U n i t e d S t a t e s G o v e r n m e n t

MEMORANDUM

FORM 0-115f (1-92)

R a i l r o a d R e t i r e m e n t B o a r d

September 28, 2001 

L-2001-14

TO Ronald Russo

Director of Policy and Systems

FROM Steven A. Bart 

General Cour

SUBJECT : Burlington Northern Santa Fe Sick Leave Policy

This is in reply to your memorandum of September 13, 2001, asking 

whether the payments m ade pursuant to the Burlington Northern Santa Fe

sick leave policy constitute compensation under the Railroad Retirement 

Act.

The plan provides salaried employees salary continuation for absences 

due to illness or injury, or for care of a spouse, child, or parent, on an 

intermittent basis up to a total of ten days per calendar year.

The plan also provides a Short-Term Disability Program for employees with 

three months of company service and at least one day of salaried 

service. To qualify for benefits, an employee must be off work due to 

illness or injury for at least six consecutive calendar days. Certain 

procedures must be followed: the employee must contact his supervisor; 

the em ployee’s department must submit a specified form; and the 

employee must submit medical forms. Benefits are 100 percent of regular 

salary, payable for a maximum of 182 days.

As cited in Legal Opinion L-2000-25, mentioned in your memorandum, 

section 1 (h)(6)(v) of the Railroad Retirement Act excludes from the 

definition of "compensation:"
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the amount of any payment (including any amount paid by an 

employer for insurance or annuities, or into a fund, to provide for 

any such payment) made to, or on behalf of, any employee or any 

of his dependents under a plan or system established by an 

employer which makes provision for his employees generally (or for 

his employees generally and their dependents) or for a class or 

classes of his employees (or for a class or classes of his employees 

and their dependents), on account of sickness or accident disability 

or medical or hospitalization expenses in connection with sickness or 

accident disability * * *.

Accordingly, a payment made pursuant to a plan as included in section 

1 (h)(6)(v) would not constitute compensation. As quoted in that legal 

opinion, paragraph 10,274.07 of the CCH Unemployment Insurance 

Reporter defines a plan or system as including the following 

characteristics: ?;

(1) makes provisions for employees generally, and/or their 

dependents; or a class or classes of employees and/or their 

dependents; provides for payment to or on behalf of an employee 

or any of the employee's dependents; and assures employee 

awareness, i.e., the terms and conditions must be com m unicated 

directly or indirectly, via a bulletin board or similar method 

customarily used by the employer, to all employees or the class 

affected;

(2) contains definite payment eligibility standards that may 

include length of service, salary, classification, or occupation, but 

may not be based solely on need, efficiency, or loyalty;

(3) contains a formula for determining the minimum benefit 

amount for each eligible employee; and

(4) specifies the minimum period of payments, e.g., 

payments will be made for the duration for the em ployee’s illness, or 

for as long as the employment relationship continues.

Clearly the Short-Term Disability Program of the BNSF meets the above 

criteria. It makes provision for employees generally and is com m unicated 

to them. It contains definite eligibility standards. It contains a formula for 

determining the minimum benefit amount (Le., the am ount of salary), and
specifies the minimum period of payments (Le., the employee must be off 

work for six days, in which case he is eligible for benefits from the first day 

up to 182 days).

In addition, the sick leave payments described in the BNSF plan also meet 

those criteria. The plan for sick leave payments makes provision for 

employees generally and is communicated to them. It contains definite 

eligibility standards (all salaried employees). It contains a formula for 

determining the minimum benefit amount (Le,, the amount of salary), and 

specifies the minimum period of payments (Le., one-half day, up to ten 

days per year).

Accordingly, the BNSF sick leave policy, or the salary continuation system, 

constitutes a plan under the foregoing definition set out in section 

1 (h)(6)(v) of the Railroad Retirement Act. Thus, payments under that plan 

should be excluded from the definition of "compensation" under the 

Railroad Retirement Act.

MCLitt:cmw

MISC/sickplan3059.mcl