FOM1 205 

205.1 Employer Defined 

An "employer" under the Railroad Retirement Act (RRA) is: 

 Any carrier subject to Part I of Interstate Commerce Act. (This includes United 

States carriers operating in Canada as explained in FOM 205.4); and 

 Any company directly or indirectly owned or controlled by carriers; and 

 Any receivers, trustee or other individual body possessing the property of or 

operating the business of any carrier; and 

 Certain railroad associations and railway labor organizations. 

See following sections for details. 

205.2 Types of Employers 

205.2.1 Carriers 

A carrier is an express company, sleeping-car company or carrier by railroad subject to 

Part I of the Interstate Commerce Act. This includes United States carriers operating in 

Canada as explained in FOM 205.4. 

205.2.2 Associations, Bureaus and Agencies 

This term includes railroad associations, traffic association, tariff bureaus, demurrage 

bureaus, weighing and inspection bureaus, collection agencies and other organizations 

that are: 

A. Controlled and maintained wholly or principally by two or more employers; and 

B. Engaged in the performance of services in connection with or incidental to 

railroad transportation. 

205.2.3 Company Controlled by Carrier 

Any company directly or indirectly owned or controlled by one or more carriers, or under 

common control therewith and which operates equipment, facilities or performs service 

(except casual or trucking service) in connection with railroad transportation. 

A. Control - A company is controlled by one or more carriers when: 

1. A carrier is directing its policies and business; or 

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2. A carrier has the right or power by any means, regardless of stock 

ownership, to direct (either directly or indirectly) its policies and business. 

B. Common Control - A company or person is under common control with a carrier 

when the control of each is by the same person, persons or company. 

C. Casual Service - Service or operation of equipment or facilities by a controlled 

company or person in connection with railroad transportation is casual when it is: 

1. Insubstantial; or 

2. So irregular or infrequent that it cannot be inferred that the service will be 

repeated. 

D. Incidental Service - An organization is engaged in the performance of service 

incidental to railroad transportation when such functions would normally, in the 

absence of the organization, be performed by the constituent employers. 

F. Contract Services - If a railroad employer contracts work with non-railroad 

employees, this may allow the non-railroad employees to be covered under the 

Railroad Retirement Act as though they were railroad employees. A coverage 

determination needs to be made for the non-railroad employer. 

205.2.4 Receiver or Trustee 

Any receiver, trustee or other individual or body, judicial or otherwise, in possession of 

the property or operating all or any part of the business of any carrier is an employer 

ONLY with respect to individuals who would be employees, if the property or operation 

of the business had continued in possession of the preceding employer. 

205.2.5 Railway Labor Organizations 

The term "employer" includes railway labor organizations that are national in scope and 

organized in accordance with the provisions of the Railway Labor Act. "Employer" also 

includes the following railway labor organization subordinate units established according 

to constitution and by-laws: 

 State and National legislative committees; and 

 General committees; and 

 Insurance departments; and 

 Local Lodges and divisions. 

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205.3 Determining Employer Status 

An initial coverage status determination must be made for every railroad employer and 

independent contractors performing services for covered employers. Investigators of 

the RRB's Audit and Compliance Section obtain the information necessary and submit it 

to the three-member Board for a formal determination. 

The "Employment Data Maintenance (EDM) System" shows the status of all employers 

for which a determination has been made. 

Under the law, it is the employer's responsibility to notify the RRB of any changes which 

may affect employer status. The coverage status is then reconsidered. 

205.4 Creditability of Canadian Service 

205.4.1 Work for a Canadian Employer 

Service in Canada for an employer whose principal operation is in Canada is not 

creditable under the RRA. 

205.4.2 Service in the United States 

Service in the United States for an employer by any employee is fully creditable under 

the RRA. 

205.4.3 U.S. Citizen Working in Canada for United States Employer 

Service in Canada by a United States Citizen for a U.S. employer is fully creditable as 

service months and compensation. 

