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Chapter 1:
Regular Earnings
Regular earnings Definition |
Regular earnings are payments made for services
rendered as an employee. This includes payments
to part-time and seasonal employees, as well
as regular earnings paid to employees who are
not working due to illness, injury, or pregnancy.
Any payment made through the regular payroll
system is presumed to be regular earnings. Regular
earnings are creditable as Tier I, Tier II,
and RUIA compensation and generate service month
credit for the month service was performed.
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| Non-monetary
earnings |
Earnings
may be paid as a commodity, a service, or a privilege.
If an employee is to be paid in any form other
than money, the employee and employer must agree
upon the arrangement and the value of the commodity,
service, or privilege being provided. Non-monetary
earnings will result in creditable compensation.
Non-monetary earnings are creditable in the amount
of ascertainable or agreed upon value. For example,
if stock is given to an employee in lieu of some
earnings, or as a bonus, or as part of a profit
sharing plan, this is considered non-monetary
earnings and is creditable in the amount of the
value of the stock at the time of transfer. See
Stock Options in Chapter
9.
The language in the Railroad Retirement
Act (RRA) and the Railroad Retirement Tax Act
(RRTA) differ with respect to non-monetary earnings.
The value of non-monetary earnings is taxable
whether or not there is an agreement as to the
value or that the earnings will not be paid
in cash.
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| Reporting compensation
on a paid or earned basis |
Regular
earnings may be reported as compensation for the
period the payment was earned, referred to as
"earned basis," or when the payment
was made, referred to as "paid basis."
- Earned Basis: Compensation
is credited with respect to the payroll period
in which it was earned even though paid at
a later date.
- Paid Basis: Compensation
is credited with respect to the period in
which compensation is paid, actually or constructively,
regardless of when the services were performed
which generated the compensation.
Employers
choosing to report compensation on a paid basis
are subject to the proviso that an employee,
within four years after the report, may request
to have the compensation reported, by way of
an adjustment, for the year in which it was
earned. This provision is found in the Railroad
Retirement Board's regulations. Employee requests
to have compensation adjusted to an earned basis
may be made to the employer directly or to the
RRB who will notify the employer to file an
adjustment report. Requests made under this
proviso must be honored.
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| Service Months |
Service
is always reported when the service was actually
or constructively performed. There are no options
for reporting service. Because service is always
reported when the service was performed, service
can never correctly be reported for months after
the employee retired, resigned, died or relinquished
employment rights. Compensation may be paid
and credited to former employees but since former
employees no longer perform a service, no service
months are creditable.
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| Adverse effect
of erroneous service months |
Reporting
a service month when no service month is creditable
can adversely effect both the employee and the
employer. The employee may be denied benefits
for the month of reported service or may have
received benefits in excess of the correct amount
based on the erroneous service month. The employer's
Railroad Unemployment Insurance Act contribution
may be adversely effected in two ways. The employer
may be erroneously determined to be the last
employer on record and be charged for benefits
paid. The employee may be paid more than the
correct amount of unemployment benefits, which
will then be charged to the employer when determining
the employer's contribution rate.
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