B.C.D. 04-48

SEP 2 0 2004

Employer Status Determination

Roadway Worker Training, Inc.

This is the decision ofthe Railroad Retirement Board regarding the status of Roadway

Worker Training, Inc.1 (RWT), as an employer under the Railroad Retirement and

Railroad Unemployment Insurance Acts. The following information was provided by

Ms. Sail}’ K. Kircher, counsel for RWT.

RWT is incorporated and began operations November 2, 2001. It has five employees,

and has engaged the senices of approximately 50 independent contractors. RWT

believes that two ofthese individuals were previously employees of Union Pacific

Railroad, which is a customer of RWT. Ms. Kircher advised that RWT provides services

to the entire railroad industry:

* * * including Class One Railroads, Regionals and Shortlines, Transits,

Consultants, Contractors and Suppliers. Some ofthe services offered by RWT

include Training Program Development, Safety and Training Audits, Railroad

New Hire Training, Dispatcher Training, Operating Rules Training, Conductor

Training, Remote Control Locomotive Operator Training, Operations

Assessments, On-Track Worker Training (49 CFR 214), Physical Plant

Inspections, Data Base Review and Analysis, Contractor and Supplier Technical

Safety & Compliance and Project Review and Analysis, Contractor and Supplier

Technical Safety & Compliance and Project Review and Inspection.

RWT has had over 350 clients, some of which are covered employers under the Acts and

others which are not. RWT subcontractors work both on client property and at other

locations. RWT is a privately held corporation owned by James L. Cashwell and Patsy J.

Crisafi, and is not affiliated with a railroad. RWT contractors are compensated by RWT,

not by RWT clients, based on the provisions of their individual contracts with RWT.

These contracts typically provide for compensation at a daily rate for services rendered

to RWT clients.

Section 1(a)(1) ofthe Railroad Retirement Act (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 ofthe Surface

Transportation Board under Part A ofsubtitle IV oftitle 49, United States

Code;

fii) any company which is directly or indirectly owmed or controlled

by, or under common control with, one or more employers as defined in

paragraph (i) ofthis subdivision, and which operates any equipment or

facility or performs any service (except trucking service, casual service,

Erroneously referred to as “Railroad Worker Training” in some material.
and the casual operation of equipment or facilities) in connection with the

transportation of passengers or property by railroad * * *.

Sections i(a) and i(b) ofthe Railroad Unemployment Insurance Act (45 U.S.C. §§ 351(a)

and (b)) contain substantially similar definitions, as does section 3231 ofthe Railroad

Retirement Tax Act (26 U.S.C. § 3231).

RWT clearly is not a carrier by rail. Further, the available evidence indicates that it is

not under common ownership with any rail carrier nor is it controlled by officers or

directors who control a railroad. Therefore, RWT is not a covered employer under the

Acts.

This conclusion leaves open, however, the question w'hether the persons wiio perform

work for RWT under its arrangements with rail carriers should be considered to be

employees ofthose railroads rather than of RWT. Section i(b) ofthe Railroad

Retirement Act and section i(d) ofthe Railroad Unemployment Insurance Act both

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

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

service of an employer" w'hen:

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

supervise and direct the manner of rendition of his service, or (B) he is

rendering professional or technical sendees and is integrated into the staff

ofthe employer, or (C) he is rendering, on the property used in the

employer's operations, personal sendees the rendition of wdfich is

integrated into the employer's operations; and

(ii) he renders such service for compensation * * *.

Section i(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 ofthe test under paragraph (A) is whether the individual performing the

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

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

The evidence in this case show's that RWT employees do not work with employees of

Union Pacific or RWT’s other clients, except to train them. The evidence also shows that

RWT employees are not compensated by the clients and do not submit invoices and

supporting documents such as timesheets to RWT’s clients. RWT employees are not

assigned to specific projects, and do not have work assigned or approved by clients. The

evidence thus show's that work by the five RWT employees is not performed under the

direction or control ofthe railroad employers with w'hich RWT contracts. Accordingly,

Employer Status Determination

Roadway Worker Training, Inc.
3

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 indixddual 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. See 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 RWT 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. While these may be rather close questions

in cases such as this one, where the contractor has only a small core of permanent

employees and retains subcontractors to perform the actual training, it is apparent that

RWT is in the business of providing sendees to many customers, and is engaged in the

recognized trade or business of providing training. Accordingly, it is the opinion ofthe

Board that RWT is an independent business.

Because RWT is an independent contractor, RWT employees are not covered employees

within the meaning of paragraphs (B) and (C). Accordingly, it is the determination of

the Board that sendee performed by employees of RWT2 is not covered under the Acts.

Employer Status Determination

Roadway Worker Training, Inc.

V.M. Spealcman, Jr. /J

(Separate concurring opinion

attached)

2 The Board does not decide the status ofthe contractors who provide sendees through RWT.
Concurring Opinion Of

V. M. Spcakman. Jr.

Employer Status Determination

Roadway Worker Training, Inc.

I concur with the result in this case but for slightly different reasons. Roadway Worker

Training, Inc. (RWT) is a consulting firm consisting offive employees. It has numerous

clients both inside an outside the railroad industry. It performs its services through a

number ofsubcontractors. There is no evidence that any employee ofRWT is under the

direction or control of any of RWT’s clients. Furthermore, there is no indication that any 

employee of RWT is in any way integrated into the staff or operations of an employer

under the Acts. Consequently, even absent the holding in Kelm. there would be no basis

for deeming an employee ofRWT an employee of one ofits carrier clients.