205.4.4 Canadian Working in Canada for United States Employer 

Service for a United States employer in Canada by a Canadian citizen or permanent 

resident of Canada is as follows effective 1-1-83 or later: 

A. This service preserves an employee/employer relationship for the establishment 

of current connection as explained in FOM 225.35; and 

B. Otherwise, this service is not creditable under the RR Act and is considered to be 

non-railroad service: 

1. The earnings for January 1, 1983, or later are not creditable as 

compensation or wages; and 

2. The service performed January 1, 1983, or later cannot be used to 

establish service months under the RRA; and 

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3. The service performed January 1, 1983, or later has no effect on the 

annuity beginning date (ABD); and 

4. The employee will be subject to last non-railroad employment (LPE) work 

deductions if he retires from the Canadian service within 6 months of his 

ABD. 

EXAMPLE: The Canadian citizen works solely in Canada for Conrail and 

its predecessor railroads from 2-7-56 through 4-24-85, the month the 

employee attains age 63. The earnings and service months from 1-1-83 

through 4-24-85 cannot be used in the annuity computation. The 

employee has a current connection. ABD for the reduced age and service 

annuity can be as early as 5-1-84, the first full month the employee is age 

62. However, last person employment work deductions apply to his tier II 

benefit. 

L-91-18 states the administrative finality is to be applied to the annuity when: 

1. The employee annuity is paid including Canadian service 1978-1982 that 

was posted to Form G-90; and 

2. The railroad service is later removed from the earnings record because 

the railroad or the employee received a refund of the tier taxes. 

205.5 Electric Railways 

An electric railway is considered to be an "employer" if it meets one of the following 

conditions: 

A. It is more than a street, suburban or interurban electric railway; or 

B. It is operating as a part of a general steam-railroad system of transportation; or 

C. It is part of the national transportation system. 

205.6 Coverage Ruling for Mining of Coal 

The term "employer" does NOT include any company by reason of its being engaged in 

the mining of coal, the supplying of coal to an employer where delivery is not beyond 

the mine tipple and the operation of equipment or facilities or in any of such activities. 

A person engaged in any of the following physical operations is NOT an employee: 

 Coal mining; 

 Preparation of coal; 

 Loading coal at the mine tipple; 

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	 Handling coal between the mine and the tipple, unless the handling consists of 

movement by rail with standard railroad locomotives. 

205.7 Coverage Ruling for Missouri Pacific Truck Lines and the Texas 

Pacific Motor Transport Company 

As a result of a 1978 audit by the Internal Revenue Service (IRS), the Missouri Pacific 

Truck Lines (MPTL) and the Texas and Pacific Motor Transport Company were ruled to 

be employers under the Railroad Retirement Tax Act (RRTA). The court has reversed 

the IRS decision and ruled that these employers are not employers under the RRTA. 

The time limit for an appeal in this case is passed. This means that earnings from the 

MPTL are wages, not compensation. 

The Social Security Administration has advised that all wages for the concerned 

employees have been posted to their social security earnings record. 

205.8 Coverage Ruling for Trans-Mark or Servitron, Inc 

205.8.1 Background 

Service by certain individuals with Trans-Mark, Inc. or Servitron, Inc. constitutes railroad 

service under the Railroad Retirement Act (RR Act). 

In March 1969, the Kansas City Southern Railway Company (KCSR) and its affiliates 

created two satellite companies: Trans-Mark, Inc. and Servitron, Inc. Both of these 

companies were largely staffed by former KCSR employees, who had been transferred 

from the KCSR payroll to those of the satellite companies. Earnings from employment 

with the satellite companies were reported to the Social Security Administration as 

wages. 

In July 1976, the General Counsel ruled in L-76-381 that the service of those individuals 

who were carried on the payrolls of Trans-Mark or Servitron, but who were performing 

service for the Kansas City Southern and its affiliated railroads, was creditable under 

the RR Act. 

At the time that this decision was made, a number of Trans-Mark and Servitron 

employees were receiving railroad retirement annuities based on their last day carried 

on the KCSR's payroll. Other individuals were receiving social security benefits based 

on the "wages" earned while employed by Trans-Mark or Servitron. 

Because the crediting of Trans-Mark or Servitron service can affect current connection, 

SUPP closing data and REG ANN, SUPP ANN or spouse annuity entitlement, any 

previous RRB determination made based on the incorrect use of this service must be 

re-opened. 

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205.8.2 Field Office Handling 

Initial cases involving service with Trans-Mark or Servitron are marked for manual 

handling. 

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