PAY FOR TIME LOST

National Rail Employers Training Seminar

(VIRTUAL) Chicago, IL 

August, 2021

Debra Chesnin

Attorney

RRB Office of General Counsel
Disclaimer

Any views expressed herein are solely the speaker’s and do

not represent the views of the three-Member Railroad

Retirement Board or agency officials. Nothing herein may

be construed as legal advice or as binding authority upon

the United States Railroad Retirement Board and its

agents. The Internal Revenue Service has sole authority to

issue legal advice and opinions on matters pertaining to the

Railroad RetirementTax Act.

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Pay for time lost

Recent Supreme Court case

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What is pay for time lost?

• Pay for time lost is...

• A payment to an employee for a period during 

which the employee was absent from the active 

service of the employer. 

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What is included in pay for time 

lost?

• Includes: 

• Injury settlements/judgments

• Dismissal allowances

• Guaranteed wages

• Displacement allowances (paid for loss of earnings 

after employee given lower paying job)

• Reinstatement awards including back pay

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What is the legal basis for pay for 

time lost?

• Statutory 

• Railroad Retirement Act (RRA)

• Railroad Unemployment Insurance Act (RUIA)

• RRB Regulations 

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Railroad Retirement Act statutory language

The term "compensation" means any form of money 

remuneration paid to an individual for services rendered as an 

employee to one or more employers, or as an employee 

representative, 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 the 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. 
Regulations 

• RRA regulation

• Any month or any part of a month during which an 

employee performed no active service but received pay 

for time lost as an employee is counted as a month of 

service....

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Does pay for time lost benefit 

employees?

Pros:

• Additional creditable compensation and service months 

• Can qualify employee for occupational disability or age 

and service annuity

• Can help employee maintain a “current connection”

Con: ?

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What is a “current connection?”

• a "current connection with the railroad industry" is one of 

the eligibility requirements for both the occupational 

disability and supplemental annuities.

• also a factor in determining whether the RRB or the 

Social Security Administration pays monthly benefits to 

survivors of a railroad employee.

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Current Connection cont.

• To meet the current connection requirement, an 

employee must generally have been credited with 

railroad service in at least 12 months of the 30 months 

immediately preceding the month his or her railroad 

retirement annuity begins. 

• Once a current connection is established at the time the 

railroad retirement annuity begins, an employee never 

loses it, no matter what kind of work is performed after.

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How does an employee receive pay for time lost? 

A typical day....
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Typical pay for time lost scenario

•Injured employee

•Federal Employers Liability Act 

(FELA) lawsuit

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• Payment must be made with respect to an identifiable 

period of time

• employment relationship for the months in question 

• An employee off work due to a disability is still 

considered employed for purposes of relationship

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Structuring of pay for time lost 

settlements
Settlements (cont.)

• Employment relationship ends if the employee resigns 

(relinquishes rights) 

• Or employer terminates the employee

• Filing for an RRB age and service annuity relinquishes 

rights of employment

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Settlements (cont.)

• To receive creditable service months from pay for time 

lost, lost months of service must directly relate to the 

claimed injury 

• cannot add in unrelated lost months prior to injury

• However, months need not be consecutive as long they 

relate to injury 

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Settlements (cont.)

• Months may extend into the future (beyond the payment 

date of the judgment or settlement) depending on 

circumstances

• Service credit cannot be received for future pay for lost 

time until time period has actually passed

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How to allocate settlement 

amounts

• If pay for time lost is allocated to the months in which 

time was actually lost, RRB will accept the parties’ 

allocation if the monthly rate is at least 10 times the 

employee’s daily rate

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Ensuring proper service and 

compensation credit for pay for 

time lost settlements

• Employer can (but does not have to) call the RRB in 

advance to review draft settlement

• Employer can obtain help from RRB’s Quality Reporting 

Service Center; QRSC phone 312-751-4992; E-mail: 

QRSC@rrb.gov, Fax: (312) 751-7123

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How is pay for time lost 

allocated when there is a courtordered judgment?

If a payment is made by an employer with 

respect to a personal injury and includes 

pay for time lost, the total payment shall 

be deemed to be paid for time lost unless, 

at the time of payment, a part of such 

payment is specifically apportioned to 

factors other than time lost, in which 

event only such part of the payment as is 

not so apportioned shall be deemed to be 

paid for time lost. 21
Judgments (cont.)

• General Verdict

• If no specific allocation for lost time in the 

court judgment, then RRB considers whole 

amount pay for time lost if original claim 

included time lost

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Judgments (cont.)

• Specific Verdict

• If allocation of certain amount to lost time and 

remainder to other damages, then only 

amount allocated to lost time is considered 

pay for time lost

• If entire allocation is for specific items 

besides lost time, then none of the amount 

is pay for time lost

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Judgments (cont.)

