BNSF R. Co. v. Loos , 203 L. Ed. 2d 160 ( 2019 )

(Slip Opinion) OCTOBER TERM, 2018 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
BNSF RAILWAY CO. v. LOOS
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE EIGHTH CIRCUIT
No. 17–1042. Argued November 6, 2018—Decided March 4, 2019
Respondent Michael Loos sued petitioner BNSF Railway Company un-
der the Federal Employers’ Liability Act (FELA) for injuries he re-
ceived 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 dam-
ages compensating an injured railroad worker for lost wages is not
taxable under the RRTA.
Held: 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 impos-
ing 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 Re-
tirement 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 ren-
dered 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 Contribu-
tions Act (FICA) taxes employers and employees to fund benefits dis-
tributed pursuant to the Social Security Act (SSA). Tax and benefit
2 BNSF R. CO. v. LOOS
Syllabus
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 def-
initions of “compensation.” The term “wages” means “all remunera-
tion” for “any service, of whatever nature, performed . . . by an em-
ployee.” 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 “compen-
sation” and “wages,” the decisions on the meaning of “wages” in So-
cial 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 conclud-
ed that backpay for time lost due to “the employer’s wrong” counted
as “wages,” id., at 364. In Quality Stores, the Court held that sever-
ance 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 ac-
tive service but also pay for periods of absence from active service—
provided that the remuneration in question stems from the “employ-
er-employee relationship.” Nierotko, 327 U. S., at 366.
Damages awarded under the FELA for lost wages fit comfortably
within this definition. See BNSF R. Co. v. Tyrrell, 581 U. S. ___, ___.
If a railroad negligently fails to maintain a safe railyard and a work-
er is injured as a result, the FELA requires the railroad to compen-
sate the injured worker for working time lost due to the employer’s
wrongdoing. FELA damages for lost wages, like backpay, are “com-
pensation” taxable under the RRTA. Pp. 4–7.
(c) The Eighth Circuit construed “compensation” for RRTA purpos-
es to mean only pay for active service, but this reading cannot be rec-
onciled with Nierotko and Quality Stores. In addition, the RRTA’s
pinpointed exclusions for certain types of payments for time lost sig-
nal that nonexcluded pay for time lost remains RRTA-taxable “com-
pensation.” 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-
Cite as: 586 U. S. ____ (2019) 3
Syllabus
ly to distinguish the “income” tax on an employee from the matching
“excise” tax on a railroad. Further, Congress specified not “gross in-
come” but employee “compensation” as the tax base for RRTA taxes.
Congress did not exclude personal injury damages from “compensa-
tion.” 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.
Cite as: 586 U. S. ____ (2019) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports. Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 17–1042
_________________
BNSF RAILWAY COMPANY, PETITIONER v.
MICHAEL D. LOOS
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
[March 4, 2019]
JUSTICE GINSBURG delivered the opinion of the Court.
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 as-
cribed $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 with-
hold 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.
The 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.
2 BNSF R. CO. v. LOOS
Opinion of the Court
§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” in-
cludes 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 RRTA.
I
In 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).
Two statutes operate in concert to ensure that retired
railroad workers receive their allotted pensions and bene-
fits. 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 In-
ternal Revenue Service (IRS) responsibility for collecting
both taxes. §§3501, 7801.1 The second statute, the Rail-
——————
1 The railroad remits both taxes to the IRS. As to the income tax, the
Cite as: 586 U. S. ____ (2019) 3
Opinion of the Court
road Retirement Act (RRA), 50 Stat. 307, as restated and
amended, 45 U. S. C. §231 et seq., entitles railroad work-
ers to various benefits and prescribes eligibility require-
ments. The RRA is administered by the Railroad Retire-
ment Board. See §231f(a).
Taxes 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
RRTA’s enactment in 1937. See Carriers Taxing Act of
1937 (1937 RRTA), §1(e), 50 Stat. 436 (defining “compen-
sation” 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).
The IRS’s reading of the word “compensation” as it
appears in the RRTA has remained constant. One year
after the RRTA’s adoption, the IRS stated that “compensa-
tion” 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 identi-
fiable period during which the employee is absent from the
active service of the employer.” §31.3231(e)–1(a)(3) (2017).
