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Seventh Circuit Upholds Railroad Retirement Board Determination that Rail Contractor Employees May be Subject to Railroad Retirement and Unemployment Insurance Acts

A three judge panel of the U.S. Court of Appeals for the Seventh Circuit issued its decision in Herzog Transit Industries, Inc. v. U.S. Railroad Retirement Board.  With one judge dissenting, the court held that Herzog, a private third-party contractor providing a variety of services related to the commuter rail operations of a public agency, was a "covered employer" as to its railroad dispatching employees under the Railroad Retirement Act and Railroad Unemployment Insurance Act.  Herzog and the transit agency had argued that Herzog was not a "covered employer" under those two acts because it is not providing transportation that is subject to the jurisdiction of the Surface Transportation Board.  The court disagreed.  This decision has a potentially significant impact on public commuter rail operators who provide service by means of contract operators.