January 12, 1990
Vernon L. Larson
Office of the State Auditor
500 East Capitol
Pierre, SD 57501
OFFICIAL OPINION NO. 90-04
State employees and frequent flier credits
Dear Mr. Larson:
You have requested an official opinion from this Office in regard to the following facts:
FACTS:
In January 1982, the State Auditor's Office requested a ruling from the Office of Attorney General concerning State employees qualifying for a reduced rate air ticket for personal use. Under the 1982 request, the airline ticket was purchased by the State for State travel, but credit was given to the individual for personal air travel use. At that time, the Office of Attorney General opined, based on SDCL 4-3-4, that it was illegal for a State employee to use a State purchased ticket to qualify for a reduced rate ticket for personal use. This is the policy that the State Auditor's Office has complied with since that time.
Recently, it was brought to the attention of the State Auditor that SDCL 4-3-4 was repealed. Further, the airlines have recently changed their procedures so that they no longer require the actual airline receipt to qualify for the reduced or free air fares. If a State employee flies on a State purchased ticket, the credit goes to the individual and not the State.
Based on those facts, you ask the following question:
QUESTION:
Whether a State employee who flies on a State purchased ticket can use the travel credits for personal reduced or free air fares?
IN RE QUESTION:
The answer to the question presented is partially answered by SDCL 4-3-4.2, which reads as follows:
All money, emoluments and perquisites other than personal salary received by any officer or employee of this state shall be remitted to the state treasury by the end of the working day following the day money is received or as specified by the state treasurer. The state treasurer shall establish rules and regulations to assure accountability.
SDCL 4-3-4.2 replaced SDCL 4-3-4, which was repealed in 1984. 1984 S.D. Sess. Laws ch. 30, 19 and 21. The first sentence of the present SDCL 4-3-4.2 is similar to the first sentence of the old SDCL 4-3-4, which stated that "[A]ll money, emoluments, and perquisites so paid to any officer or employee of this state shall be by him paid into the state treasury . . . ." SDCL 4-3-4 (1975).
SDCL 4-3-4.2 speaks of money, emoluments, and perquisites. No definitions for the terms emoluments or perquisites can be found in the South Dakota Code. The term emolument can be defined as follows:
The profit arising from office or employment; that which is received as a compensation for services, or which is annexed to the possession of office as salary, fees, and perquisites. Any perquisite, advantage, profit, or gain arising from the possession of an office. . . .
Black's Law Dictionary 470 (5th ed. 1979). The term perquisites can be defined as follows:
Emoluments, fringe benefits, or other incidental profits or benefits attaching to an office or position. Shortened term "Perks" is used with reference to such extraordinary benefits afforded to business executives (e.g. free cars, club memberships, insurance, etc.).
Black's Law Dictionary 1027 (5th ed. 1979).
Under the facts presented, the State officer or employee, while on State business, with a State purchased ticket, would be accumulating airline credits for reduced or free air fares. These airline credits are based on the fact that an individual is flying with the airline, and are not based upon who the individual is or who purchased the airplane ticket.
Under SDCL 4-3-4.2, the State officer or employee would have to account to the state treasury for all emoluments and perquisites received by that officer or employee. The question in this context, however, is whether the frequent flier miles, which accrue to the employee for flying on the airline, are emoluments or perquisites of employment with the State. It is my view that they are not, for several reasons.
First, the frequent flier miles are not conferred upon the state business traveler by the State. The above-referenced definitions are based upon an employee receiving compensation for services rendered, or other benefits annexed to the position of the office, such as salary, fees, free cars, club memberships, insurance, and other benefits accruing to the state employee because of his employment. In the case of frequent flier miles, the State pays nothing extra for the airline ticket because of the benefit of frequent flier miles. Indeed, the miles accrue only because the state employee gives a frequent flier number to the airline ticket agent at the time of boarding. The State cannot obtain a discount if the business flier does not give this number. The State has conferred nothing upon the employee who gives his frequent flier number to the airline at the time of boarding. This situation is to be distinguished from the facts set forth in the 1982 opinion, where the actual tickets were needed in order to obtain a frequent flier ticket, and the free tickets thus arose directly from presentation to the airline of a state purchased ticket.
Second, it is not reasonable for the employee to be expected to account for all incidental benefits that might accrue by virtue of the fact that the employee is travelling on state business, or indeed, fulfilling any other duty of employment. For example, various incidental benefits accrue to a state employee staying at a given hotel while travelling on state business. The state employee might be permitted free use of the hotel swimming pool; certain items of free or reduced price food might be given to the state employee; a reduced room rate might be granted to a state employee; and other possible benefits might accrue to the state employee while travelling at state expense on state business. The mere fact that travelling on state business has caused certain incidental benefits to be conferred by third parties does not require that the employee account for them to the State.
Third, the airline confers the benefit upon the individual involved. This is more clear under the present system than it was in 1982, since the benefit at that time was conferred based only upon possession of the original airline ticket. Many airlines do not permit an employee to assign the individual rights to a free or reduced price airline ticket obtained in frequent flier programs. See U.S. News and World Report, November 13, 1989, at 77-82. In my view, this fact supports the rationale that the benefit is being conferred upon the individual who boards the plane and flies, and not upon any other person who may have paid the price of the ticket. The State thus has no claim to the free or reduced price tickets that might incidentally arise when its employees travel on state business.
Fourth, SDCL 4-3-9 sets forth the duty of a state officer or employee to account to the State Treasury:
Any salaried state officer or employee who shall fail or refuse to pay into the state treasury any and all money, emoluments, fees, perquisites, or other property received by him for the performance of any duty or duties connected with his office or in any manner paid to him as such officer or employee by reason of his holding such office or employment as is provided in this chapter, and within the time provided therein is guilty of theft.
This statute requires the state employee to turn over money, etc., received by him for the performance of any duty or duties connected with his office. The state employee has, in this instance, received nothing for the performance of duties connected with his or her office. The employee quite simply is not being given additional money or perquisites by virtue of being as a state officer or by reason of his holding the office or employment. Rather, the employee has travelled, as required by his employer. In the course of so travelling, a third party has chosen to confer an incidental benefit. This incidental benefit has not been paid to the employee in return for the employee doing her or his job. This benefit cannot be differentiated from other incidental travel amenities. The statute does not, therefore, require that it be turned over to the State.
For these reasons, I am of the opinion that neither SDCL 4-3-4.2 nor SDCL 4-3-9 requires a state officer or employee to account to the State for frequent flier miles that an airline chooses to confer upon the employee. Such frequent flier miles are simply an amenity that the airline industry chooses to confer upon those individuals using its services. There is no indication that this benefit is conferred on the person who or entity which purchased the ticket.
Finally, it is my opinion that one of the central purposes of the statute is to dissuade employees from altering their conduct as state employees to gain a benefit. I assume that employees, when they travel, do so in good faith. Thus, the purpose of the statute is not disserved by allowing the employee to retain the airline credit.
Respectfully submitted,
ROGER A. TELLINGHUISEN
ATTORNEY GENERAL
RAT:do
