Board Coverage Decision

2004-54

GT, TO

GT and TO service not creditable under the Acts.

The Board found that GT’s and TO’s service was self-employment

and not creditable under the Acts.

No Form G-215 Available
B.C.D. 04-54 NOV 15 2004

Employee Service Determination

GT

TO

This is the decision of a majority of the Railroad Retirement Board regarding

whether the services performed by GT and TO for CSX Transportation constituted

employee service under the Railroad Retirement Act (45 U.S.C. § 231 et seq.(RRA)

and the Railroad Unemployment Insurance Act (45 U.S.C. § 351 et sea.HRUIAl.

CSXT is a covered employer under those Acts.

GT is currently receiving an annuity under the Railroad Retirement Act with an

annuity beginning date of November 1,2003. He stated that he is a former Conrail

employee who "was asked to be available to answer questions re territory

acquired by CSX and to coach a senior CSX executive re sales and marketing

techniques. This individual had no prior sales & marketing experience." He stated

that he was under contract for the period July 1, 2001 through December 2002’.

He worked primarily from his home by telephone with one trip to Jacksonville,

Florida, for a meeting. He was paid a retainer of $10,000.00 per quarter for two

quarters and $5,000.00 per quarter thereafter, and his work was limited to

telephone consultation. The contract provided that GT was not to be entitled to

any benefits from CSXT, and that he was to be reimbursed for expenses.

TO stated that he was retained by CSXT "to assist on an as-needed basis in the

transition to a new management team in CSXT’s Sales and [Marketing

Department]." He stated that he contracted for the period November 20 through

December 31, 2000. He worked in his home, primarily by telephone and e-mail.

He was paid a single one-time payment for his services, specified in the contract

as $27,000.06, plus travel expenses (to be incurred only with prior consent of CSXT).

Section 1(b) of the Railroad Retirement Act and section 1(d)(1) of the Railroad

Unemployment Insurance Act both define a covered employee as an individual in

the service of an employer for compensation. Section 1 (d) of the Railroad

Retirement Act further defines an individual as 'In the service of an employer”

when:

1 According to GT, there were actually three contracts with various dates, including July

1,2000 through June 30. 2001; July 1,2001 through June 30, 2002: and July 1,2002 

through December 2002.
-2-

(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 (ej of the Railroad Unemployment Insurance Act contains a definition of

service substantially identical to the above, as do sections 3231 (b) and 3231 (d) of

the Railroad Retirement Tax Act (26 U.S.C. §§ 3231(b) and (d)). While the

regulations of the RRB generally merely restate this provision, it should be noted

that section 203.3(b) thereof (20 CFR 203.3(b)) provides that the foregoing criteria

apply irrespective of whether "the service is performed on a part-time basis * *

Both GT and TO were clearly not supervised in the performance of their services.

In addition, they were not integrated into the staff of CSXT, and they were not

providing services on the property of CSXT. Accordingly, a majority of the

Board2 finds that service of GT and TO for CSXT under the contracts described

above constituted self-employment and not employee service.

Original signed by:

2 The Labor Member abstained.