v. Houston Indep. Sch. Dist., 81 S.W.2d 815, 819 (Tex. Civ. App.-Galveston 1935, writ dism'd)).

Most relevant here, section 53 does not prohibit terms of employment that tie compensation to performance when the plan is in place before the services are rendered. A bonus is permissible where the bonus plan was approved as part of compensation before the work, and salaries may be set or adjusted prospectively at any time. The opinion also deferred to the interim city attorney's authority to construe the Socorro city charter, under which merit increases were subject to the availability of budgeted funds and only the City Council could grant a raise (Socorro, Tex., City Charter art. XI, § 11.4-4 (2001)). Because no advance policy converted a high evaluation into an automatic raise from the evaluation date, the backdated increase would have been prohibited extra compensation.

Citations

Constitutional and charter provisions:

• Tex. Const. art. III, § 53
• Socorro, Tex., City Charter art. XI, § 11.4-4 (2001)

Cases:

• Fausett v. King, 470 S.W.2d 770, 774 (Tex. Civ. App.-El Paso 1971, no writ)
• Pierson v. Galveston County, 131 S.W.2d 27, 29 (Tex. Civ. App.-Austin 1939, no writ)
• Dallas County v. Lively, 167 S.W. 219, 220 (Tex. 1914)
• City of Wichita Falls v. Cox, 300 S.W.2d 317, 321 (Tex. Civ. App.-Fort Worth 1957, writ ref'd n.r.e.)
• Taxpayers' Ass'n v. Houston Indep. Sch. Dist., 81 S.W.2d 815, 819 (Tex. Civ. App.-Galveston 1935, writ dism'd)

Other authorities:

• Tex. Att'y Gen. Op. Nos. GA-0322 (2005), GA-0226 (2004), GA-0130 (2003), JC-0376 (2001), JM-1253 (1990), JM-1160 (1990), JM-1113 (1989), JM-846 (1988)

Source

• Landing page: https://www.texasattorneygeneral.gov/opinions/greg-abbott/ga-0368
• Original PDF: https://www.texasattorneygeneral.gov/sites/default/files/opinion-files/opinion/2005/ga0368.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

October 21, 2005

The Honorable Norma Chavez, Chair
Committee on Border and International Affairs
Texas House of Representatives
Post Office Box 2910
Austin, Texas 78768

Opinion No. GA-0368

Re: Whether a civil service commission may authorize retroactive salary increases for municipal employees (RQ-0339-GA)

Dear Representative Chavez:

You have asked whether the Socorro Civil Service Commission may grant a retroactive pay rate increase to municipal employees effective from the date of their last evaluation.[1] An opinion from the Interim City Attorney of Socorro attached to your letter concludes that the pay increases would be impermissible under the Texas Constitution.

Article III, section 53 of the Texas Constitution states:

The Legislature shall have no power to grant, or to authorize any county or municipal authority 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. The purpose of this provision ("section 53") is to prevent "counties or municipalities from freely giving away the public moneys for services previously rendered or for which no valid legal authorization existed for which the public would receive no return." Id. interp. commentary (Vernon 1997). Section 53 prohibits local governments from granting retroactive pay raises to employees. Fausett v. King, 470 S.W.2d 770, 774 (Tex. Civ. App.-El Paso 1971, no writ) (holding that a salary increase delayed for one month in order to meet a public hearing requirement could not be made retroactive); Pierson v. Galveston County, 131 S.W.2d 27, 29 (Tex. Civ. App.-Austin 1939, no writ) (commissioners court could not "retrospectively" approve a salary increase for a deputy employed by a justice of the peace); Tex. Att'y Gen. Op. No. JM-1113 (1989) at 2 (county may not make salary increases for county employees retroactive).

However, section 53 prohibits only the granting of "extra compensation" to an employee. Compensation is "extra" if it is "in addition to that allowed by law or contract." Dallas County v. Lively, 167 S.W. 219, 220 (Tex. 1914); Tex. Att'y Gen. Op. No. GA-0322 (2005) at 5. For example, section 53 does not prohibit the award of back pay where a city pays civil service employees less than required by statute. See City of Wichita Falls v. Cox, 300 S.W.2d 317, 321 (Tex. Civ. App.-Fort Worth 1957, writ ref'd n.r.e.). Similarly, where compensation under an employment contract is reduced due to emergency spending cuts, the restoration of those cuts is not extra compensation. See Taxpayers' Ass'n v. Houston Indep. Sch. Dist., 81 S.W.2d 815, 819 (Tex. Civ. App.-Galveston 1935, writ dism'd). More important for our purposes, section 53 does not prohibit terms of employment that tie compensation to performance. For instance, bonuses are permissible where a bonus plan has been approved as part of compensation before the rendering of services. See Tex. Att'y Gen. Op. No. JC-0376 (2001) at 2 (citing Tex. Att'y Gen. Op. No. JM-1253 (1990) at 2-3).

A city policy could authorize pay raises in the event of a high evaluation — for example, over a certain score — and provide that the increases start from the evaluation date. The raises would not be "extra compensation" because they would be a term of employee compensation in place before the employee rendered services. This does not appear to be the case in the present situation, however. We are informed by the interim city attorney that an evaluation constitutes only a "recommendation" for a pay rate increase. It "is not to be considered as the granting" of a pay raise. Request Letter, supra note 1, at 4. He further states that the "only authority that may grant a pay raise is the City Council." Id. at 4; see also SOCORRO, TEX., CITY CHARTER, art. XI, § 11.4-4 (2001) ("[m]erit increases shall be subject to the availability of funds under the City Budget"). We defer to the interim city attorney's authority as a city officer to construe the charter. See Tex. Att'y Gen. Op. Nos. GA-0226 (2004) at 3; GA-0130 (2003) at 3; JM-846 (1988) at 1.

Certainly, the Socorro Civil Service Commission may recommend pay raises for meritorious employees to be applied prospectively. Section 53 does not prevent the adjustment of salaries or benefits at any time, as long as the changes are applied to future services rendered. See Tex. Att'y Gen. Op. No. JM-1160 (1990) at 1-2 (grant of additional sick leave does not violate section 53 because compensation for county employees may be set at any time). The raises would need to be approved by the City Council to become effective. We have further noted that section 53 would not prohibit the restructuring of employment to tie compensation to performance, perhaps through a bonus.

In conclusion, the City of Socorro may not grant a retroactive pay rate increase to municipal employees without violating article III, section 53 of the Texas Constitution.

SUMMARY

Article III, section 53 of the Texas Constitution prohibits the Socorro Civil Service Commission from granting a pay increase to municipal employees effective from the date of their last evaluation, unless a policy for such pay increase was already in existence prior to the evaluation.

Very truly yours,

GREG ABBOTT
Attorney General of Texas

BARRY R. McBEE
First Assistant Attorney General

NANCY S. FULLER
Chair, Opinion Committee

Susan L. Garrison
Assistant Attorney General, Opinion Committee

Footnotes

[1] See Letter from Honorable Norma Chavez, Chair, Committee on Border and International Affairs, Texas House of Representatives, to Honorable Greg Abbott, Texas Attorney General, at 1 (April 25, 2005) (on file with Opinion Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].