U n it e d St a t e s G o v e r n m e n t

M e m o r a n d u m

FORM 6-115T (1-92)

R a il r o a d R e t ir e m e n t B o a r d

October 29,2002

L-2002-13

TO : Wayne J. Scharnak

Chief, Employer Service/Training Center

FROM : Steven A. Bartholow

General Counsel

SUBJECT : February 1965 Job Stabilization Agreement Allocating Service

and Compensation for Wage Guaranty Payments for

Seasonal Employees

This is to advise you regarding an inquiry from the Brotherhood of Maintenance

of Way Employees (BMWE) concerning crediting wage guaranty payments

made to railroad employees pursuant to a 1996 revision of the February 7, 1965

Job Stabilization Agreement. As detailed below, in my opinion the payments

constitute pay for time lost creditable under section 1(h) of the Railroad

Retirement Act.

The February 7, 1965 Job Stabilization Agreement arose from a dispute between

a group of five railway labor organizations (including the BMWE) and a group of

class I railroad employers which was mediated under the Railway Labor Act.

Articles I and IV of the 1965 Agreement essentially provided that employees

represented by the labor organizations who met a minimum service requirement

as of October 1964 were protected from being placed in a worse position with

respect to their compensation than the normal rate of compensation for their

assigned position on October 1, 1964. Where the employee worked only

seasonally, the Agreement required that he or she was to be offered

employment at least equivalent to that performed in his or her seasonal

employment in 1964 both as to period and as to compensation.1

1 Article I, section 2 of the 1965 Agreement stated “Seasonal employees, who had

compensated service during each of the years 1962,1963 and 1964, will be offered
On June 26, 1996, a Presidential Emergency Board established pursuant to the

Railway Labor Act issued a report which recommended revisions to the February

1965 Agreement. The National Carriers' Conference and the BMWE adopted

the report verbatim on September 26, 1996, thereby making certain

amendments to the February 1965 Agreement. Article I, section 2, of the

Agreement as amended now provides:

Seasonal employees, who had compensated service during each of the

years 1995, 1996 and 1997 who otherwise meet the definition of

'protected' employees under Section 1, will be offered employment in

future years at least equivalent to what they performed in 1997 unless or

until retired, discharged for cause, or otherwise removed by natural

attrition.

The BMWE has advised that a seasonal employee makes a claim to his or her

employer under Article I section 2 for a protective payment after the end of a

calendar year: for example, a claim for compensation protection for 2001 is filed

in 2002. The amount of the payment is determined by the employer and paid to

the employee in the subsequent year. The BMWE suggests that since the

payment actually relates to the prior year, the compensation should be

credited to months in that prior year rather than to months in the year in which

payment is issued. In this regard, section 1(h) of the Railroad Retirement Act

defines compensation creditable for benefit entitlement purposes in part as

follows:

(h)(1) The term "compensation" means any form of money remuneration

paid to an individual for services rendered as an employee to one or

more employers * * * including remuneration paid for time lost as an

employee, but remuneration paid for time lost shall be deemed earned in

the month in which such time is lost. A payment made by an employer to

an individual through the employer’s payroll shall be presumed, in

absence of evidence to the contrary, to be compensation for service

rendered by such individual as an employee of the employer in the

period with respect to which the payment is made. * * *

Footnote 1 (cont'd)

employment in future years at least equivalent to what they performed in 1964 unless or

until retired, discharged for cause, or otherwise removed by natural attrition."
(2) An employee shall be deemed to be paid “for time lost" the

amount he is paid by an employer with respect to an identifiable period

of absence from the active service of the employer * * * and the amount

he is paid by the employer for loss of earnings resulting from his

displacement to a less remunerative position or occupation. * * *

Regulations of the Board at 20 CFR 211.3(a) further provide as follows:

(a) A payment made to an employee for a period during which the

employee was absent from the active service of the employer is

considered to be pay for time lost and is, therefore, creditable

compensation. Pay for time lost as an employee includes:

* * * * *

(2) Pay received for loss of earnings for a certain period of time, resulting

from the employee being placed in a position or occupation paying less

money. In reporting compensation which represents pay for time lost,

employers shall allocate the amount paid to the employee to the

month(s) in which the time was actually lost. * * *

This definition of the term "compensation" is substantially the same as that found

in section 1 (i)(l) of the Railroad Unemployment Insurance Act (RUIA) (45 U.S.C.

351 (i)(1)). See also, section 302.7(a) of the Board's regulations (20 CFR 302.7(a)).

In Legal Opinion L-84-162, this Office considered the status of payments under

the February 1965 Agreement prior to the 1996 amendment, and concluded

that such payments were compensation within the meaning of section 1 (h) of

the RRA and 1 (i) of the RUIA, creditable to the months for which the payment is

made. That opinion further advised that "the employees may request to have

these payments so credited" pursuant to section 9 of the RRA (45 U.S.C. 231 h)

and former regulations of the Board at 20 CFR 250.3 (1984) (governing employer

reports of compensation). Legal Opinion L-84-162 concluded that as the

payments represented pay for time lost, "payment made pursuant to the Job

Stabilization Agreement would entitle an employee to a month of service [even]

where such payment is the only compensation received in a month."

The language of Article 1, Section 2 of the 1965 Agreement differs from that of

the 1996 amendment. However, while the 1996 amendment updated the years

of reference for the guaranty and inserted language explicitly specifying

eligibility requirements, the 1996 revision does not alter the essential purpose of

the section to establish compensation protection. The factual basis for the

advice provided by Legal Opinion L-84-162 remains following the 1996 revision.
Therefore, in my opinion payments made to employees pursuant to the 1996

revision remain compensation under the RRA and RUIA, creditable to months for

which the payments are made in the prior year. Where the guaranty payment

represents the only compensation paid to an employee in the year, the

employee must be credited in the records of the Board with months of sen/ice in

a fashion consonant with the protection of service afforded to the employee by

Agreement. Finally, consistent with the advice provided by L-84-162, if the

compensation is reported by the employer for the year in which the payment is

made, the employee may request an amendment to his or her record of

compensation, subject to the four year limitation specified by section 9 of the

RRA and current regulations of the Board governing finality of returns of

compensation and service at 20 CFR 211.16.