B.C.D. 03-67

SEP 0 9 2003

Employer Status Determination

Decision on Reconsideration

Rail Temps, Inc.

This is the decision on reconsideration of the Railroad Retirement

Board regarding the status of Rail Temps, Inc. as an employer under

the Railroad Retirement Act (45 U.S.C. § 231 et sea.HRRA) and the

Railroad Unemployment Insurance Act (45 U.S.C. § 351 et

sea.l(RUIA).

Procedural History

By letter dated May 16, 2002, the Board was requested to issue a

determination regarding the status of Rail Temps under the RRA and

the RUIA by Mr. Ronald A. Lane, Fletcher & Sippel, LLC, counsel for

Rail Temps. Based on information provided by Mr. Lane, a majority

of the Board held that Rail Temps became a rail carrier employer

under the Acts effective April 1,2002. See Board Coverage Decision

(B.C.D.) No. 03-38, issued May 6, 2003. In a letter dated August 6,

2003, Rail Temps requested reconsideration of B.C.D. No. 03-38.

Discussion of Rail Temps’ Operations

As noted above, the Board's determination in B.C.D. 03-38 was

based on information provided by Mr. Lane. Because the request for

reconsideration identifies "factual error" as the initial basis for that

request, we set out below the description included in our initial

determination.

* * * Rail Temps is an Illinois corporation incorporated October 3,

2001, for the purpose of conducting "a temporary worker

referral service for railroads and industries that operate non-
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carrier railroad facilities." It began operations in April 2002. Its

owners are Homer C. Henry and Terese M. Jones * * *. Neither

Mr. Henry nor Ms. Jones owns a railroad carrier.

Rail Temps refers qualified individuals to perform railroad

operating functions on a temporary basis. Those individuals

include locomotive engineers, conductors, trainmen,

dispatchers, and other railroad operators. Rail Temps contracts

with these individuals and pays them based on the time they

spend performing services for a rail client of Rail Temps. Rail

Temps is in turn compensated by its rail clients for services

performed for them by Rail Temps' contractors.

Under the contracts with the individual contractors, Rail Temps

refers the individuals for a specific assignment for a specified

length of time, which may be extended. The rail client has a

right to reject the individual or to terminate the assignment.

Rail Temps pays the individual a daily service fee and

reimburses him or her for certain specified expenses. Payment

to the contractor is made by Rail Temps after Rail Temps is paid

by the rail client. The individual agrees to perform all train

operation services as requested by the rail client (subject to

legal restrictions). Under those contracts, the individuals are

referred to as independent contractors. However, the contract

also provides that the rail client will pay the appropriate taxes

under the RRTA and the RUIA.

Under the contracts with its rail client(s), Rail Temps agrees to

establish a pool of qualified locomotive engineers and other

operators and to make a good faith effort to supply the needs

for temporary employees. Rail Temps will invoice the clients for

fees and certain specified expenses.

During its existence, Rail Temps has had only two clients:

Portland & Western Railroad, Inc., a covered employer under
Rail Temps, Inc.

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the Acts (B.A. No. 2776) and Caliber Auto Transport, an

automobile ramp operator. It provided individuals who

performed train and engine work to Portland & Western for the

period May 1 through May 22, 2002 [footnote omitted]. These

individuals were then hired directly by Portland & Western.

In the request for reconsideration, Mr. Lane stated that Rail Temps 

has never operated as described in his letter dated May 16, 2002.

More specifically, Mr. Lane explained that Rail Temps does not

compensate and has not compensated the individuals provided by

Rail Temps as "Temporary Train Operators" who perform services for

the benefit of railroad clients. Mr. Lane reported that all individual

Temporary Train Operators are compensated exclusively by the

railroad client of Rail Temps, all compensation received by

Temporary Train Operators has been reported by that rail client, and,

to the best of Rail Temps' knowledge, that rail client has withheld

and paid all applicable railroad retirement and railroad

unemployment insurance taxes on those earnings. Under the

contract between Rail Temps and Portland & Western, which was

entered into December 23, 2002, Portland & Western is obligated to

comply with the requirements of the Railroad Retirement Act,

Railroad Unemployment Insurance Act, and Railroad Retirement Tax

Act with regard to the individuals supplied by Rail Temps to Portland

& Western. That contract provides that Rail Temps is obligated to

attempt to refer qualified "locomotive engineers, conductors,

brakemen/yardmen, dispatchers or other individuals" to the Portland

& Western as requested. The Portland & Western is obligated to

qualify Temporary Train Operators, "including providing any

necessary territorial familiarization, and any other training, testing or 

examining as may be required by" the Portland & Western. Under

paragraph 4, the Portland & Western is obligated to pay Rail Temps

"the Daily Referral Fee, and to pay each Temporary Train Operator

the Daily Service Fee specified * * Paragraph 9 of the contract

provides that Temporary Train Operators are not employees of Rail

Temps but are employees of the Portland & Western.
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Mr. Lane states that Rail Temps has signed a Temporary Train

Operator Agreement with Northern Plains Railroad dated June 9,

2003. Under that agreement, the railroad is obligated to comply

with the requirements of the Railroad Retirement Act, Railroad

Unemployment Insurance Act, and the Railroad Retirement Tax Act

with regard to the temporarily-employed individuals (paragraph 10

of the contract). The requirements of that contract are substantially

identical to those of the contract between Rail Temps and the

Portland & Western.

Statutes

Section 1(a)(1) of the 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 of the

Surface Transportation Board under Part A of subtitle IV of

title 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) of this 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) of the Railroad Unemployment Insurance Act

(45 U.S.C. §§ 351 (a) and (b)) contain substantially similar definitions,

as does section 3231 of the Railroad Retirement Tax Act (26 U.S.C. §

3231).
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Discussion and Conclusion

The information submitted in the request for reconsideration

indicates that Rail Temps has not taken on the responsibility for

operation of either of the two railroads with which it currently has

contracts. Instead, the evidence on reconsideration shows that

Rail Temps is acting as a referral agency that has contracted to

supply individuals to Portland and Western and to Northern Plains

Railroad for short-term assignments while the railroads hire and train

their own permanent workers. The contract with each of these two

railroads describes the object of the contract as the provision of

“referrals of qualified train operators for temporary full-time

employment * * *." However, each contract also expressly provides

that, "Rail Temps does not guarantee that it will meet Railroad's

requests, and it will have no liability in the event that it cannot or

does not meet Railroad's needs or requests for train operator

applicants." Thus, with a contract that specifically states that Rail

Temps will only make a “good faith attempt” to refer individuals to

perform certain functions for the railroad, it is not possible to

conclude that Rail Temps became a rail carrier by virtue of its

contracts with the railroads.

It is also significant that each contract with the two railroads

provides that the railroad agrees to pay Rail Temps the "Daily

Referral Fee", and to pay each Temporary Train Operator the "Daily

Service Fee" specified in [an attachment to the contract] for each

day each Temporary Train Operator is available to work.

The evidence on reconsideration shows that Rail Temps is acting as

an employment agency for Portland & Western and for Northern

Plains Railroad. Based on the evidence of record, the Board finds on

reconsideration that Rail Temps is not a carrier under the Acts. Since
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it is not owned by or under common control with a carrier, it is also

not an affiliate employer under the Acts. Accordingly, the Board

reverses its decision dated May 6, 2003, and finds that Rail Temps is

not an employer under the Acts administered by the Board.

Michael S. Schwartz^

V.M. Speakman, Jr.

J

erome F. Kever