——————
railroad deducts the amount owed by the employee from her earnings
and then forwards that amount to the IRS. See Tr. of Oral Arg. 22–23.
See also 26 U. S. C. §3402(a)(1) (employers must “deduct and withhold”
income taxes from earnings).
4 BNSF R. CO. v. LOOS
Opinion of the Court
In 1994, the IRS added, specifically, that “compensation”
includes “pay for time lost.” §31.3231(e)–1(a)(4); see 59
Fed. Reg. 66188 (1994).
Congress created both the railroad retirement system
and the Social Security system during the Great Depres-
sion primarily to ensure the financial security of members
of the workforce when they reach old age. See Wisconsin
Central Ltd. v. United States, 585 U. S. ___, ___ (2018)
(slip op., at 1); Helvering v. Davis, 301 U. S. 619, 641
(1937). Given the similarities in timing and purpose of the
two programs, it is hardly surprising that their statutory
foundations mirror each other. Regarding Social Security,
the Federal Insurance Contributions Act (FICA), 26
U. S. C. §3101 et seq., taxes employers and employees to
fund benefits, which are distributed pursuant to the Social
Security Act (SSA), 49 Stat. 620, as amended, 42 U. S. C.
§301 et seq. Tax and benefit amounts are determined by
the worker’s “wages,” the Social Security equivalent to
“compensation.” See Davis, 301 U. S., at 635–636. Both
the FICA and the SSA define “wages” employing language
resembling the RRTA and the RRA definitions of “compen-
sation.” “Wages” under the FICA and the SSA mean “all
remuneration for employment,” and “employment,” in
turn, means “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). Reading these pre-
scriptions together, the term “wages” encompasses “all
remuneration” for “any service, of whatever nature, per-
formed . . . by an employee.” Ibid.II
A
To determine whether RRTA-qualifying “compensation”
includes an award of damages for lost wages, we begin
Cite as: 586 U. S. ____ (2019) 5
Opinion of the Court
with the statutory text.2 The RRTA defines “compensa-
tion” as “remuneration paid to an individual for services
rendered as an employee.” 26 U. S. C. §3231(e)(1). This
definition, as just noted, is materially indistinguishable
from the FICA’s definition of “wages” to include “remuner-
ation” for “any service, of whatever nature, performed . . .
by an employee.” §3121.
Given the textual similarity between the definitions of
“compensation” for railroad retirement purposes and
“wages” for Social Security purposes, our decisions on the
meaning of “wages” in Social Security Bd. v. Nierotko, 327
U. S. 358 (1946), and United States v. Quality Stores, Inc.,
572 U. S. 141 (2014), inform our comprehension of the
RRTA term “compensation.” In Nierotko, the National
Labor Relations Board found that an employee had been
“wrongfully discharged for union activity” and awarded
him backpay. 327 U. S., at 359. The Social Security
Board refused to credit the backpay award in calculating
the employee’s benefits. Id., at 365–366. In the Board’s
view, “wages” covered only pay for active service. Ibid.We disagreed. Emphasizing that the phrase “any service
. . . performed” denotes “breadth of coverage,” we held that
“wages” means remuneration for “the entire employer-
employee relationship”; in other words, “wages” embraced
pay for active service plus pay received for periods of
absence from active service. Id., at 366. Backpay, we
——————
2 Before turning to the language of the RRTA, the dissent endeavors
to unearth the reason why BNSF has pursued this case. The railroad’s
“gambit,” the dissent surmises, is to increase pressure on injured
workers to settle their claims. Post, at 3. Contrast with the dissent’s
conjecture, BNSF’s entirely plausible account of a railroad’s stake in
this dispute. Because the RRA credits lost wages toward an employee’s
benefits, see 45 U. S. C. §231(h)(1), BNSF posits that immunizing those
payments from RRTA taxes would expose the system to “a long-term
risk of insolvency.” Tr. of Oral Arg. 4; see Reply Brief for Petitioner 14.
6 BNSF R. CO. v. LOOS
Opinion of the Court
reasoned, counts as “wages” because it compensates for
“the loss of wages which the employee suffered from the
employer’s wrong.” Id., at 364.
