B.C.D. 01-45

EMPLOYER STATUS DETERMINATION JUN 0 1 2001

Gordon Fay Associates, Inc.

This is the determination ofthe Railroad Retirement Board concerning the status ofGordon Fay

Associates, Inc. (GFAI), 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). This 

determination also addresses the request on behalfofGFAI for waiver ofcontributions under the

Railroad Unemployment Insurance Act.

On October 2, 1996, the Railroad Retirement Board held GFAI to be an employer under the

Railroad Retirement and Railroad Unemployment Insurance Acts effective November 13, 1987

(B.C.D. 96-84). That decision was based on GFAI’s being under common control with its rail

affiliates, Bay Colony Railroad and Seminole GulfRailway, and providing services to those two

rail carriers. GFAI has requested that the Board reopen the determination holding GFAI to be an

employer and terminate the coverage ofGFAI based on changes ofcircumstances in the 

operations of GFAI.

According to information submitted by counsel for GFAI, GFAI is still under common control

with Bay Colony Railroad and Seminole GulfRailway, and is providing services to them. What

is alleged to have changed is that GFAI is now performing a greater percentage ofits operations

in connection with non-rail affiliates and non-affiliated companies. In B.C.D 96-84, it was found

that GFAI performed accounting, marketing and sales, executive management, passenger service 

reservations and ticket sales, real estate management, and management ofoutside party

contracting services, and that these services constituted service in connection with railroad

transportation. For 1992-1993 approximately 66 percent to 70 percent of GFAI’s revenues were 

received from Bay Colony Railroad and Seminole GulfRailway.

In the submission to the Board, it is estimated that GFAI will be providing approximately 30

percent ofits billed time to clients for rail-related services. This percentage is still a substantial

percentage and sufficient for GFAI to remain a covered employer under the Acts. Section 

202.11 ofthe Board’s regulations provides that “The employer status of any company or person

shall terminate whenever such company or person loses any ofthe characteristics essential to the

existence of an employer status.” Accordingly, since the basis on which GFAI was held to be an

employer does not appear to have changed, the Board finds that termination of GFAI’s status as

an employer is not appropriate.

In regard to contributions under the Railroad Unemployment Insurance Act, it should be noted

that GFAI has been assessed contributions for the period from January 1, 1997, through 

December 31, 2000. In other words, GFAI has been assessed contributions only for periods after

the date ofthe Board’s original coverage decision, October 2, 1996.

The Board has the authority under section 8(k) ofthe Railroad Unemployment Insurance Act to 

decide not to give retroactive effect to a coverage ruling with respect to contributions under that

Act. Rulings on non-retroactive coverage under the Railroad Unemployment Insurance Act have

been granted by the Board in cases where (1) the evidence suggests that the employer paid taxes

BA# 9353
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Gordon Fay Associates, Inc.

under the Federal/State unemployment compensation system believing in good faith that the

employer was covered by that system; (2) no benefits have been paid to the employer’s

employees under the Railroad Unemployment Insurance Act; and (3) retroactive coverage would

impose an undue burden on the Board, the employer, and the state system for no apparent gain.

The assessment in this case is not retroactive in that it is not for periods before the date ofthe

Board’s initial coverage determination and, accordingly, is not subject to waiver as a retroactive

assessment. Further, since in this case the assessment of contributions under the Railroad

Unemployment Insurance Act was for periods after the Board’s decision ofOctober 2, 1996,

holding GFAI to be an employer under the Railroad Retirement and Railroad Unemployment

Insurance Acts, GFAI could not have a good faith beliefthat it was not covered under the

Railroad Unemployment Insurance Act after that date. Accordingly, the Board finds that the

requirements for waiver ofretroactive contributions under the Railroad Unemployment

Insurance Act are not met in this case. GFAI’s request for waiver ofGFAI’s obligation to pay

contributions for the period lanuary 1, 1997, through December 31, 2000, is denied.

V. M. Speakman, Jr.

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