Request By:
Ms. Carolyn F. Shain
Attorney
Department of Finance
Capitol Annex
Frankfort, Kentucky 40601
Opinion
Opinion By: Robert F. Stephens, Attorney General; By: Thomas R. Emerson, Assistant Attorney General
This is in reply to your letter raising several questions concerning unemployment compensation and the financing of such benefits for the employes of sheriffs, jailers and county clerks in each county having a population of 75,000 or more.
You state that beginning January 1, 1979, governmental entities which have employes performing services in "covered employment" under KRS Chapter 341 (unemployment compensation) are to be considered "employers" for purposes of unemployment compensation. The employes of sheriffs, jailers and county clerks in each county having a population of 75,000 or more who are performing services in covered employment will be eligible to apply for benefits under the act.
KRS 341.277 provides that governmental entities may elect to reimburse the unemployment insurance fund in lieu of paying quarterly contributions on taxable wages. Under the reimbursement method the governmental entity is billed by the Department for Human Resources at the end of each quarter for an amount equal to all regular benefits and all extended benefits paid during each quarter for compensable weeks occurring on or after January 1, 1979, and for all regular benefits plus one-half extended benefits paid for compensable weeks occurring prior to January 1, 1979, which are attributable to service performed in covered employment in the employ of the governmental entity. Furthermore, under the reimbursement method an employer can be billed for payment of benefits two and one-half years or more after the claimant received wages from the employer.
The other method of payment, the contribution method, involves the unemployment taxes paid on taxable wages on a quarterly basis. The Department for Human Resources maintains a reserve account for each subject employer into which the contributions are paid.
You cite KRS 64.350 providing that in counties having a population of 75,000 or more the salaries of the county clerks, of sheriffs and jailers and of their deputies and all necessary office expenses, shall be paid out of the state treasury in amounts not to exceed 75 percent of the fees collected by the officers and received into the treasury. After the payment of the salaries and expenses, any balance in the 75 percent account at the end of the officers' terms shall be paid by the state treasurer to the fiscal courts or urban-county government of the respective counties. There is another procedure to follow for the offices of sheriffs and jailers in counties where a metropolitan services department has been established.
Your questions all involve the applicability of KRS Chapter 341 to the offices of county clerk, sheriff and failer in counties having a population of 75,000 or more. Your second question, which we will answer first, concerns payment of either the reimbursements or the contributions, from the 75 percent accounts and whether the reimbursements or the contributions for purposes of unemployment compensation may be considered necessary office expenses.
KRS 341.069 states that for purposes of unemployment compensation, a governmental entity includes, among others, the state government of the Commonwealth of Kentucky and its instrumentalities and a county government and its instrumentalities. Under KRS 341.050 covered employment in part means service performed by an individual in the employ of this state or any of its instrumentalities or any political subdivision or municipality thereof. KRS 341.055(4), however, in dealing with noncovered employment, provides that a public elected official is not covered.
Since it appears that deputies and assistants of the county jailer, sheriff and county clerk are now covered by the provisions of KRS Chapter 341 pertaining to unemployment compensation and that such coverage must be provided for them, the expenses associated with providing such coverage under the law are necessary expenses of those offices and can be paid pursuant to the provisions of KRS 64.350 from the 75 percent accounts. In OAG's 72-830 and 75-230, copies enclosed, we concluded that for purposes of the Workmen's Compensation Act, sheriffs, jailers and county clerks and their deputies in counties having a population of 75,000 or more were state officers with the workmen's compensation insurance premiums to be paid by the state pursuant to KRS 64.350 and 64.345 as necessary office expenses. See also
Shamburger v. Commonwealth, Ky., 240 S.W.2d 636 (1951).
Another question concerns the responsibility for payment under KRS Chapter 341. You ask whether the offices of county clerk, sheriff and jailer in counties having a population of 75,000 or more will be responsible for either reimbursements or contributions or will the officer himself be responsible. As you point out, this question may be crucial if the reimbursement method is used since responsibility may last for several years and the obligation to make payments could exceed the term of office of a particular officer.
In our opinion such payments would have to be considered as an expense of the office and not of the individual office holder. While the office remains, officers come and go and the account of each officer is closed and the remaining balance, if any, in his account at the end of his term of office is returned to the fiscal court or urban-county government. Payments when due and payable under either the reimbursement or contribution method would have to be made from the 75 percent account of the particular person in office at that time. The responsibility for providing the protection afforded by KRS Chapter 341 rests with the various units of county government because they employ persons covered by the act. Persons under the act are covered because they are in covered employment and not because they work for a particular individual or officer.
Another question deals with the authority granted to the Secretary of the Department for Human Resources under KRS Chapter 341. You ask whether the Secretary may deny a governmental entity the option of electing the reimbursement method over the contribution method or whether the choice rests exclusively with the governing body.
KRS 341.277 states in part that any governmental entity which is a subject employer shall pay contributions under the provisions of KRS 341.270 unless it elects, in accordance with this section, to pay under the reimbursement provisions set forth in this section. The statute further provides that the governmental entity may change from the contribution method to the reimbursement method by filing with the Department for Human Resources a written notice of its election within the prescribed time. The only provisions whereby the Department for Human Resources can affect the choice of payment by the governmental entity are KRS 341.277(3)(d) and (4). Under those subsections the reimbursement method of payment can be terminated if the governmental entity fails to observe certain statutory requirements. Basically the choice of payment is exclusively determined by the governmental entity and the Department for Human Resources can terminate the entity's election to pay by the reimbursement method only when certain statutory procedures are not followed.
Another question concerns the procedure to follow when the governmental entity selects the reimbursement method of payment. Under KRS 64.350 payment of the account balance is to be made to the fiscal court or urban county government at the end of the officer's term. However, liability for payment of claims may exist for two and one-half years or longer. If payment of the balance is made to the fiscal court or urban county government, where would the responsibility lie in connection with reimbursement of the fund? If payment of the account balance is withheld, is there authority to support such a procedure? Would retention by the Department for Human Resources of the deposit allowed by KRS 341.277(3)(a) be sufficient insurance that the reimbursement would be paid?
Under KRS 64.350(1), any remaining balance in the 75 percent fund shall be paid to the fiscal court or urban county government at the end of the officer's term. Thus, such funds cannot be retained and must be paid as directed by the statute.
KRS 341.277(3)(a) provides that a governmental entity paying by reimbursement may be required to make a deposit, to be retained in an escrow account until all possible liability to the fund under the election is terminated. As previously stated, if the governmental entity does not adhere to various statutory requirements, its right to pay by reimbursement may be terminated. These provisions should serve as some sort of incentive to those entities paying by reimbursement to maintain their responsibilities and obligations.
Finally, as mentioned before, if the obligations to reimburse the fund are considered as expenses of the office, due and payable when received, regardless of what particular person is in office at the time, the office involved should be able to keep up the required payments to the fund.