This
is the decision of the Railroad Retirement
Board regarding whether the services performed
by LP for the DeQueen and Eastern Railroad
(DQE) constitute employee service under
the Railroad Retirement and Railroad Unemployment
Insurance Acts. The DQE is an employer (BA
2805) under the Acts administered by the
Board. LP is an employee of Weyerhaeuser,
a publicly traded integrated forest products
company. Weyerhaeuser Corporation owns the
DQE. According to an Employee Questionnaire
regarding the activities of LP supplied
by Mr. Brooks F. Burton, Regional HR Manager
for Weyerhaeuser Corporation, LP provides
payroll time collection and input, vacation
tracking and data entry, purchasing backup
and supply inventory auditing, invoice coding
and preparation for accounts payable center,
foreign car billing and journal voucher
preparation, and other miscellaneous accounting
duties. LP is an employee of Weyerhaeuser
who works in an office building that houses
both the Weyerhaeuser and DQE employees.
LP provides services for both Weyerhaeuser
and the DQE. Approximately 90% of his time
is spent on DQE activities. The DQE does
not reimburse Weyerhaeuser for LP’s
services.
Section 1(b) of the Railroad Retirement
Act and section 1(d)(1) of the Railroad
Unemployment Insurance Act both define a
covered employee as an individual in the
service of an employer for compensation.
Section 1(d) of the Railroad Retirement
Act further defines an individual as "in
the service of an employer" when:
(i)(A) he is subject to the continuing
authority of the employer to supervise and
direct the manner of rendition of his service,
or (B) he is rendering professional or technical
services and is integrated into the staff
of the employer, or (C) he is rendering,
on the property used in the employer's operations,
personal services the rendition of which
is integrated into the employer's operations;
and
(ii) he renders such service for compensation
* * *.
Section 1(e) of the Railroad Unemployment
Insurance Act contains a definition of service
substantially identical to the above, as
do sections 3231(b) and 3231(d) of the Railroad
Retirement Tax Act (26 U.S.C. § 3231(b)
and (d)). Paragraph (A) of the definition
dates from the inception of the railroad
retirement system. See Public Law No. 162,
75th Cong., Ch. 382, Part I, (50 Stat. 307).
In Reynolds v. Northern Pacific Railway,
168 F. 2d 934 (8th Cir. 1948), the Eighth
Circuit stated that for purposes of liability
for taxes under the analogous provision
of the Railroad Retirement Tax Act, persons
performing services for a railroad may be
regarded as railroad employees, even though
they are not directly employed or directly
paid by the railroad. Id. at 942. The Court
further stated that the intent of parties
to the contract to avoid coverage, the historical
practice of the railroad industry, and factors
deciding the employment relationship under
other Federal laws should all be considered.
Id at 940-941. Under other federal laws,
numerous factors are involved in determining
whether an individual is engaged in employee
service. In the absence of judicial authority
directly interpreting the employee service
provisions of the Railroad Retirement Act,
these factors may be useful in determining
application of those provisions. An individual
may not be self-employed where the employer
furnishes without charge the supplies and
premises for the work. See Henry v. United
States, 452 F. Supp. 253, 255 (E.D. Tenn.,
1978). Payment on an hourly basis rather
than at a specified amount per job also
indicates that the individual is an employee.
See Bonney Motor Express, Inc. v. United
States, 206 F. Supp. 22, 26 (E.D. Va., 1962).
An independent contractor offers his service
to the general public rather than to a specific
employer. See May Freight Service, Inc.
v. United States, 462 F. Supp. 503, 507
(E.D. N.Y., 1978). Similarly, an independent
contractor generally may substitute another
individual to perform the contract work,
while an employee must perform the work
himself. Gilmore v. United States, 443 F.
Supp. 91, 97 (D. Md., 1977).
LP provides accounting services to the
DQE; and those services are directly integrated
into the management and operation of the
railroad employer. Therefore, the Board
finds that LP is integrated into the employer's
staff or operations, as is specified in
paragraph (B) and (C).
Under section 211.16(a) of the Board’s
regulations (20 CFR 211.16(a)), the period
of time within which compensation may be
reported is limited to four years after
the date on which such compensation is required
to be reported to the Board. The four-year
rule is subject to certain exceptions including
the case “Where the earnings were
erroneously reported to the Social Security
Administration in the good faith belief
by the employer or employee that such earnings
were not covered under the Railroad Retirement
Act * * *” (section 211.16(b)(ii)).
However, no employee may be credited with
service months or tier II compensation beyond
the four-year period unless the appropriate
railroad retirement taxes have been paid
(section 211.16(c)). Accordingly, it is
the decision of the Board that LP’s
services for the DeQueen and Eastern Railroad
is employee service. Consequently, such
service is creditable under the Railroad
Retirement and Railroad Unemployment Insurance
Acts insofar as is permitted by section
211.16. |