B.C.D. 03-75 OCT 1 6 2003

EMPLOYER STATUS DETERMINATION

Trinity Railcar Repair, Inc.

This is the decision of the Railroad Retirement Board regarding the status ofTrinity Railcar

Repair, Inc. (Trinity Railcar) 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 Trinity Railcar, which was incorporated in October 2001, is part of 

Trinity Rail Group, one of five business groups1 operated by Trinity Industries,

Incorporated. In a letter dated May 6, 2003, the Assistant General Counsel of Trinity

Railgroup advised that Trinity Railcar currently operates four car repair facilities, primarily

for tank cars, at Waycross, Georgia; at Miles City, Montana; and at Saginaw and Vidor in

Texas. Each of these facilities employs from 20 to 100 individuals. Trinity Railcar also

performs light repair work at three CSX Transportation intermodal terminals, and on

location at two smaller railroads. From 2 to 10 Trinity Railcar employees perform the light

repairs at each site. As of the May 2003 letter, Trinity Railcar has 375 employees at all

locations. In 2002, about 15.5 percent of Trinity Railcar’s revenue, or about $6.5 million 

out of $42 million, derived from railroads or "railroad affiliates”. There is no evidence that

Trinity Railcar is affiliated through equity ownership or through common directors or

corporate officers with any rail carrier. The other components of the Rail Group

manufacture rail cars and rail car parts.

Section 1 (a)(1) of the Railroad Retirement Act (RRA) (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 (RUIA), 45 U.S.C.

351(a) and (b), contain substantially similar definitions, as does section 3231 of the

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

Trinity Railcar is clearly not a carrier by rail. Further, there is no evidence that Trinity

Railcar is under common ownership with any rail carrier or controlled by officers or

'The four remaining groups are Trinity Railcar Leasing and Management Services, Trinity Inland Barge

Group, Trinity Construction Products Group, and Trinity Industrial Products Group.
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Trinity Railcar Repair, Inc.

directors who control a railroad. Based on available evidence, the Board finds that Trinity

Railcar therefore is not a covered rail carrier affiliate employer because it is not under 

common control with a rail carrier employer covered by the Acts. As Trinity Railcar meets

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

Railcar is not a covered employer.

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

light car repairs for Trinity Railcar away from Trinity Railgroup facilities under its

arrangements with rail carriers should be considered to be employees of those railroads 

rather than of Trinity Railcar. Section 1(b) of the RRA and section 1(d)(i) of the RUIA both

define a covered employee as an individual in the service of an employer for

compensation. Section 1 (d) of the RRA further defines an individual as "in the service of

an employer" when:

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

supervise and direct the manner of rendition of his service, 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 * * *.

Section 1 (e) of the RUIA contains a definition of service substantially identical to the above, 

as do sections 3231(b) and 3231(d) of the 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 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 if he 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 of

independent 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). 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 whetherthe contractor has

a significant investment in facilities and whether the contractor has any opportunity for
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Trinity Railcar Repair, Inc.

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

and whether the contractor engages in a recognized trade; e.q., Laniqan Storage & Van

Co. v. United States, 389 F. 2d 337 (6th Cir. 1968, at 341).

Trinity Railcar under its contracts with the rail carriers evidently performs the light car

repairs on the rail carrier premises. Nevertheless, Trinity Railcar has a sizable investment

in plant and equipment at the four independent facilities where it conducts major car repair.

Moreover, Trinity Railcar provides its services to the rail industry as a whole, and advertises 

itself to the general public as a freight car repair company. See: The Pocket List of

Railroad Officials. Volume 109, Number 3, at A-66, A-67 (3rd Quarter 2003). Trinity Railcar 

consequently meets the test for independent contractor status under paragraphs (B) and

(C). There is no evidence that work by Trinity Railcar at the CSX intermodal terminal is

performed under supervision of employees of CSX Transportation, and in fact others

working at the intermodal terminal may not be rail carrier employees. See, e.g., Board 

Coverage Decision 96-82, CSX Intermodal Inc., (carrier affiliate trucking company which 

picks up and hauls intermodal containers from carrier terminal is not a covered employer);

and Legal Opinion L-91-67, Budco Group. Inc., Parsec and Piggyback Services Divisions,

(employees of independent contractor performing truck-flatcar ramping service at various

railroad terminals are not statutory employees of the railroads). The Board finds that 

available evidence does not establish that the control test in paragraph (A) is met.

Accordingly, it is the determination of the Board that the service performed by employees

of Trinity Railcar Repair, Inc. engaged in light repair of freight cars at intermodal terminals

is not covered employee service under the Railroad Retirement and Railroad

Unemployment Insurance Acts.

V. M. Speakman, Jr. ^