In Quality Stores, we again trained on the meaning of
“wages,” reiterating that “Congress chose to define wages
. . . broadly.” 572 U. S., at 146 (internal quotation marks
omitted). Guided by Nierotko, Quality Stores held that
severance payments qualified as “wages” taxable under
the FICA. “[C]ommon sense,” we observed, “dictates that
employees receive th[ose] payments ‘for employment.’ ”
572 U. S., at 146. Severance payments, the Court spelled
out, “are made to employees only,” “are made in considera-
tion for employment,” and are calculated “according to the
function and seniority of the [terminated] employee.” Id.,
at 146–147.
In line with Nierotko, Quality Stores, and the IRS’s long
held construction, we hold that “compensation” under the
RRTA encompasses not simply pay for active service but,
in addition, pay for periods of absence from active ser-
vice—provided that the remuneration in question stems
from the “employer-employee relationship.” Nierotko, 327
U. S., at 366.
B
Damages awarded under the FELA for lost wages fit
comfortably within this definition. The FELA “makes
railroads liable in money damages to their employees for
on-the-job injuries.” BNSF R. Co. v. Tyrrell, 581 U. S. ___,
___ (2017) (slip op., at 1); see 45 U. S. C. §51. 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, inter alia, working
time lost due to the employer’s wrongdoing. FELA dam-
ages for lost wages, then, are functionally equivalent to an
award of backpay, which compensates an employee “for a
period of time during which” the employee is “wrongfully
Cite as: 586 U. S. ____ (2019) 7
Opinion of the Court
separated from his job.” Nierotko, 327 U. S., at 364. Just
as Nierotko held that backpay falls within the definition of
“wages,” ibid., we conclude that FELA damages for lost
wages qualify as “compensation” and are therefore taxable
under the RRTA.
III
A
The Eighth Circuit construed “compensation” for RRTA
purposes to mean only pay for “services that an employee
actually renders,” in other words, pay for active service.
Consequently, the court held that “compensation” within
the RRTA’s compass did not reach pay for periods of ab-
sence. 865 F. 3d, at 1117. In so ruling, the Court of Ap-
peals attempted to distinguish Nierotko and Quality
Stores. The Social Security decisions, the court said, were
inapposite because the FICA “taxes payment for ‘employ-
ment,’ ” whereas the RRTA “tax[es] payment for ‘services.’ ”
865 F. 3d, at 1117. As noted, however, supra, at 3–4, the
FICA defines “employment” in language resembling the
RRTA in all relevant respects. Compare 26 U. S. C.
§3121(b) (FICA) (“any service, of whatever nature, per-
formed . . . by an employee”) with §3231(e)(1) (RRTA)
(“services rendered as an employee”). Construing RRTA
“compensation” as less embracive than “wages” covered by
the FICA would introduce an unwarranted disparity
between terms Congress appeared to regard as equiva-
lents. The reasoning of Nierotko and Quality Stores, as we
see it, resists the Eighth Circuit’s swift writeoff.3
Nierotko and Quality Stores apart, we would in any
event conclude that the RRTA term “compensation” covers
——————
3 The dissent’s reduction of Nierotko’s significance fares no better.
Nierotko, the dissent urges, is distinguishable because it involved “a
different factual context.” Post, at 7. But as just explained, supra, at
6–7, the facts in Nierotko resemble those here in all material respects.
8 BNSF R. CO. v. LOOS
Opinion of the Court
pay for time lost. Restricting “compensation” to pay for
active service, the Court of Appeals relied on statutory
history and, in particular, the eventual deletion of two
references to pay for time lost contained in early rendi-
tions of the RRTA. See also post, at 6–7 (presenting the
Eighth Circuit’s statutory history argument). To under-
stand the Eighth Circuit’s position, and why, in our judg-
ment, that position does not withstand scrutiny, some
context is in order.
On enactment of the RRTA in 1937, Congress made
“compensation” taxable at the time it was earned and
provided specific guidance on when pay for time lost
should be “deemed earned.” Congress instructed: “The
term ‘compensation’ means any form of money remunera-
tion earned by an individual for services rendered as an
employee . . . , including remuneration paid for time lost
as an employee, but [such] remuneration . . . shall be
deemed earned in the month in which such time is lost.”
