Employer Status Determination

Marsh Technologies, Inc.

MAY 1 7 2001

This is the decision ofthe Railroad Retirement Board regarding the status of Marsh

Technologies, Inc. (MTI), as an employer under the Railroad Retirement and 

Railroad Unemployment Insurance Acts. The following information was provided

by Mr. Nicholas C. Marsh, President and Chief Executive Officer of MTI.

MTI was incorporated on October 4, 2000, and performs derailment investigations.

It plans to provide assistance with derailment investigation, training in derailment

investigation and in other areas for which it has technical expertise. All ofits

employees perform work related to rail carriers. Six percent oftotal business time 

and three percent ofrevenues are derived from Amtrak. MTI’s work for Amtrak

has consisted of performing “simulation oftrain impact, future training issues,

derailment issues” and marketing MTI’s services. Twenty percent oftotal business

time and fourteen percent ofrevenues are derived from Burlington Northern Santa

Fe performing “simulation oftrain derailments, future training issues, derailment

issues” and marketing MTI’s services. Six percent oftotal business time and

twelve percent ofrevenues are derived from the Kansas City Southern Railroad

performing “on site derailment analysis, future training issues, derailment issues”

and marketing MTI’s services. Ten percent oftotal business time and fifty-seven

percent ofrevenues have been derived from the Association ofAmerican

Railroads. MTI’s work is done largely or entirely on the premises ofthe railroad

organizations.

MTI is a privately-held corporation which is owned by Mr. Marsh and Karen

Marsh. It currently has five employees.

Section 1(a)(1) ofthe Railroad Retirement Act (45 U.S.C. § 231(a)(1)), insofar as

relevant here, defines a covered employer as:

(i) any carrier by railroad subject to the jurisdiction ofthe

Surface Transportation Board under Part A ofsubtitle IV oftitle 49,

United States Code;

(ii) any company which is directly or indirectly owned or

controlled by, or under common control with, one or more employers

as defined in paragraph (i) ofthis subdivision, and which operates any
equipment or facility or performs any service (except trucking service, 

casual service, and the casual operation of equipment or facilities) in

connection with the transportation of passengers or property by

railroad * * *.

Sections 1(a) and 1(b) ofthe Railroad Unemployment Insurance Act (45 U.S.C §§

351(a) and (b)) contain substantially similar definitions, as does section 3231 ofthe

Railroad Retirement Tax Act (26 U.S.C. § 3231).

MTI clearly is not a earner by rail. Further, the available evidence indicates that it

is not under common ownership with any rail carrier nor is it controlled by officers

or directors who control a railroad. Therefore, the Board finds that MTI is not a

covered employer under the Acts.

This conclusion leaves open, however, the question whether the persons who

perform work for MTI under its arrangements with rail carriers should be

considered to be employees ofthose railroads rather than of MTI. Section 1(b) of 

the Railroad Retirement Act and section 1(d) ofthe Railroad Unemployment 

Insurance Act both define a covered employee as an individual in the service of an

employer for compensation. Section 1(d)(1) ofthe RRA further defines an

individual as "in the service of an employer" when:

(i) (A) he is subject to the continuing authority ofthe employer

to supervise and direct the manner ofrendition of his service, or (B)

he is rendering professional or technical services and is integrated into

the staff ofthe 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) ofthe RUIA contains a definition ofservice substantially identical to

the above, as do sections 3231(b) and 3231(d) ofthe RRTA (26 U.S.C. § 3231(b)

and (d)).

The focus ofthe test under paragraph (A) is whether the individual performing the

service is subject to the control ofthe service-recipient not only with respect to the

outcome of his work but also with respect to the way he performs such work.

Marsh Technologies, Inc.
Marsh Technologies, Inc.

There is no evidence that MTI’s work is performed under the direction of anyone

other than MTI employees; accordingly, the control test in paragraph (A) is not

met. The tests set forth under paragraphs (B) and (C) go beyond the test contained 

in paragraph (A) and would hold an individual to be a covered employee if he is

integrated into the railroad's operations even though the control test in paragraph 

(A) is not met. However, under an Eighth Circuit decision consistently followed 

by the Board, these tests do not apply to employees ofindependent contractors 

performing services for a railroad where such contractors are engaged in an

independent trade or business. See Kelm v. Chicago. St. Paul. Minneapolis and

Omaha Railway Company. 206 F. 2d 831 (8th Cir. 1953).

Thus, under Kelm the question remaining to be answered is whether MTI is an

independent contractor. In this case, MTI has permanent employees and provides

services to a number of different customers. In addition, MTI provides a

recognized service to its customers. Accordingly, it is the opinion ofthe Board 

that MTI is an independent business.

Because MTI is an independent contractor, MTI is not a covered employer within

the meaning of paragraphs (B) and (C). Accordingly, it is the detennination ofthe

Board that service performed by employees of MTI is not covered under the Acts.

V.M. Speakman, Jr.

erome F. Kever