An initial coverage status determination is made for every railroad employer. The term "employer" is defined in Section 1 of both the Railroad Retirement Act (RRA) and the Railroad Unemployment Insurance Act (RUIA). 

Generally, the Railroad Retirement Board (RRB) initiates a coverage review of an employer or employee based on the following circumstances:

• Information received from employers, employees or other private individuals;
• Information concerning a related company identified during a compliance audit of a carrier;
• Information that demonstrated individuals rendering services to a covered employer as independent contractors may be more appropriately classified as employees;
• Information received concerning potential employers from other federal agencies; and
• Information or referral received from the RRB's Inspector General.

The RRB's Office of Audit and Compliance investigates and obtains coverage information from possible covered employers. The factual background information is then forwarded to the RRB's General Counsel for review. The General Counsel then submits a written recommendation concerning the coverage or non-coverage of the employer/employee to the three member Board for a formal determination. A coverage determination is issued when a majority of the Board Members agree on a decision. The employer/employee has the right within a year of the decision to seek reconsideration from the Board.

It is presumed that all employees of a covered employer are covered under the RRA and RUIA.

Changes in Coverage Status

RRB regulations (20 CFR 209.5) states that it is the duty of an employer to notify the RRB of changes that may affect the employer's coverage status. If your organization has experienced changes that may affect its coverage status as a covered employer under the RRA and RUIA, notify:

Office of Audit and Compliance
U.S. Railroad Retirement Board
844 North Rush Street
Chicago, IL 60611-2092

Employee Coverage Determinations

An individual may be covered under the RRA and RUIA even though they are not employees of a covered employer, such as independent contractors performing service for a covered employer. Questions concerning coverage of specific occupations should be directed to:

Office of Audit and Compliance
U.S. Railroad Retirement Board
844 North Rush Street
Chicago, IL 60611-2092

For a definition of employees covered under the Acts, see Part IV,Chapter 9.

Segregated Employer

A segregated employer is an employer whose business consists of a non-railroad operation that is not covered under the RRA and RUIA, and a railroad operation that is covered under the RRA and RUIA. The employees performing service for the railroad operation would be covered under the RRA and RUIA.

FICA and State Unemployment Tax Exemption

Employers who are covered under the RRA and RUIA do not pay Social Security taxes under the Federal Income Contributions Act nor do they pay unemployment taxes under any state law or the Federal Unemployment Tax Act.