1937 RRTA, §1(e), 50 Stat. 436 (emphasis added). In
1946, Congress clarified that the phrase “pa[y] for time
lost” meant payment for “an identifiable period of absence
from the active service of the employer, including absence
on account of personal injury.” Act of July 31, 1946 (1946
Act), §2, 60 Stat. 722.
Thus, originally, the RRTA stated that “compensation”
included pay for time lost, and the language added in 1946
presupposed the same. In subsequent amendments, how-
ever, Congress removed the references to pay for time lost.
First, in 1975, Congress made “compensation” taxable
when paid rather than when earned. Congress simultane-
ously removed the 1937 language that both referred to pay
for time lost and specified when such pay should be
“deemed earned.” So amended, the definitional sentence,
in its current form, reads: “The term ‘compensation’ means
any form of money remuneration paid to an individual for
services rendered as an employee . . . .” Act of Aug. 9,
Cite as: 586 U. S. ____ (2019) 9
Opinion of the Court
1975 (1975 Act), §204, 89 Stat. 466 (emphasis added).
Second, in 1983, Congress shifted the wage base for
RRTA taxes from monthly “compensation” to annual
“compensation.” See Railroad Retirement Solvency Act of
1983 (1983 Act), §225, 97 Stat. 424–425. Because the
“monthly wage bases for railroad retirement taxes [were
being] changed to annual amounts,” the House Report
explained, the RRTA required “[s]everal technical and
conforming amendments.” H. R. Rep. No. 98–30, pt. 2,
p. 29 (1983). In a section of the 1983 Act titled “Technical
Amendments,” Congress struck the subsection containing,
among other provisions, the 1946 Act’s clarification of pay
for time lost. 1983 Act, §225, 97 Stat. 424–425. In lieu of
the deleted subsection, Congress inserted detailed instruc-
tions concerning the new annual wage base.
As the Court of Appeals and the dissent see it, the 1975
and 1983 deletions show that “compensation” no longer
includes pay for time lost. 865 F. 3d, at 1119; see post, at
6–7. We are not so sure. The 1975 Act left unaltered the
language at issue here, “remuneration . . . for services
rendered as an employee.” That Act also left intact the
1946 Act’s description of pay for time lost. Continuing
after the 1975 Act, then, such pay remained RRTA-taxable
“compensation.” The 1983 Act, as billed by Congress,
effected only “[t]echnical [a]mendments” relating to the
change from monthly to annual computation of “compen-
sation.” Concerning the 1975 and 1983 alterations, the
IRS concluded that Congress revealed no “inten[tion] to
exclude payments for time lost from compensation.” 59
Fed. Reg. 66188 (1994). We credit the IRS reading. It
would be passing strange for Congress to restrict substan-
tially what counts as “compensation” in a manner so
oblique.
Moreover, the text of the RRTA continues to indicate
that “compensation” encompasses pay for time lost. The
RRTA excludes from “compensation” a limited subset of
10 BNSF R. CO. v. LOOS
Opinion of the Court
payments for time lost, notably certain types of sick pay
and disability pay. See 26 U. S. C. §3231(e)(1), (4). These
enumerated exclusions would be entirely superfluous if, as
the Court of Appeals held, the RRTA broadly excludes
from “compensation” any and all pay received for time lost.
In justification of its confinement of RRTA-taxable
receipts to pay for active service, the Court of Appeals also
referred to the RRA. The RRA, like the RRTA as enacted
in 1937, states that “compensation” “includ[es] remunera-
tion paid for time lost as an employee” and specifies that
such pay “shall be deemed earned in the month in which
such time is lost.” 45 U. S. C. §231(h)(1). Pointing to the
discrepancy between the RRA and the amended RRTA,
which no longer contains the above-quoted language, the
Court of Appeals concluded that Congress intended the
RRA, but not the RRTA, to include pay for time lost.
