B.C.D. 15-09 May 7, 2015

EMPLOYER STATUS DETERMINATION

The Mutual Beneficial Association of Pennsylvania Railroad Employees,

Inc.

This is a determination of the Railroad Retirement Board concerning the

continuing status of the Mutual Beneficial Association of Pennsylvania

Railroad Employees, Inc. (Association) as an employer under the Railroad

Retirement Act (45 U.S.C. §231 et seq.) and the Railroad Unemployment

Insurance Act (45 U.S.C. §351 et seq.) (collectively, the “Acts”). Based on

the information provided, the Board finds that the Association is no longer

an employer under the Acts for the reasons set out below.

In Legal Opinion L-40-209, the Association (B.A. #9315) was found to be

an employer under the Railroad Retirement Act and Railroad

Unemployment Insurance Act. In that opinion, it was noted that the 

Association could qualify as an employer under the Acts if it was owned or

controlled by a covered railroad and if it was performing service in

connection with the transportation of passengers or property by railroad. It

discusses the history of the Association and its relationship with the 

Pennsylvania Railroad System (Railroad). The opinion states:

Prior to and during 1914, labor conditions on the Railroad were very

unstable. In an effort to bring about stability and harmonious relations

between the employees and the Railroad, the Association was 

organized and incorporated with the aid and approval ofthe Railroad;

the latter assisted the Association in organizing because it hoped to

derive benefits in obtaining a satisfied group of employees and in

improving the morale of their employees so as to secure more 

efficient and economical and generally better service to the Railroad.

Membership in the Association was open to Railroad employees and their

immediate families. In 1940, the Railroad had approximately 110,000

employees of which 16,000 were members of the Association. The 

Association insured qualified members and in addition participated in

cooperative buying and distribution of household necessities and foodstuffs.

Through 85 local assemblies, the Association operated stores and restaurants

that were operated primarily for the benefit of the employees ofthe Railroad

irrespective of their membership in the Association. The Association also 

published a monthly magazine and solicited freight and passenger traffic for

BA # 9315
the Railroad. It relied on the Railroad for financial assistance including

paying the salaries of Association officials.

Based on this history, the Association was found to be an employer covered

by the Acts. The legal opinion states, “it is clear that the Association is

performing the requisite service in connection with railroad transportation.

At the very beginning, the Railroad assisted the Association in organizing

because it hoped that the Association would tend to bring about more 

efficient, more economical, and generally better service by employees in

railroad transportation.” Service to the Association starting from December

31, 1914 was considered creditable.

The latest coverage information in the file for the Association was provided

by Stephen M. Santarlasci, General President of the Association. In a letter

dated December 17, 2014, Mr. Santarlasci explained to the Board the

changes that have occurred over the last 80 years which affects the

Association’s status as a covered employer. He points out that the

Association’s original parent companies have gone out of business and the 

Association no longer actively works with any railroad. As a result, the

Association opened up its membership to non-railroad employees.

Currently, of approximately 10,000 members, less than 50 are actively

employed by the railroad. There are only two full-time employees and two 

part-time employees of the Association. For these reasons, Mr. Santarlasci

requests that as of December 31, 2014, the Association no longer be

considered a covered employer under the Acts.

Section 202.11 (20 CFR 202.11) ofthe Board’s regulations states that:

The employer status of any company or person shall terminate

whenever such company or person loses any of the characteristics

essential to the existence of an employer status.

Based on the information provided, the Association no longer retains the 

essential characteristics related to employer status. It no longer provides

services to a satisfied group of Railroad employees who in turn provide

efficient, economical, and generally better service to the Railroad.

Membership is open to non-railroad employees. In fact, membership has

dropped from 100% railroad employee membership in 1940 to the current

0.5% railroad employee membership. The Pennsylvania Railroad System no

longer exists, and therefore, cannot provide the financial support that it once
did to the Association. No other covered railroad employer has stepped into 

the place of the original Railroad parent company and the Association does 

not currently have a special relationship with any railroad employer. The 

current purpose and operation ofthe Association bear very little resemblance

to the Association of 1940 when it was first found to be a covered employer

under the Acts. As a result, the Association no longer has the characteristics

essential to the existence of an employer status and its employer status

should be terminated.

The Board finds that effective December 31, 2014, the last day of the month

in which the Board was given notice that the Association no longer retained

the characteristics essential to the existence of an employer status, the

Association ceased being a covered employer under the Railroad Retirement

and Railroad Unemployment Insurance Acts.

Michael S. Schwartz

Walter A. Barrows