B.C.D. 02-49

Employer Status Determination

P & L Intermodal Corporation

d/b/a P& L Intermodal

JUL 0 2 2002

This is the decision ofthe Railroad Retirement Board regarding the status of P & L

Intermodal Corporation d/b/a P& L Intermodal (PLI) as an employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts. The status of this

company has not previously been considered.

The evidence is that PLI was incorporated as a privately held corporation in October

1998. The sole shareholders are Mr. Richard M. Grandish and Ms. Cheryl S.

Grandish. Neither Mr. Grandish nor Ms. Grandish owns a controlling interest in any

rail carrier, and no officers or directors ofPLI are also officers or directors of any rail 

carrier.

In a letter dated September 13, 2001, Mr. Grandish stated as president ofPLI that the

company was formed to operate two intermodal freight terminals operated by the

Burlington Northern Santa Fe until 1996. The Paducah and Louisville Railway1

apparently acquired the terminals, and contracted with PLI to operate them under lease.

Mr. Grandish states that PLI owns all improvements on the leased premises, including

buildings, lighting, parking lots, track, and the freight-handling and office equipment.

PLI began operations February 1, 1999. Virtually all of PLI’s business is with the

Paducah and Louisville, and PLI has exclusive right under contract to all the

intermodal freight business ofthe Railway. Two PLI employees ofa total offive work

on the premises ofthe Railway in connection with their intermodal duties but are not

supervised by Railway employees.

Section 1(a)(1) of the Railroad Retirement Act (RRA) (45 § 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;

1 The Paducah and Louisville Railway has been determined to be a covered rail carrier employer

under the Acts, with service creditable from August 27, 1986. See Legal Opinion L-86-116.
P & L Intermodal Corporation

d/b/a P& L Intennodal

(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 aid 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 (RUIA), 45

U.S.C. § 351 (a) and (b), contain substantially similar definitions, as does section 3231

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

PLI is clearly not a carrier by rail. Further, there is no evidence that PLI is under

common ownership with any rail carrier or controlled by officers or directors who 

control a railroad. PLI therefore is not a covered rail carrier affiliate employer. As PLI

meets no other definition of a covered employer under the Acts, the Board finds that

PLI is not a covered employer.

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

intermodal terminal work for PLI under its contract with the Paducah and Louisville

Railway should be considered to be employees of that railroad rather than of PLI.

Section 1(b) of the RRA and section 1 (d)(i) of the RUIA both define a covered

employee as an individual in the sendee of an employer for compensation. Section

1 (d) ofthe RRA further defines an individual as "in the sendee ofan employer" when:

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

supervise and direct the manner ofrendition of his sendee, 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 * * *.
P & L Intermodal Corporation

d/b/a P& L Intermodal

-3-

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 of the test under paragraph (A) is whether the individual performing the

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

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

The foregoing evidence shows that PLI's employees do not work under the directions

ofRailway staff; 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 ifhe 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. 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 PLI is an 

independent contractor. Courts have faced similar considerations when determining

the independence of a contractor for purposes of liability of a company to withhold

income taxes under the Internal Revenue Code (26 U.S.C. § 3401(c)). In these cases,

the courts have noted such factors as whether the contractor has a significant

investment in facilities and whether the contractor has any opportunity for profit or

loss; e.g.. Aparacor. Inc, v. United States. 556 F. 2d 1004 (Ct. Cl. 1977), at 1012; and

whether the contractor engages in a recognized trade; e.g.. Lanigan Storage & Van Co.

v. United States. 389 F. 2d 337 (6th Cir. 1968, at 341). PLI owns all buildings and

equipment used in the intermodal terminal, which clearly constitutes a sizable

investment. A majority ofthe Board finds that PLI consequently meets the test for

independent contractor stams, and individuals performing service under its contracts

are employees of PLI rather than employees ofthe Paducah and Louisville Railway.

Kelm. supra.
P & L Intermodal Corporation

d/b/a P& L Intermodal

-4-

Accordingly, it is the determination of a majority ofthe Board that service performed

by employees of PLI is not covered employee service under'the Railroad Retirement

and Railroad Unemployment Insurance Acts.

V. M. Speakman, Jr. (Dissenting in part)

-uzJerome F. ICever