Accord post, at 7. Although “ ‘[w]e usually presume differ-
ences in language . . . convey differences in meaning,’ ”
Wisconsin Central, 585 U. S., at ___ (slip op., at 4), Con-
gress’ failure to reconcile the RRA and the amended RRTA
is inconsequential. As just explained, the RRTA’s
pinpointed exclusions from RRTA taxation signal that
nonexcluded pay for time lost remains RRTA-taxable
“compensation.”
B
Instead of adopting lockstep the Court of Appeals’ inter-
pretation, Loos takes a different approach. In his view,
echoed by the dissent, “remuneration . . . for services
rendered” means the “package of benefits” an employer
pays “to retain the employee.” Brief for Respondent 37;
post, at 3–4. He therefore agrees with BNSF that benefits
like sick pay and vacation pay are taxable “compensation.”
He contends, however, that FELA damages for lost wages
are of a different order. They are not part of an employee’s
“package of benefits,” he observes, and therefore should
Cite as: 586 U. S. ____ (2019) 11
Opinion of the Court
not count as “compensation.” Such damages, Loos urges,
“compensate for an injury” rather than for services ren-
dered. Brief for Respondent 20; post, at 3–4. Loos argues
in the alternative that even if voluntary settlements qualify
as “compensation,” “involuntary payment[s]” in the form
of damages do not. Brief for Respondent 33.
Our decision in Nierotko undermines Loos’s argument
that, unlike sick pay and vacation pay, payments “com-
pensat[ing] for an injury,” Brief for Respondent 20, are not
taxable under the RRTA. We held in Nierotko that an
award of backpay compensating an employee for his
wrongful discharge ranked as “wages” under the SSA.
That was so, we explained, because the backpay there
awarded to the employee redressed “the loss of wages”
occasioned by “the employer’s wrong.” 327 U. S., at 364;
see supra, at 5. Applying that reasoning here, there
should be no dispositive difference between a payment
voluntarily made and one required by law.4
Nor does United States v. Cleveland Indians Baseball
Co., 532 U. S. 200 (2001), aid Loos’s argument, repeated
by the dissent. See post, at 8. Indeed, Cleveland Indians
reasserted Nierotko’s holding that “backpay for a time in
——————
4 The dissent, building on Loos’s argument, tenders an inapt analogy
between passengers and employees. If BNSF were ordered to pay
damages for lost wages to an injured passenger, the dissent asserts, one
would not say the passenger had been compensated “for services
rendered.” There is no reason, the dissent concludes, to “reach a
different result here simply because the victim of BNSF’s negligence
happened to be one of its own workers.” Post, at 5. Under the RRTA,
however, this distinction is of course critical. The passenger’s damages
for lost wages are not taxable under the RRTA, for she has no employ-
ment relationship with the railroad. In contrast, FELA damages for
lost wages are taxable because they are paid only if the injured person
previously “rendered [services] as an employee,” 26 U. S. C. §3231(e)(1),
and, indeed, was working for the railroad when the injury occurred, see
45 U. S. C. §51.
12 BNSF R. CO. v. LOOS
Opinion of the Court
which the employee was not on the job” counts as pay for
services, and therefore ranks as wages. 532 U. S., at 210.
Cleveland Indians then took up a discrete, “secondary
issue” Nierotko presented, one not in contention here, i.e.,
whether for taxation purposes backpay is allocable to the
tax period when paid rather than an earlier time-earned
period. 532 U. S., at 211, 213–214, 219–220. Moreover,
Quality Stores, which postdated Cleveland Indians, left no
doubt that what qualifies under Nierotko as “wages” for
benefit purposes also qualifies as such for taxation pur-
poses. 572 U. S., at 146–147.
C
Loos presses a final reason why he should not owe
RRTA taxes on his lost wages award. Loos argues, and
the District Court held, that the RRTA’s tax on employees
does not apply to personal injury damages. He observes
that the RRTA taxes “the income of each employee.” 26
U. S. C. §3201(a)–(b) (emphasis added). He then cites a
provision of the Internal Revenue Code, 26 U. S. C.
