November 6, 2018
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE
Respondent Michael Loos sued petitioner BNSF Railway Company
under the Federal Employers' Liability Act (FELA) for
injuries he received while working at BNSF's railyard. A
jury awarded him $126, 212.78, ascribing $30, 000 of that
amount to wages lost during the time Loos was unable to work.
BNSF asserted that the lost wages constituted
"compensation" taxable under the Railroad
Retirement Tax Act (RRTA) and asked to withhold $3, 765 of
the $30, 000 to cover Loos's share of the RRTA taxes. The
District Court and the Eighth Circuit rejected the requested
offset, holding that an award of damages compensating an
injured railroad worker for lost wages is not taxable under
A railroad's payment to an employee for working
time lost due to an on-the-job injury is taxable
"compensation" under the RRTA. Pp. 2-14.
(a) In 1937, Congress created a self-sustaining retirement
benefits system for railroad workers. The RRTA funds the
program by imposing a payroll tax on both railroads and their
employees, referring to the railroad's contribution as an
"excise" tax, 26 U.S.C. §3221, and the
employee's share as an "income" tax,
§3201. The Railroad Retirement Act (RRA) entitles
railroad workers to various benefits. Taxes under the RRTA
and benefits under the RRA are measured by the employee's
"compensation," which both statutes define as
"any form of money remuneration paid to an individual
for services rendered as an employee." §3231(e)(1);
45 U.S.C. §231(h)(1).
The statutory foundation of the railroad retirement system
mirrors that of the Social Security system. The Federal
Insurance Contributions Act (FICA) taxes employers and
employees to fund benefits distributed pursuant to the Social
Security Act (SSA). Tax and benefit amounts are determined by
the worker's "wages," the Social Security
equivalent to "compensation." Both the FICA and the
SSA define "wages" employing language resembling
the RRTA and the RRA definitions of "compensation."
The term "wages" means "all remuneration"
for "any service, of whatever nature, performed ... by
an employee." 26 U.S.C. §3121(a)-(b) (FICA); see 42
U.S.C. §§409(a), 410(a) (SSA). Pp. 2-4.
(b) Given the textual similarity between the definitions of
"compensation" and "wages," the decisions
on the meaning of "wages" in Social Security
Bd. v. Nierotko, 327 U.S. 358, and United States v.
Quality Stores, Inc., 572 U.S. 141, inform this
Court's comprehension of the RRTA term
"compensation." In Nierotko, the Court
held that "wages" embraced pay for active service
as well as pay received for periods of absence from active
service, 327 U.S., at 366, and concluded that backpay for
time lost due to "the employer's wrong" counted
as "wages," id., at 364. In Quality
Stores, the Court held that severance payments qualified
as "wages" taxable under the FICA. 572 U.S., at
146-147. In line with these decisions, the Court holds that
"compensation" under the RRTA encompasses not
simply pay for active service but also pay for periods of
absence from active service- provided that the remuneration
in question stems from the "employer-employee
relationship." Nierotko, 327 U.S., at 366.
Damages awarded under the FELA for lost wages fit comfortably
within this definition. See BNSFR. Co. v. Tyrrell,
581 U.S., . If a railroad negligently fails to maintain a
safe railyard and a worker is injured as a result, the FELA
requires the railroad to compensate the injured worker for
working time lost due to the employer's wrongdoing. FELA
damages for lost wages, like backpay, are
"compensation" taxable under the RRTA. Pp. 4-7.
(c)The Eighth Circuit construed "compensation" for
RRTA purposes to mean only pay for active service, but this
reading cannot be reconciled with Nierotko and
Quality Stores. In addition, the RRTA's
pinpointed exclusions for certain types of payments for time
lost signal that nonexcluded pay for time lost remains
RRTA-taxable "compensation." Pp. 7-10.
(d)Loos contends that "compensation" does not
include payments made to compensate for an injury. This
reading, however, is at odds with Nierotko, which
held that "wages" included backpay awarded to
redress "the loss of wages" occasioned by "the
employer's wrong." 327 U.S., at 364.
Loos also argues that the exclusion of personal injury
damages from "gross income" for federal income tax
purposes, see 26 U.S.C. §104(a)(2), should carry over to
the RRTA's tax on the "income" of railroad
workers. The RRTA, however, uses the term "income"
mere- ly to distinguish the "income" tax on an
employee from the matching "excise" tax on a
railroad. Further, Congress specified not "gross
income" but employee "compensation" as the tax
base for RRTA taxes. Congress did not exclude personal injury
damages from "compensation." Pp. 10-14.