• RRB presumes that pay for time lost ceases upon 

settlement date or date of verdict/judgment unless 

otherwise specified by the parties

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Judgments (cont.)

• Amount of compensation for each lost month depends on 

whether allocation was specifically made by court

• RRB will accept lower monthly compensation amount 

(below amount required by regulation) as creditable if 

court ordered

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How to report pay for time lost

• 1) Determine whether pay for time lost might apply

• 2) If so, determine whether any portion of the amount is allocated to eligible months and how many 

months 

• Can use Pay For Time Lost Worksheet 

• (for employer’s use only- does not need to be 

submitted to RRB)

• https://rrb.gov/index.php/RERI_Appendix_II_Pay_ for_Time_Lost_Worksheet

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Reporting (cont.)

• settlements

• ensure that at least 10 times the employee’s daily pay rate in effect on the first day to which pay for 

time lost payments relate is allocated for each 

month

• court judgments

• if no specific allocation, then year’s annual 

earnings maximum amount divided by 12 is used 

for compensation until total amount is exhausted 

or pay for time lost period is completed 

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Reporting (cont.)

• 5) Ensure that proper Report of Creditable 

Compensation Adjustments BA-4 is filed with 

RRB 

• Assistance with reporting can be sought through 

the RRB’s Quality Reporting Service Center; 

QRSC phone 312-751-4992 

• E-mail: QRSC@rrb.gov, Fax: (312) 751-7123

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Pop Quiz!

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Pay for time lost and 

unemployment or sickness 

payments

• Employee cannot receive unemployment or sickness 

benefits while receiving compensation. 

• What happens if employee receives time lost 

payments for time period when s/he previously 

received unemployment or sickness benefits?

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Unemployment or sickness 

payments (cont.)

• RRB 12(o) lien – what is this?

• How to find out information about 12(o) lien?

• Fax or electronically submit forms to RRB’s Sickness and 

Unemployment Benefits Section (SUBS): 

• Phone:(312) 751-4820 

• E-mail: SUBS@rrb.gov 

• Fax: (312) 751-7185

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Unemployment or sickness 

payments (cont.)

• On RRB’s website: 

• Can submit the following forms to 

SUBS:

• Form ID3S (12(o) (lien amount 

request)

• Form ID3U (unemployment insurance 

amount request)

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Pay for time lost and tax issues

• Important!!

• Tax Rates are calculated based on the year the 

payment was made, not on the year the months 

of service were credited to the employee

• Employer is responsible for remitting RRTA taxes 

even if employee is responsible as part of 

settlement

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Tax issues (cont.)

• ALSO....

• Employer must pay applicable RUIA 

contributions for each affected year 

• Must contact RRB to find out applicable RUIA 

contribution rate for the proper year

• Check with RRB’s Quality Reporting Service Center; 

QRSC phone 312-751-4992 

• E-mail: QRSC@rrb.gov, Fax: (312) 751-7123

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•Recent Supreme Court case 

involving the Railroad 

Retirement Tax Act and Pay for 

Time Lost

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BNSF Railway v. Loos

• Lower court, Loos v. BNSF Railway, 2015 U.S. Dist. LEXIS 

84663 (D. Minn. June 30, 2015) and Loos v. BNSF Railway, 

2015 U.S. Dist. LEXIS 167603 (D. Minn. Dec. 15, 2015) 

• Court of Appeals: Loos v. BNSF Railway, 865 F.3d 1106 

(8th Cir. 2017)

• Supreme Court: BNSF Railway v. Loos, 139 S. Ct. 893 

(2019)

• (Remanded) Loos v. BNSF Railway, 920 F.3d 1218 (8th Cir. 

2019)

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BNSF Railway v. Loos

• Issue: BNSF Railway’s obligation to withhold and pay the 

IRS Mr. Loos’ share of Railroad Retirement Tax Act (RRTA) 

payroll taxes on Loos’ wage loss award. 

• Question: Does RRTA include pay for time lost within the 

definition of “compensation?”

• RRTA was amended in 1975 and 1983 to delete all 

language regarding pay for time lost.

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BNSF Railway v. Loos (cont.)

• But IRS regulations still include language stating pay for 

time lost is compensation.

• Also pay for time lost language was left in the RRA’s 

definition of compensation.

• Additionally, personal injury awards are not taxable under 

FICA.

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BNSF Railway v. Loos (cont.)

• On March 4, 2019, the United States Supreme Court 

issued a ruling holding for BNSF and against Loos.

• Court held that pay for time lost in an employeremployee context is taxable compensation under the 

Railroad Retirement Tax Act.

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Questions?

???

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THANK YOU!

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