§104(a)(2). This provision exempts “damages . . . received
. . . on account of personal physical injuries” from federal
income taxation by excluding such damages from “gross
income.” Loos urges that the exclusion of personal
injury damages from “gross income” should carry over
to the RRTA’s tax on the “income” of railroad workers,
§3201(a)–(b).
The argument is unconvincing. As the Government
points out, the District Court, echoed by Loos, conflated
“the distinct concepts of ‘gross income,’ [a prime compo-
nent of] the tax base on which income tax is collected, and
‘compensation,’ the separately defined category of pay-
ments that are taxable under the RRTA.” Brief for United
States as Amicus Curiae 15. Blending tax bases that
Congress kept discrete, the District Court and Loos proffer
a scheme in which employees pay no tax on damages
Cite as: 586 U. S. ____ (2019) 13
Opinion of the Court
compensating for personal injuries; railroads pay the full
excise tax on such compensation; and employees receive
full credit for the compensation in determining their re-
tirement benefits. That scheme, however, is not plausibly
attributable to Congress.
For federal income tax purposes, “gross income” means
“all income” “[e]xcept as otherwise provided.” 26 U. S. C.
§61; see §§1, 63 (imposing a tax on “taxable income,” de-
fined as “gross income minus . . . deductions”). Congress
provided detailed prescriptions on the scope of “gross
income,” excluding from its reach numerous items, among
them, personal injury damages. See §§101–140. Conspic-
uously absent from the RRTA, however, is any reference to
“gross income.” As employed in the RRTA, the word “in-
come” merely distinguishes the tax on the employee, an
“income . . . tax,” §3201, from the matching tax on the
railroad, called an “excise tax.” §§3201, 3221. See also
1937 RRTA, §§2–3 (establishing an “income tax on em-
ployees” and an “excise tax on employers”); S. Rep. No.
818, 75th Cong., 1st Sess., 5 (1937) (stating that the RRTA
imposes an “income tax on employees” and an “excise tax
on employers”); H. R. Rep. No. 1071, 75th Cong., 1st Sess.,
6 (1937) (same).
Congress, we reiterate, specified not “gross income” but
employee “compensation” as the tax base for the RRTA’s
income and excise taxes. §§3201, 3221. Congress then
excepted certain payments from the calculation of “com-
pensation.” See §3231(e); supra, at 9. Congress adopted
by cross-reference particular Internal Revenue Code ex-
clusions from “gross income,” thereby carving out those
specified items from RRTA coverage. See §3231(e)(5)–(6),
(9)–(11). Tellingly, Congress did not adopt for RRTA
purposes the exclusion of personal injury damages from
federal income taxation set out in §104(a)(2). We note,
furthermore, that if RRTA taxes were based on “income”
or “gross income” rather than “compensation,” the RRTA
14 BNSF R. CO. v. LOOS
Opinion of the Court
tax base would sweep in nonrailroad income, including,
for example, dividends, interest accruals, even lottery
winnings. Shifting from “compensation” to “income” as the
RRTA tax base would thus saddle railroad workers with
more RRTA taxes.
Given the multiple flaws in Loos’s last ditch argument,
we conclude that §104(a)(2) does not exempt FELA dam-
ages from the RRTA’s income and excise taxes.
* * *
In harmony with this Court’s decisions in Nierotko and
Quality Stores, we hold that “compensation” for RRTA
purposes includes an employer’s payments to an employee
for active service and for periods of absence from active
service. It is immaterial whether the employer chooses to
make the payment or is legally required to do so. Either
way, the payment is remitted to the recipient because of
his status as a service-rendering employee. See 26
U. S. C. §3231(e)(1); 45 U. S. C. §231(h)(1).
For the reasons stated, FELA damages for lost wages
qualify as RRTA-taxable “compensation.” The judgment of
the Court of Appeals for the Eighth Circuit is accordingly
reversed, and the case is remanded for proceedings con-
sistent with this opinion.
It is so ordered.
Cite as: 586 U. S. ____ (2019) 1
GORSUCH, J., dissenting
SUPREME COURT OF THE UNITED STATES
_________________
No. 17–1042
_________________
BNSF RAILWAY COMPANY, PETITIONER v.
MICHAEL D. LOOS
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE EIGHTH CIRCUIT
[March 4, 2019]
JUSTICE GORSUCH, with whom JUSTICE THOMAS joins,
dissenting.
