B.C.D. 03-66

SEP o 9 2003

EMPLOYER STATUS DETERMINATION

Connex Railroad, Inc.

This is the determination ofthe Railroad Retirement Board concerning the status of

Connex Railroad, Inc., as an employer under the Railroad Retirement Act (45 U.S.C. § 231

et seep) and the Railroad Unemployment Insurance Act (45 U.S.C. § 351 et seep).

Information regarding this company was provided by James E. Howard, counsel for the

company and for Massachusetts Bay Commuter Railroad Company, LLC (MBCR).

Massachusetts Bay Commuter Railroad Company was selected by the Massachusetts Bay

Transportation Authority to operate the Authority’s commuter rail system in the Boston

area. Operations were scheduled to begin July 1, 2003. The Board held Massachusetts

Bay Commuter Railroad Company to be an employer under the Acts as ofJanuary 10,

2003 (B.C.D. Nos. 03-23 and 03-37).

Connex Railroad is a subsidiary of Connex North America, Inc.1 Connex North America

also has a 60 percent interest in Massachusetts Bay Commuter Railroad Company.

Connex Railroad has three employees. Connex Railroad currently provides rail

transportation services to one client, including rail operations planning, train and engine

crew scheduling, value engineering with respect to commuter rail operations, financial

and accounting services and management advice. More specifically, Connex Railroad will

provide the following services to MBCR: rail operations services (such as analyzing and

monitoring crew utilization, equipment utilization and transportation performance and

reporting, and development and implementation of improvements with respect to crew

and equipment utilization), customer related services (such as management ofticket

offices and information booths and communication with passengers on [Massachusetts

Bay Commuter Railroad Company] trains), financial services (such as maintenance of

books and accounts, preparation of budgets, forecasts and reports, monitoring actual

results v. budgeted, preparation offinancial information and reports required by

[Massachusetts Bay Transportation Authority-Massachusetts Bay Commuter Railroad

Company] Operating Agreement, and establishment and monitoring of internal control

procedures) and management services (such as providing general management and

oversight of commuter rail operations and the relationship of Massachusetts Bay

Commuter Railroad Company with the Massachusetts Bay Transportation Authority]).

Mr. Howard characterized the services provided by Connex Railroad to MBCR as

“essential functions that must be performed in order to enable MBCR to provide rail 

transportation service and to perform its obligations pursuant to the operating agreement

between MBCR and Massachusetts Bay Transportation Authority.”

Section 1(a)(1) ofthe Railroad Retirement Act (45 U.S.C. § 231(a)(1)), insofar as relevant

here, defines a covered employer as:

1 Although Mr. Howard requests thatthe Board issue a decision holding Connex North America not to be an

employer under the Acts, it should be noted thatthe Board has already done so: in B.C.D. No. 03-23 holding

Massachusetts Bay Commuter Railroad Company to be a covered employer, the Board also ruled that

Connex North America was not an employer under the Acts.

BA#9359
2-

Connex Railroad, Inc.

(i) any carrier by railroad subject to the jurisdiction ofthe Surface 

Transportation Board under Part A ofsubtitle IV oftitle 49, United States

Code;

(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, or the receipt, delivery,

elevation, transfer in transit, refrigeration or icing, storage, or handling of

property transported by railroad;

Sections i(a) and i(b) ofthe Railroad Unemployment Insurance Act (45 U.S.C.

§§ 35i(a) and (b)) contain substantially the same definition, as does section 3231 ofthe

Railroad Retirement Tax Act (26 U.S.C. § 3231).

Connex Railroad is a subsidiary of Connex North America, Inc., which is the same

company that owns a 60 percent interest in MBCR. The Board finds that Connex

Railroad is under common control with Massachusetts Bay Commuter Railroad 

Company. In addition, Connex Railroad provides all ofits services to MBCR. The Board

therefore finds that Connex Railroad provides service in connection with railroad

transportation within the statutory definition of a covered employer. Accordingly, it is

determined that Connex Railroad is an employer within the meaning ofsection 1(a)(1)(h) 

ofthe Railroad Retirement Act (45 U.S.C. § 231(a)(1)(h)) and the corresponding provision

ofthe Railroad Unemployment Insurance Act as ofJuly 1, 2003, the date as ofwhich rail

operations began. „

Michael S. Schwartz