B.C.D. 03-82

Employer Status Determination

Employee Service Determination

DisAbility ReDesign, Inc.

Sheila Gniffke-Pribyl

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

ReDesign, Inc. (DRI) as an employer under the Railroad Retirement and Railroad

Unemployment Insurance Acts, and the creditability ofservice performed by Sheila

Gniffke-Pribyl.

Background

Coverage of DRI was requested by Joseph D. Roach, Mackall, Crounse & Moore, PLC, 

counsel for DRI, who requested on behalf of DRI that the Board find that DRI is a

covered employer under the Acts based on work performed by Ms. Gniffke-Pribyl for

Union Pacific Railroad Company (UP). The following information was submitted by

Mr Roach.

DRI was incorporated and began operations April 2, 1999. Mr. Roach represented that

its only client is and has been UP. However, DRI’s website1 2states that “Over the past 20

years" we have provided services to more than 100 self-insurers or insured employers

from transportation, health care, manufacturing, construction, insurance and the

government.” UP states that DRI had a corporate existence for five years before

contracting with UP June 1, 2001. An affidavit dated March 5, 2002, of Sheila GniffkePribyl, Chief Executive Officer of DRI, states that she left the Burlington Northern in

1996 and formed DRI (“[formerly known as] Sheila Gniffke-Pribyl, Inc.”) at that time,

and that for “the lastsixteen months, DRI has provided vocational rehabilitation

services exclusively to the Union Pacific Railroad.”

From 1990-1996, Ms. Gniffke-Pribyl worked as a Rehabilitation Manager for Burlington

Northern Railroad Company. In 1996, the Burlington Northern merged to form the

Burlington Northern and Santa Fe Railway Company and decided to obtain certain

services from independent vendors. At that time, Ms. Gniffke-Pribyl left Burlington

Northern and formed DRI f/k/a Sheila Gniffke-Pribyl, Inc. The purpose ofthis new

venture was to provide vocational rehabilitation facilitation services. DRI has two

employees, Ms. Gniffke-Pribyl and Ms. Cynthia R. Widman.

In his letter of October 22, 2002, Mr. Roach stated that for the last 16 months, DRI had

provided vocational rehabilitation services exclusively to UP. Those services include

“facilitating return-to-worlc plans by identifying appropriate referrals; assisting network

1 As of October 3, 2002.

2 Other information obtained in connection with this case indicates that the 20-year period does not refer

to the corporate existence of DRI, but to the work experience of Ms. Gniffke-Pribyl and another DRI

employee, Ms. Cynthia R. Widman.
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counselors in placing [UP] employees as part of their rehabilitation; and partnering with

[UP] management to redesign its disability management program.” According to

Mr. Roach, Ms. Gniffke-Pribyl reports directly to [UP’s] Director of Disability 

Management, who oversees and monitors her work and determines whether to renew

DRI’s contract. Mr. Roach stated that, "at all times [UP] determines and directs the

scope and manner of DRI’s, and Gniffke-Pribyl’s, responsibilities, duties and

performance under the contract.” We note that this last statement is not consistent with

information provided by UP, which is examined below.

After obtaining information from Mr. Roach, the Board requested and obtained

information from Mr. Jim Coulton, Senior Director - Federal Taxes, UP, and Candace

Berg Girard, Director Disability Management, UP. According to Ms. Girard" UP has 65

Network Vocational Rehabilitation Counselors (NVRCs) in the Northern Region, who

are independent contractors paid on a fee-for-service basis, and who provide services to

disabled UP employees. The program is available to employees who have permanent

physical limitations as a result of accident or illness that results in a loss offunction

which impedes the employee’s ability to perform his or herjob. The goal ofthe service is

to assist disabled railroad workers in their return to work efforts. NVRCs are

geographically disbursed throughout the UP system, a 23-state area. The NVRCs are

private practitioners who are stilled experts in the area of vocational rehabilitation

services. The rehabilitation program follows the traditional return to work hierarchy3 4.

