B.C.D. 04-18

MAR 2 4 2004-

EMvLOYEE service determination

Employees of Transportation Certification Services

On October 30, 2002, the Office of Inspector General of the Railroad

Retirement Board (OIG) referred to the Retirement Benefits Division, for the

assessment of overpayments, the cases of 31 retirees who were receiving

annuities while performing work under contract with Transportation

Certification Services (TCS). Transportation Certification Services was

previously found not to be an employer under the Railroad Retirement and

Railroad Unemployment Insurance Acts in B.C.D. 95-40.

The information provided by the annuitants was in many cases inconsistent

with the information provided by the OIG. The information contained in the

files provided by the OIG is not original information from employers covered

under the Acts, but was compiled from information provided by TCS. The

General Counsel requested the Audit and Comphance Division to seek

additional information from the affected annuitants so that the Board could

make employee coverage determinations prior to assessment of any

overpayments.

The referral of the 31 cases is, in effect, a request to re-open both the decision

in B.C.D. 95-40 and the compensation and service record of each of the 31

annuitants. B.C.D. 95-40 was issued on March 20, 1995, and became a final

agency decision when the period for requesting reconsideration passed one

year later. See 20 CFR 259.3. With respect to the service and compensation

records of the 31 annuitants, the years involved range from 1994 through

1998. The reports of service and compensation for most of these years were

also final at the time of the referral to the Retirement Benefits Division. See 45

U.S.C. §231h and 20 CFR 211.16. One employer covered under the Railroad

Retirement and Railroad Unemployment Insurance Acts did submit amended

reports to provide compensation and service credits for annuitants who had

worked in train and engine service on that employer’s property.

The Board is thus presented with the dual question of whether to re-open its

decision in B.C.D. No. 95-40 and whether to re-open the service and

compensation records of the 31 annuitants. In reviewing the prior coverage

determination concerning TCS, the Board held that training service provided

by TCS to carriers would not be covered service. However, the OIG discovered

that some of the individuals under contract with TCS were also providing

locomotive engineering services for TCS’s clients. The Board has previously

held that an individual that is operating a train as an engineer or conductor

will be held to be an employee of the carrier. Therefore, any service in this

regard would be covered service even if the individual claimed to be an
Employees of Transportation Certification Services

independent contractor. B.C.D. No. 95-40 is modified to conclude that any

work performed through TCS as a locomotive engineer or as a conductor for a

covered rail carrier employer is employee service for the rail carrier employer

However, the greater difficulty the Board faces in this case concerns the

individual records of service and compensation involved. Specifically, the

evidence as to the types and amount of service provided by the annuitants in

this matter is inconsistent and meager. Certainly, the passage of time has not

made the Board’s job any easier in resolving these issues. Additionally, the

Board must consider the effects of its prior decision concerning TCS and the

misinformation that has been provided to the annuitants regarding thenstatus under the Acts. For these reasons, except in the limited circumstances

described below, the Board will not re-open the compensation and service

records of the 31 annuitants. See 20 CFR 261.11.

The Board finds that any service that has been reported by an employer under

the Acts for a contractor of TCS as of the date of this decision shall be credited

to the individual as employee service pursuant to the Board’s regulations and,

if applicable, shall cause an adjustment in the annuity of that employee. If the

crediting of such service shall cause an overpayment in annuities under the

Railroad Retirement Act, an overpayment shall be assessed, but the conditions

for waiver set out in section 10 (c) of the Railroad Retirement Act shall be

deemed to be satisfied as explained below.

First, it shall generally be considered that the employee was without fault in

causing the overpayment due to the confusion and misinformation concerning

the employee’s status as an employee while under the contract with TCS.

Further, the Board finds that recovery of the overpayment would be against

equity or good conscience, since the employee accepted the annuity

payment(s) in question in the belief based on B.C.D. No. 95-40 that the service

being provided through TCS was not covered rail service that would interrupt

the employee’s annuity entitlement. In view of the length of time that has

elapsed since the service was rendered, as well as the misinformation and

confusion mentioned earlier, and the advanced age of the annuitants at the

present time, the Board finds that equity demands that recovery of the

overpayments be waived.

In summary, the Board reopens and modifies its decision in B.C.D. No. 95-40

to conclude that work performed through TCS as a locomotive engineer or as a

conductor for a covered rail carrier employer is employee service for the rail
Employees of Transportation Certification Services

carrier employer. The Board will reopen the service and compensation records

only for those annuitants for whom service performed under contract with TCS

was reported by a covered employer on or before the date of this decision. The

Board in all other cases will not reopen its record of service and compensation

and holds that any service of any individual under contract with TCS, which

has not been reported prior to the date of this decision by an employer under

the Acts, shall not be considered creditable service by virtue of section 9 of the

Railroad Retirement Act.