United States of America

Railroad Retirement Board

844 North Rush Street

Chicago, Illinois 60611-2092

GENERAL COUNSEL

June 8, 2016

L-2016-22

Ellen Conboy

Executive Director/National Representative

Transportation Communications International Union

3 Research Place 

Rockville, MD 20850

Re: Carlson v. CSX Transportation,

In the United States District Court for

the Southern District of Indiana, Case

Nos. 3:il-CV-66, 3:12-CV-195, and

3:i3-CV-202

RRB No. XXX-XX-1922

C. 2016-2383

Dear Ms. Conboy:

This letter is in response to your inquiry of May 24, 2016 to Geraldine Clark of the

Railroad Retirement Board’s Office of the Labor Member regarding whether

monthly payments under a settlement agreement in the above-captioned cases

would be creditable to the plaintiff employee as compensation under the Railroad

Retirement Act (RRA) and Railroad Unemployment Insurance Act (RUIA) for the

months in which the settlement payments would be made. Ms. Clark referred your

question to my office for a response. As explained below, it is my opinion that these

payments will constitute railroad compensation under the Acts until the employee 

finally relinquishes her employment rights for service and seniority on June 30,

2019.

The draft Agreement between the plaintiff employee and defendant railroad

provides for a “dismissal allowance” in the total gross sum of $150,000.00 to be paid

in equal amounts on a bi-weekly basis through the railroad’s normal payroll system

until June 30, 2019. The Agreement provides that the employee will maintain

health insurance coverage through the railroad while she is receiving these

payments and employee contributions for health insurance will be deducted from

her settlement payments, along with other legally required deductions. Although

the employee would agree to resign her current position with the railroad effective

April 28, 2016 and would be barred from exercising any employment or seniority
2

rights with the railroad, she will not actually relinquish those employment rights

until the settlement payments cease on June 30, 2019.

As you know, Section 1(h)(1) of the RRA defines compensation for benefit

entitlement purposes under that Act in relevant part as:

.... any form of money remuneration paid to an individual for services

rendered as an employee to one or more [railroad] employers...

including remuneration paid for time lost as an employee, but

remuneration paid for time lost shall be deemed earned in the month

in which such time is lost. A payment made by an employer to an

individual through the employer’s payroll shall be presumed, in

absence of evidence to the contrary, to be compensation for service

rendered by such individual as an employee of the employer in the

period with respect to which the payment is made....

Section l(i)(l) of the RUIA provides essentially the same definition with respect to

compensation creditable for benefit entitlement purposes under that Act. Although

the settlement agreement characterizes the payments to the employee as a 

“dismissal allowance”, Board regulations at 20 CFR §211.9 discuss the creditability

of dismissal allowances paid to an employee under a protective labor agreement

that covers the amounts paid for specific periods of time, not payments agreed to in

settlement of litigation. A review of the court docket sheets for the above-captioned

cases shows that the each case involved complaints of employment discrimination

against the employee in violation of Title VII of the Civil Rights Act of 1964.

Payments in settlement of employment discrimination claims may be credited as

compensation paid for time lost under Board regulations 20 CFR §211.3 and §322.6,

if the requirements for crediting pay for time lost are met.

In order for a payment by an employer of an employee’s claim for damages (whether

in settlement or as a judgment) to be treated as compensation for time lost, three

factors must be satisfied: (l) the payment must be made at least in part in

satisfaction of a claim for lost wages! (2) the payment must be attributable to an

identifiable period of absence from work! and (3) the payment must be made with

respect to months in which an employer-employee relationship existed. An

employment relationship ends when the employee is discharged; however, if the

discharged employee later receives a payment which represents reimbursement for

lost wages, the period following discharge will meet the requirement if the

discharge was determined to be wrongful or if the wrongful discharge claim results

in the employee’s reinstatement. Board regulations 20 CFR §211.3 and §322.6

further require that for the Board to accept an allocation of pay for time lost, the

payment must be reasonably related to the employee’s normal monthly pay,

ordinarily no less than ten times the employee’s daily pay rate.

In the present case, under the settlement agreement the employee will receive 

payments in full and complete settlement of all claims, including claims for

employment discrimination and lost compensation, to be paid in monthly

installments through the railroad’s normal payroll system. These payments are

&

Printed on recycled paper
3

allocated to specific future months through June 2019, during which the employee

will maintain her eligibility for health insurance and her employment and seniority

rights, although the settlement agreement prohibits her from exercising any

employment or seniority right after April 28, 2016. In Legal Opinion L-1989-89, this

office indicated that a prohibition on exercising seniority rights did not terminate

the employer-employee relationship, and as a result the dismissal allowance

payments under consideration in that case were determined to be creditable as

railroad compensation under the Acts. Furthermore, Legal Opinion L-2013'39

states that the Board presumes the termination of an employment relationship at

the date of the award or settlement, but that presumption may be overcome by a

specific allocation of service months by agreement of the parties or by court order.

Although the portion of the agreement stating the employee “agrees to resign her

position with [railroad] effective April 28, 2016” suggests a termination of

employment at the time of resignation, it is evident from the remainder of the

agreement (including the continuation of health insurance, the making of payments

through the railroad’s normal payroll, and the specific acknowledgement that the

employee will not relinquish her employment rights for service and seniority until

June 30, 2019) that the parties intend for the employment relationship to continue

until the end of the payment period. Finally, Board records indicate the amount of

monthly payments to be made to the employee are not less than ten times the

employee’s daily pay rate, and thus are reasonably related to the employee’s normal

monthly pay.

Therefore, under the facts of this specific case, I find that the employee’s

“resignation” from her particular position with the railroad does not terminate the

overall employer-employee relationship between the employee and the railroad, but

that the employee is not required to relinquish her employment and seniority rights

until the end of the payment period. In light of the continuation of the employment

relationship and the specific allocation of pay for time lost for future months in

satisfaction of claims for lost wages, in accordance with section 211.3 of the Board’s

regulations, I find that the payments to the employee in the above-captioned cases

pursuant to the provided settlement agreement will be creditable as railroad

compensation under the Acts.

Sincerely,

Karl Blank

General Counsel

cc: Office of the Labor Member

Enclosures: Legal Opinions L-1989*89 and L-2013'39

$

Printed on recycled paper