Due to the number offee-for-service NVRCs, “UP contracts for 3 Vocational

Rehabilitation Counselors to assist the 65 NVRCs in offering rehabilitation services to

[UP injured or ill] employees.” UP has contracted with the three regional vocational

rehabilitation counselors of which DRI is one, to use them on an as-needed basis to

assist the NVRCs with handling the vocational rehabilitation needs of UP employees.

Ms. Girard describes UP’s arrangements with the counselors as follows. Examples of

assistance from the regional counselor might be coordinating an on-site job analysis for

the NVRC, assisting the NVRCs with preparation of reports, identifying appropriate job

opportunities, or preparing for trial testimony. UP is limited in its ability to provide

confidential information to a counselor without a specific contract for such services.

Just as UP contracts outside defense counselors for litigation purposes, the Vocational

Rehabilitation Program contracts three vocational rehabilitation counselors because

Employer Status Determination

Employee Service Determination

Disability ReDesign, Inc.

Sheila Gniffke-Pribyl

3 The quoted material in these paragraphs, except for that described as from the statement of work, is

entirely from that submitted by Ms. Girard.

4 “1) Return to work at regularjob, 2) Return to work at regularjob with accommodation, 3) Return to

work with constructive use ofseniority, 4) Internal placement into a new position within [UP] without

training, 5) Internal placement into a new position within UP with training, and 6) External placement

into a new position without or with training."
-3-

these individuals have the education, credentials, skills and expertise necessary to

perform this type ofservice.

The statement ofwork contained in an attachment to the UP-DRI contract, describes

the work as: “vocational rehabilitation sendees including oversight and direction to the

[UP] Network VRCs who are providing services to disabled [UP] employees at [the

Railroad’s] Northern Region.”

According to Ms. Girard, DRI’s contract began June l, 20015. DRI is paid $4,500.00 per 

month plus travel expenses. Ms. Gniffke-Pribyl sets her own hours and schedule, in

order to conform to the schedule ofthe NVRCs. She does not conform to UP’s work

hours, routines, or schedules. The work is not ordinarily performed on UP premises but

at DRi’s office or in the field with the NVRCs and disabled employees. UP does not

know how many hours DRI performs services for UP.

Applicable Law

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;

Employer Status Determination

Employee Service Determination

Disability ReDesign, Inc.

Sheila Gniffke-Pribyl

(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) ofthis 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 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).

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

employer" when:

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

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

s As is stated in the copy of the contract provided to the Board.
rendering professional or technical services and is integrated into the staff

ofthe 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 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. §§ (b) and (d)).

Findings and Conclusions

DRI 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. Although DRI in effect contends that it is controlled by 

UP by reason ofthe contract between UP and DRI, the Board does not agree. The Board

recognizes that UP may have legitimate business reasons to contract for certain services,

and all elements ofthe contract in this case indicate that it was entered into between two

independent enterprises. Further, DRI is an independent enterprise which has had

clients other than UP. Its website indicates that it advertises for such clients.

Accordingly, we conclude that DRI is not a covered employer under the Acts.

This conclusion leaves open, however, the question whether Ms. Gniffke-Pribyl should

be considered to be an employee of UP rather than of DRI. 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.

The focus ofthe test under paragraph (A) ofsection 1(d)(1) ofthe RRA, quoted above, is

whether the individual performing the service is subject to the control ofthe servicerecipient not only with respect to the outcome of his work but also with respect to the

way he performs such work.

Although the evidence is conflicting in that Mr. Roach contends that Ms. Gniffke-Pribyl

is supervised by employees of UP, a majority ofthe Board finds that Ms. Gniffke-Pribyl's

work is performed independently and is not supervised. Her duties involve work with

the NVRC, who are themselves independent contractors, not with UP employees. DRI’s

contract with UP does not provide for UP supervision of individual DRI employees, and

UP does not have records ofthe number of hours worked by Ms. Gniffke-Pribyl. As

mentioned above, she mainly does not work on UP premises and does not conform to

UP hours ofwork. Accordingly, a majority ofthe Board finds that the control test in

paragraph (A) is not met. Moreover, under an Eighth Circuit decision consistently

Employer Status Determination

Employee Service Determination

Disability ReDesign, Inc.

