BNSF Railway Co. v. Loos

BNSF Railway Co. v. Loos involved Michael Loos, a BNSF employee who suffered an on-the-job injury and obtained a jury verdict awarding him damages for lost wages. BNSF withheld employment taxes under the Railroad Retirement Tax Act (RRTA) from that award. Loos sued for a refund, arguing that the lost-wages portion of a personal injury recovery does not constitute taxable “compensation” under the RRTA. The district court and the U.S. Court of Appeals for the Eighth Circuit agreed with Loos, creating a split with other circuits. The U.S. Supreme Court granted certiorari and, on March 4, 2019, reversed the Eighth Circuit. The Court held that the RRTA’s broad definition of “compensation” unambiguously encompasses damages for lost wages awarded in a personal injury lawsuit, thereby subjecting such awards to railroad retirement taxes.

The Supreme Court reversed the Eighth Circuit, holding that damages for lost wages in a personal injury award are taxable compensation under the Railroad Retirement Tax Act.

Whether damages for lost wages awarded in a personal injury lawsuit constitute taxable “compensation” under the Railroad Retirement Tax Act.

The ruling resolved a circuit split and clarified that personal injury damages for lost wages are subject to RRTA taxes. It impacted railway employers and employees by confirming the tax treatment of tort recoveries, affecting how settlements and awards are structured in the railroad industry. The decision also reinforced the broad scope of “compensation” under federal employment tax laws.