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

M e m o r a n d u m

FORM G -115I (1 .(2 )

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

JVN 0 2 2000

L-2000-17

TO

FROM

SUBJECT :

Carol A. Arnold

Assessment & Training

Through: Ronald Russo

Director of Policy and Systems

Steven A. Bartholow

General Counsel

Railinc Corporation and American Association of Railroads

Contribution Rates

This is in response to your e-mail request of April 25,2000 for guidance as to

•

 whether a joint employer record for experience rating purposes may be

established for Railinc Corporation (Railinc - II) (BA-7534) and the Association

of American Railroads (BA-7304) (AAR). In a separate request, you inquired as

to whether the experience of the former Railinc Corporation (BA-9341) (RailincI) should have been joined with the new Railinc-II when it was created in 1999.

For the reasons explained below, it is my opinion that a joint employer record

may be established for Railinc-II and the AAR with an effective date of

January 1,2001, assuming we consider their inquiry as a request for such.

Additionally, it is my opinion that it would not be correct to join the Railinc-I

experience with the current Railinc-II experience. Railinc II is a separate,

independent company which is performing business in the inspection of safety

and audit of railcar movement. Railinc-I was involved in data processing and

communications.

According to the facts as presented in your e-mail, the Association of American

Railroads (AAR) telephoned the Board on April 19,2000, inquiring about their

contribution rate, explaining that they had never received, or could not locate,

their notice. You stated that upon being provided two contribution rates (one

for BA-7304, jointly with BA-93411 and BA-7721, and the other for BA-7534), the

AAR alleged that this was in error. AAR indicated that Railinc-II, formed in

1999, was a subsidiary of the AAR, just as Railinc-I was, and should have a joint

'It is unclear whether a rate is still established for BA-9341, which no longer exists.
contribution rate. You indicated that although this was not the case, since

Railinc-I was not set up as a joint record with the AAR, the AAR may have

assumed a joint contribution rate existed since the rates for the two separate

entities were identical. You also stated that the AAR does not wish to reopen

the contribution rates for 1999, but would like a recalculated contribution rate

for 2000.

Section 8(a)(18) of the Railroad Unemployment Insurance Act (RUIA) provides

that the Board may allow 2 or more employers to establish and maintain a joint

employer record if the employers request such record. Section 345.202 of the

Board’s regulations provides in pertinent part that:

Two or more employers that are under common ownership

or control may request the Board to consolidate their individual

employer records into a joint individual employer record. Such

joint individual employer record shall be treated as though it

were a single employer record. A request for such consolidation

shall be made to the Director of Unemployment and Sickness

Insurance, and such consolidation shall be effective commencing

with the calendar year following the year of request. 20 C.F.R.

§345.202(a).

Additionally, section 345.205 provides as follows:

The cumulative benefit balance, net cumulative contribution

balance, 1-year compensation base, and 3-year compensation base

of an employer that reincorporates or otherwise alters its corporate

identity in a transaction not involving a merger, consolidation, or

unification will attach to the reincorporated or altered identity. 20

C.F.R. §345.205.

First, based upon the information you provided, it appears that Railinc-I was

never set up as a joint record with the AAR. You indicated that the AAR may

have assumed that they had a joint record with Railinc-I because the

contribution rates in those years happened to be identical. Further evidence

shows that the annual contribution rate notices for the AAR and for Railinc-I

were mailed to separate contacts at different addresses. Barring a specific

request and approval by the Director of Unemployment and Sickness

Insurance for consolidation of employer records, the individual employer

records of the AAR and Railinc-I were correct under the Board’s regulations (20

CFR §345.202(a)).
Since you indicated that the AAR does not wish to reopen the contribution

rates for 1999, but would like a recalculated rate for 2000, the Board may

consider this as a request for a joint employer record for consolidation with

Railinc-II. Since this request was received too late to change the 2000

contribution rates for both entities, this request would be effective

commencing with the calendar year following the year of request, specifically

January 1,2001.

Second, you inquired as to whether when the new Railinc-II was created in

1999, it would have been correct for the Board to join the old Railinc-I

experience with the new Railinc-II. As stated in the Board’s regulations cited

above (20 CFR 345.205), experience may be joined when an employer alters its

corporate identity in a transaction that does not involve a merger, consolidation

or unification. It would not be correct to join the Railinc-I experience with the

current Railinc-II experience since the latter is a separate, independent

company which is performing business in the inspection of safety and audit of

railcar movement and is completely separate from the data processing and

communications operation of the former Railinc-I. Railinc II is not a

reincorporation of Railinc-I, but is a new corporation that happens to have the

same name as the former corporation.

In summary, Railinc-II may be set up as a joint record for experience rating

purposes with the AAR with an effective date of January 1, 2001. Additionally,

it would not be correct to join the Railinc-I experience with the current RailincII experience, since the latter is a new separate, independent company.

I hope this information is helpful.

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