Sheila Gniffke-Pribyl
-5-

followed by the Board, the tests set forth under paragraphs (B) and (C) 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 DRI is an independent

contractor. Courts have faced similar considerations when determining the

independence of a contractor for purposes ofliability 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 two employees and only one

client, it is apparent that DRI has been in the business of providing services to many

customers, not all ofwhich were connected to the rail industry, and is engaged in the

recognized trade or business of vocational rehabilitation. Accordingly, it is the opinion

of a majority ofthe Board that DRI is an independent business.

Because DRI is an independent contractor, the services performed by DRI employees is

not covered employee service within the meaning of paragraphs (B) and (C).

Accordingly, it is the determination of a majority ofthe Board that service performed by

Ms. Gniffke-Pribyl of DRI is not covered under the Acts.

Employer Status Determination

Employee Service Determination

Disability ReDesign, Inc.

Sheila Gniffke-Pribyl

V. M. Speakman, Jr. (Dissenting,

separate dissenting opinion attached)
Dissent of

V. M. Speakman, Jr.

Employer Status Determination

Employer Service Determination

DisAbility ReDesign, Inc.

Sheila Gniffke-Pribyl

I must respectfully dissent from the majority’s decision in this case. The

majority’s decision does not, in my view, give serious consideration to the facts

raised by DisAbility ReDesign, Inc., (DRI) and incorrectly applies the law to the 

facts as stated in the decision.

At the outset, DRI, wants to be covered under our statutes. (Letter from Joseph D.

Roach to Edmund T. Fleming, October 22, 2002). Granted that coverage is not a

voluntary matter, but where an entity wants to be covered should not our policy be

to cover it ifthere is any reasonable interpretation ofthe statute that would affect

that result?

Sheila Gniffke-Pribyl (Gniffke-Pribyl) worked for many years as a Rehabilitation 

Manager for the Burlington Northern Railroad. In 1996 when the Burlington

Northern merged with the Santa Fe her department was eliminated and the services

she had performed were contracted out to non-covered employees. At that point

she formed DRI in order to provide vocational rehabilitation services primarily on 

railroad-related matters. DRI consists of Gniffke-Pribyl and another employee.

Although there is some evidence that DRI has had other clients, since June of2001

it has worked exclusively for Union Pacific providing assistance to Union Pacific

Network Vocational Rehabilitation Counselors. These individuals are independent 

contractors whose function is to assist disabled railroad workers in their return to

work efforts. Mr. Jim Coulton, Senior Director - Federal Taxes- Union Pacific,

indicated that DRI was retained because ofGniffke-Pribyl’s knowledge ofthe

railroad work environment.

As the majority states, DRI is clearly not a carrier by rail. Thus, the next level of

inquiry is whether it is controlled or under common control with a carrier by rail.

Control is evidenced not merely by ownership, or voting control, but by the ability

to influence the operations or direction of another business. RRB v. Duquesne

l
Warehouse Co., 326 U.S. 446, 453 (1946). The legislative history ofthe

definition of employer contained in the RRA provides that “ Contractors, other 

than those which perform casual service, would not be excluded, irrespective of

whether control be legal or de facto. De facto control may be exercised not only 

by direct ownership ofstock, but by means of agreements, licenses and other 

devices which insure that the operation ofthe company is conducted in the interest 

ofthe carrier.” (S. Rep. No. 697, 75th Cong., 1st Session 7 (1937))

In Legal Opinion L-79-41 the General Counsel set forth certain factors which

could be used to judge whether a carrier has de facto control by contract. These 

include whether the contractor performs work for one enterprise or several? To

what extent is the contractor economically dependent on the carrier? Is the

contractor performing railroad-related work only? To what extent does the carrier

control the contractor’s method ofperformance? Does the contract provide for 

exclusivity? Does the contract provide for payment on a cost-plus or flat fee basis 

(the latter being more like a salary)? How central are the contractor’s services to

the carrier’s operations? What is the usual practice in the industry?

