U n i t e d S t a t e s G o v e r n m e n t FORM 0-1 ISf (142)

R a i l r o a d R e t i r e m e n t B o a r d M e m o r a n d u m

August 17. 2010 

L-2010-06

TO Ronald R. Russo

Director of Policy and Systems

FROM Steven A. Bartholoi 

General C o u n sel^

SUBJECT : Effect of CSX Payments under WARN Act on RUIA Benefits

This is in response to your memorandum of June 15,2010, wherein you asked whether laid 

o ff CSX employees could receive unemployment and/or sickness benefits under the 

Railroad Unemployment Insurance Act (RUIA) and benefits under the Worker Adjustment 

and Retraining Notification Act (WARN Act). You provided the facts se t out below.

On the morning of April 6,2010, CSX's Progressive Rail Raceland Car Shop in Worthington, 

Kentucky, advised 125 employees th at the shop no longer had enough work to continue to 

operate. Employees were sent home and were paid their full salaries for April 6,2010 

through April 13,2010. Employees who were off duty due to injury or illness were not paid 

for that week. Under the WARN Act, all 125 employees received their full salary for the 

days of April 14,2010 through June 4,2010. Ultimately, CSX provided a list th at shows 

135 employees received WARN Act payments for th at time period. The WARN Act lumpsum payments were issued on May 4,2010. Service months and earnings will be credited 

and reported for both RRA and RUIA purposes.

Employees were given the option to work at other locations in Huntington, West Virginia 

and Russell, Kentucky. One hundred three carmen did not have to exercise their seniority 

rights until June 5,2010. The remaining employees had to act immediately and only 

received payments under the WARN Act if there was a reduction in their rate of pay. The 

employee/employer relationship remained.

F ACTS
DISCUSSION and CONCLUSIONS

The WARN Act is the Worker Adjustment and Retraining Notification Act, enacted 

August 4,1988 (Public Law 100-379,29 U.S.C. 6 2101 et seq.). The WARN Act offers 

protection to workers, their families and communities by requiring employers to provide 

written notice 60 days in advance of covered plant closings and covered mass layoffs (29 

U.S.C. S 2102). The notice must be provided to either affected workers or their 

representatives (e.g., a labor union); to the State dislocated worker unit; and to the 

appropriate unit of local government. The advance notice allows workers and their families 

transition time to seek alternative jobs or enter skills training programs. See 20 CFR sec. 

639.1(a).

In general, employers are covered by WARN if they have 100 or more employees, not 

counting employees who have worked less than 6 months in the last 12 months and not 

counting employees who work an average of less than 20 hours a week (29 U.S.C. S 

2101(a)). Private, for-profit employers and private, nonprofit employers are covered, as 

are public and quasi-public entities which operate in a commercial context and are 

separately organized from the regular government (20 CFR sec. 639.3(aXl)).

An employer who fails to give the notice required by the WARN Act shall be liable to each 

aggrieved employee who suffers an employment loss as a result of the plant closing or 

layoff for an amount including back pay and benefits for each day of violation a t a 

specified rate of compensation. The maximum period used to calculate the payment is 60 

days (29 U.S.C. S 2104).

An employer who fails to provide notice as required to a unit of local government is subject 

to a civil penalty not to exceed $500 for each day of violation (29 U.S.C. S 2104(aX3).

This penalty may be avoided if the employer satisf ies the liability to each aggrieved 

employee within 3 weeks a fte r the closing or layoff is ordered by the employer.

The first question you asked is whether the laid off CSX employees may receive payments 

under the WARN Act without affecting their eligibility to receive unemployment and/or 

sickness benefits under the Railroad Unemployment Insurance Act (RUIA). Section l(k) of 

the RUIA provides in pertinent part that:
. . . (1) a day of unemployment, with respect to any employee, 

means a calendar day on which he is able to work and is available for work 

and with respect to which (i) no remuneration is payable or accrues to him..

. (2) a "day of sickness," with respect to any employee, means a calendar day 

on which because of any physical, mental, psychological, or nervous injury, 

illness, sickness, or disease he is not able to work... and with respect to 

which (i) no remuneration is payable or accrues to him...

Section 2104(aXl) of the WARN Act provides in pertinent part that:

(1) Any employer who orders a plant closing or mass layoff in violation of 

section 2102 of this title1 shall be liable to each aggrieved employee 

who suffers an employment loss as a result of such closing or layoff 

for-

(A) back pay for each day of violation a t a rate of 

compensation not less than the higher of -

(i) the average regular rate received by such

employee during the last 3 years of the 

e m p l o y e e 's e m p l o y m e n t ; o r

(ii) the final regular rate received by such employee

Section 2104(aX2) provides th at the amount for which an employer is liable under 

subparagraph (1) shall be reduced by any wages paid by the employer to the employee for 

the period of violation.

I t is clear th at a payment made pursuant to section 2104 of the WARN Act is intended to 

replace compensation th at is lost due to a plant closing or layoff where no notice or less 

than 60 days' notice is given to the employees. Because the payment to the CSX 

employees under the WARN Act was mode by their employer and consisted of an amount 

considered to be for back pay and benefits, it is my opinion th at the payment would be 

compensation th at would disqualify a railroad employee from entitlement to unemployment 

or sickness benefits under the RUIA for the period covered by the payment. Moreover, 

because the WARN Act payments are paid with respect to a specific period of time

1 Section 2102 requires an employer to serve written notice of a plant closing or mass 

layoff 60 days prior to the closing or layoff.
and the employment relationship continues to exist during th at time period, it is my 

further opinion that the payments are creditable as earnings for which service months can 

be credited. You have already indicated in your statem ent of facts that CSX does plan to 

report the payments as creditable compensation for both RRA and RUIA purposes.

Your final question is should the WARN Act payments be treated as a payment affected 

by section 2(f) of the RUIA. Section 2(f) provides in pertinent part that:

(f) I f (i) benef its are paid to any employee with respect to 

unemployment or sickness in any registration period, and it is later 

determined that remuneration is payable to such employee with respect to 

any period which includes days in such registration period which had been 

determined to be days of unemployment or sickness, and (ii) the person or 

company from which such remuneration is payable has, before payment 

thereof, notice of the payment of benefits upon the basis of days of 

unemployment or sickness included in such period, the remuneration so 

payable shall not be reduced by reason of such benefits but the 

remuneration so payable, to the extent to which benefits were paid upon the 

basis of days which had been determined to be days of unemployment or 

sickness and which are included in the period for which such remuneration is 

payable, shall be held to be a special fund in tru st for the Board.

Section 2104 of the WARN Act is clear that a payment made by an employer who orders a 

plant closing or mass layoff without giving appropriate notice is liable to each aggrieved 

employee for "back pay". In fact, section 2104(aX2) provides th at the amount for which 

an employer is liable shall be reduced by, among things, any wages paid by the employer to 

the employee for the period of the violation. Similarly, section 2(f) of the RUIA applies to 

back pay that is paid for a period for which an employee has been paid unemployment or 

sickness benef its. While the facts in this particular case involving CSX seem to indicate 

that there was no overlapping of WARN Act payments and RUIA payments, if the 

requirements of section 2(f) are met,2 then it is my opinion th at the WARN Act payments 

are subject to section 2(f).

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2 Prior to making the WARN Act payment, the employer must have had notice of the RUIA 

payments that were paid with respect to a registration period covered by the WARN Act 

payment.