865 F.3d 1106, reversed and remanded.
GINSBURG, J., delivered the opinion of the Court, in which
ROBERTS, C. J., and BREYER, ALITO, SOTOMAYOR, KAGAN, and
KAVANAUGH, JJ., joined. GORSUCH, J., filed a dissenting
opinion, in which THOMAS, J., joined.
Respondent Michael Loos was injured while working at
petitioner BNSF Railway Company's railyard. Loos sued
BNSF under the Federal Employers' Liability Act (FELA),
35 Stat. 65, as amended, 45 U.S.C. §51 et seq.,
and gained a $126, 212.78 jury verdict. Of that amount the
jury ascribed $30, 000 to wages lost during the time Loos was
unable to work. BNSF moved for an offset against the
judgment. The lost wages awarded Loos, BNSF asserted,
constituted "compensation" taxable under the
Railroad Retirement Tax Act (RRTA), 26 U.S.C. §3201
et seq. Therefore, BNSF urged, the railway was
required to withhold a portion of the $30, 000 attributable
to lost wages to cover Loos's share of RRTA taxes, which
came to $3, 765. The District Court and the Court of Appeals
for the Eighth Circuit rejected the requested offset, holding
that an award of damages compensating an injured railroad
worker for lost wages is not taxable under the RRTA.
question presented: Is a railroad's payment to an
employee for working time lost due to an on-the-job injury
taxable "compensation" under the RRTA, 26 U.S.C.
§3231(e)(1)? We granted review to resolve a division of
opinion on the answer to that question. 584 U.S. __(2018).
Compare Hance v. Norfolk S. R. Co., 571 F.3d 511,
523 (CA6 2009) ("compensation" includes pay for
time lost); Phillips v. Chicago Central & Pacific R.
Co., 853 N.W.2d 636, 650-651 (Iowa 2014) (agency
reasonably interpreted "compensation" as including
pay for time lost); Heckman v. Burlington N. Santa Fe R.
Co., 286 Neb. 453, 463, 837 N.W.2d 532, 540 (2013)
("compensation" includes pay for time lost), with
865 F.3d 1106, 1117-1118 (CA8 2017) (case below)
("compensation" does not include pay for time
lost); Mickey v. BNSF R. Co., 437 S.W.3d 207, 218
(Mo. 2014) ("compensation" does not include FELA
damages for lost wages). We now hold that an award
compensating for lost wages is subject to taxation under the
1937, Congress created a self-sustaining retirement benefits
system for railroad workers. The system provides generous
pensions as well as benefits "correspon[ding] . . . to
those an employee would expect to receive were he covered by
the Social Security Act." Hisquierdo v.
His-quierdo, 439 U.S. 572, 575 (1979).
statutes operate in concert to ensure that retired railroad
workers receive their allotted pensions and benefits. The
first, the RRTA, funds the program by imposing a payroll tax
on both railroads and their employees. The RRTA refers to the
railroad's contribution as an "excise" tax, 26
U.S.C. §3221, and describes the employee's share as
an "income" tax, §3201. Congress assigned to
the Internal Revenue Service (IRS) responsibility for
collecting both taxes. §§3501, 7801. The second
statute, the Rail- road Retirement Act (RRA), 50 Stat. 307,
as restated and amended, 45 U.S.C. §231 et
seq., entitles railroad workers to various benefits and
prescribes eligibility requirements. The RRA is administered
by the Railroad Retirement Board. See §231f(a).
under the RRTA and benefits under the RRA are measured by the
employee's "compensation." 26 U.S.C.
§§3201, 3221; 45 U.S.C. §231b. The RRTA and
RRA separately define "compensation," but both
statutes state that the term means "any form of money
remuneration paid to an individual for services rendered as
an employee." 26 U.S.C. §3231(e)(1); 45 U.S.C.
§231(h)(1). This language has remained basically
unchanged since the RRTAs enactment in 1937. See Carriers
Taxing Act of 1937 (1937 RRTA), §l(e), 50 Stat. 436
(defining "compensation" as "any form of money
remuneration earned by an individual for services rendered as
an employee"). The RRTA excludes from
"compensation" certain types of sick pay and
disability pay. See 26 U.S.C. §3231(e)(1), (4)(A).
IRS's reading of the word "compensation" as it
appears in the RRTA has remained constant. One year after the
RRTAs adoption, the IRS stated that "compensation"
is not limited to pay for active service but reaches, as
well, pay for periods of absence. See 26 CFR §410.5
(1938). This understanding has governed for more than eight
decades. As restated in the current IRS regulations,
"[t]he term compensation is not confined to
amounts paid for active service, but includes amounts paid
for an identifiable period during which the employee is
absent from the active service of the employer."
§31.3231(e)-l(a)(3) (2017). In 1994, the IRS ...