Since June of 2001 the Union Pacific has been DRI’s primary, if not only client.

DRI’s contract with the Union Pacific is DRI’s sole source ofmcome, which is

paid on a flat fee basis. DRI’s services are railroad related and DRI was retained

because ofits principal’s railroad-related experience. It ignores economic reality

to suggest, as does the majority, that DRI’s contract with the Union Pacific is a

deal between equals. The economic reality is that Union Pacific by virtue ofits

leverage has the ability to pretty much dictate how DRI does business or, more to

the point, whether it stays in business, and thus indirectly has the potential for 

control ofDRI.

DRI is clearly performing substantial services in connection with the transportation 

ofproperty by rail. In this regard we do not merely look as to whether the services 

are essential to day-to-day operations ofthe carrier, but whether they are in any 

way supportive ofthe railroad’s common carrier obligation. Despatch Shops v.

RRB, 153 F. 2d. 644 (D.C. Cir. 1946). As stated earlier, DRI assists the Union 

Pacific’s rehabilitation counselors in returning disabled railroad workers to work as

well as assists the Union Pacific in the management ofits rehabilitation program. 

These services are clearly related to Umon Pacific’s common carrier obligations. 

Note that holding DRI to be an employer does not cost the Union Pacific one dime.

The tax obligations and reporting requirements which would follow such a

determination would fall on DRI.

2
Whether or not DRI is an employer under the Acts, it is clear that Gniffke-Pribyl’s

services for the Union Pacific are covered as a statutory employee under section 

l(d)(l)(i)(B) ofthe RRA and its companion section 1(e) under the RUIA. GniffkePribyl is clearly “rendering professional or technical services and is integrated into

the staff ofthe employer” In fact she is performing services very similar to those 

performed when she was an employee ofthe Burlington Northern. She is now

unfortunately one ofthe vast army ofthose who have lost decentjobs as the result

ofmergers and downsizing and now are so-called consultants.

The majority points to Kelm v. Chicago, St. Paul, Minneapolis and Omaha

Railway Company, 206 F.2d 831 (8th Cir. 1953) to support their finding that

Gniffke-Pribyl’s services are not covered under l(d)(l)(i)(B). The majority states

that (B) and its companion section (C) do not apply to contractors who are engaged 

in an independent trade or business. However, such an interpretation renders (B)

and (C) pretty much superfluous. Any individual rendering technical or 

professional services is by nature ofthe services performed usually engaged in an 

independent trade or business. If you exclude such individuals from coverage

when does (B) or (C) ever apply?

To the extent that the majority is correct that (B) and (C) do not apply to an

independent trade or business, this interpretation should be limited to wellestablished enterprises which engage in numerous contracts with both railroad and

non-railroad employers.

In my view this coverage determination presents exactly the situation which

Congress intended (B) and (C) to address, that is, a nominal independent contractor 

performing personal services for an employer under the Acts and integrated in the

operations ofthe carrier. It was their intent that such services be covered to the

same extent as services of a common law employee were covered by virtue of

section l(d)(l)(i)(A). Gniffeke-PribyTs relationship with the Union Pacific is very

similar to that ofRoth Gatewood’s relationship to the Santa Fe. Gatewood, a

nominal member oflaw firm (of counsel), performed legal services exclusively for

the ATSF. In Gatewood v. RRB, 88 F.3d 886 (10th Cir. 1996), the court found

such service covered under (B) and (C). It held that these sections were intended 

to cover work by self-employed individuals who were rendering service to a carrier 

under contract. Gatewood, supra at 891.

3
It is one thing to apply Kelm to employees oflarge corporations doing consulting 

work on the property of a carrier. It is another to apply it in a case such as this one

where you are dealing with a single individual operating through a corporate shell.

The majority concedes that this is a close case since we have an independent 

contractor with essentially one client. I would find that Gniffke-PribyFs services

for the Union Pacific are covered under the Acts.

'-VTV'l /£-j

V. M. Speakman, Jr. ^

//-/3 -03

Date

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