BNSF Railway’s negligence caused one of its employees
a serious injury. After a trial, a court ordered the
company to pay damages. But instead of sending the full
amount to the employee, BNSF asserted that it had to
divert a portion to the Internal Revenue Service. Why?
BNSF said the money represented taxable “compensation”
for “services rendered as an employee.” 26 U. S. C.
§3231(e)(1). Today, the Court agrees with the company.
Respectfully, I do not. When an employee suffers a
physical injury due to his employer’s negligence and has to
sue in court to recover damages, it seems more natural to
me to describe the final judgment as compensation for his
injury than for services (never) rendered.
The Court does not lay out the facts of the case, but they
are relevant to my analysis and straightforward enough.
Years ago, Michael Loos was working for BNSF in a train
yard when he fell into a hidden drainage grate and injured
his knee. He missed work for many months, and upon his
return he had a series of absences, many of which he
attributed to knee-injury flareups. When the company
moved to fire him for allegedly violating its attendance
policies, Mr. Loos sued. Among other things, Mr. Loos
sought damages for BNSF’s negligence in maintaining the
2 BNSF R. CO. v. LOOS
GORSUCH, J., dissenting
train yard. He brought his claim under the Federal
Employers’ Liability Act (FELA), an analogue to
traditional state-law tort suits that makes an interstate
railroad “liable in damages to any person suffering injury
while he is employed” by the railroad “for such injury . . .
resulting in whole or in part from the [railroad’s]
negligence.” 45 U. S. C. §51. Ultimately, and again much
like in any other tort suit, the jury awarded damages in
three categories: $85,000 in pain and suffering, $11,212.78
in medical expenses, and $30,000 in lost wages—the final
category representing the amount Mr. Loos was unable to
earn because of the injury BNSF’s negligence caused.
Then a strange thing happened. BNSF argued that the
lost wages portion of Mr. Loos’s judgment represented
“compensation” to him “for services rendered as an
employee” and was thus taxable income under the
Railroad Retirement Tax Act (RRTA). 26 U. S. C. §3201et seq. In much the same way the Social Security Act
taxes other citizens’ incomes to fund their retirement
benefits, the RRTA taxes railroad employees’ earnings to
pay for their public pensions. And BNSF took the view
that, because Mr. Loos owed the IRS taxes on the lost
wages portion of his judgment, it had to withhold an
appropriate sum and redirect it to the government. The
company took this position even though it meant BNSF
would owe corresponding excise taxes. See 26 U. S. C.
§3221. It took this position, too, even though no one has
identified for us a single case where the IRS has sought to
collect RRTA taxes on a FELA judgment in the 80 years
the two statutes have coexisted. The company even
persisted in its view after, first, the district court and,
then, the Eighth Circuit ruled that Mr. Loos’s award
wasn’t subject to RRTA taxes. Even after all that, BNSF
went to the trouble of seeking review in this Court to win
the right to pay the IRS.
What’s the reason for BNSF’s tireless campaign? Is the
Cite as: 586 U. S. ____ (2019) 3
GORSUCH, J., dissenting
company really moved by a selfless desire to protect a
federal program from “a long-term risk of insolvency”?
See ante, at 5, n. 2. Several amici offer a more prosaic
possibility. Under the rule BNSF seeks and wins today,
RRTA taxes will be due on (but only on) the portion of a
FELA settlement or judgment designated as lost wages.
Taxes will not attach to other amounts attributed to, say,
pain and suffering or medical costs. At trial, of course, a
plaintiff ’s damages are what they are, and often juries
will attribute a significant portion of damages to lost
wages. But with the help of the asymmetric tax treatment
they secure today, railroads like BSNF can now sweeten
their settlement offers while offering less money. Forgo
trial and accept a lower settlement, they will tell injured
workers, and in return we will designate a small fraction
(maybe even none) of the payments as taxable lost wages.
In this way, the Court’s decision today may do precisely
nothing to increase the government’s tax collections or
protect the solvency of any federal program. Instead, it
may only mean that employees will pay a tax for going to
trial—and railroads will succeed in buying cheaper
settlements in the future at the bargain basement price of
a few thousand dollars in excise taxes in one case today.
