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What Employees Should Know About Railroad Companies

Railroad Companies are in Business to Make a Profit

Most Class I railroads are publicly traded companies which means they are owned by and accountable to shareholders. These shareholders want increasing stock prices and/or payment of dividends. Because Wall Street tends to look favorably on companies that bring positive results to the bottom line, railroads must continue to strive toward profitability. The simplest way to do so is improve income and reduce costs. Some of the methods used to reduce costs are:

Reduce the Labor Force

Typically, one of the largest cost elements for any company is labor expense. In an effort to reduce costs and develop more efficient business methods, railroad companies have focused their efforts on downsizing the work force.

From 1985 to 1995, total class I railroad employment declined a total of 37.7%, from 301,879 in 1985 to 188,000 in 1995. This decline has been more pronounced in some crafts than others:

Employment Change by Class
Executives, Officials & Staff Assistants -21.4%
Professional & Admin. -52.7%
MOW & Structures -35.5%
MOW Equipment & Stores -33.9%
Transportation Other than Train & Engine -51.5%
Transportation Train & Engine -31.6%
Source: Assoc. of American Railroads

In contrast, from 1990 to 1995, total train miles increased 10% while employee hours decreased 7.8%, indicating improved efficiency with the existing work force.

Utilize Internal Claim Agents to Reduce Injury Losses

Every year thousands of railroad employees are injured and some are killed while on duty. Railroad employment is not covered by worker's compensation, therefore, the cost of injuries must be paid by some form of insurance or out of the company's pockets. Years ago railroad companies decided to cover these losses out of their own pockets through what is called "self insurance." Simply stated, they pay for injury losses out of current revenues.

Naturally, as a self insured company that reports to shareholders, it is in the company's best interest to minimize injury losses. While work force reduction has succeeded in slimming the total number of claims, the average claim amount paid has increased.

F.E.L.A. Claims 1990-1994
Claim Amount
1990 17,398 $48,683
1991 15,324 53,026
1992 14,231 58,706
1993 12,722 65,408
1994 12,025 69,023
Source: Assoc. of American Railroads

Source: Assoc. of American Railroads

To combat employee injury claims, the railroad utilizes a system of internal claim agents. Claim agents are employees of the railroad hired with the sole purpose of protecting the railroad's interest and saving the company money. All too often the railroad companies, through claim agents and other methods, succeed in dodging their just, lawful responsibility.

Remember: Claim Agents are Not on the Side of Employees!

The United States Supreme Court, in a decision rendered on April 20, 1964, stated:

"Injured workers or their families often fall prey on the one hand to persuasive claims adjusters eager to gain a quick and cheap settlement for their railroad employers, or on the other to lawyers either not competent to try these lawsuits against the able railroad counsel or too willing to settle a case for a quick dollar."

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