See Brief for American Association for Justice as Amicus
Curiae 34–36; Brief for SMART et al. as Amici Curiae 5–7.
Whatever the reason for BNSF’s gambit, the problems
with it start for me at the first step of the statutory
interpretation analysis—with the text of the law itself.
The RRTA taxes an employee’s “compensation,” which it
defines as “money remuneration . . . for services rendered
as an employee to one or more employers.” 26 U. S. C.
§3231(e)(1). A “service” refers to “duty or labor . . . by one
person . . . bound to submit his will to the direction and
control of [another].” Black’s Law Dictionary 1607 (3d ed.
1933). And “remuneration” means “a quid pro quo,” “rec-
ompense” or “reward” for such services. Id., at 1528. So
4 BNSF R. CO. v. LOOS
GORSUCH, J., dissenting
the words “remuneration for services rendered” naturally
cover things like an employee’s salary or hourly wage.
Nor do they stop there, as the Court correctly notes.
Rather, and contrary to the court of appeals’ view, those
words also fairly encompass benefits like sick or disability
pay. After all, an employer offers those benefits to attract
and keep employees working on its behalf. In that way,
these benefits form part of the “quid pro quo” (compensa-
tion) the employer pays to secure the “duty or labor” (ser-
vices) the employee renders. Cf. United States v. Quality
Stores, Inc., 572 U. S. 141, 146 (2014).
But damages for negligence are different. No one would
describe a dangerous fall or the wrenching of a knee as a
“service rendered” to the party who negligently caused the
accident. BNSF hardly directed Mr. Loos to fall or offered
to pay him for doing so. In fact, BNSF didn’t even pay Mr.
Loos voluntarily; he had to wrest a judgment from the
railroad at the end of a legal battle. So Mr. Loos’s FELA
judgment seems to me, as it did to every judge in the
proceedings below, unconnected to any service Mr. Loos
rendered to BNSF. Instead of being “compensation” for
“services rendered as an employee,” it seems more natural
to say that the negligence damages BNSF paid are “com-
pensation” to Mr. Loos for his injury. That’s exactly how
we usually understand tort damages—as “compensation”
for an “injury” caused by “the unlawful act or omission or
negligence of another.” Black’s Law Dictionary 314 (2d ed.
1910). And that’s exactly how FELA describes the damages
it provides—stating that it renders a railroad “liable”
not for services rendered but for any “injury” caused by
the defendant’s “negligence.” 45 U. S. C. §51; see also New
York Central R. Co. v. Winfield, 244 U. S. 147, 164 (1917)
(Brandeis, J., dissenting) (FELA liability is “a penalty for
wrong doing,” a “remedy” that “mak[es] the wrongdoer
indemnify him whom he has wronged”).
Of course, BNSF isn’t without a reply. Time and again
Cite as: 586 U. S. ____ (2019) 5
GORSUCH, J., dissenting
it highlights the fact that the district court measured the
lost wages portion of Mr. Loos’s award by reference to
what he could have earned but for his injury. But if
BNSF’s negligence had injured a passenger on a train
instead of an employee in a train yard, a jury could have
measured the passenger’s tort damages in exactly the
same way, taking account of the wages she could have
earned from her own employer but for the railroad’s negli-
gence. Vicksburg & Meridian R. Co. v. Putnam, 118 U. S.
545, 554 (1886). In those circumstances, I doubt any of us
would say the passenger’s damages award represented
compensation for “services rendered” to her employer
rather than compensation for her injury. And I don’t see
why we would reach a different result here simply because
the victim of BNSF’s negligence happened to be one of its
own workers. Of course, as the Court points out, ante, at
11, n. 5, FELA suits may be brought only by railroad
employees against their employers. But in cases like ours
a FELA suit simply serves in the interstate railroad in-
dustry as a federalized substitute for a traditional state
negligence tort claim of the sort that could be brought by
anyone the railroad injured, employee or not. Inescapably,
“the basis of liability under [FELA] is and remains negli-
gence.” Wilkerson v. McCarthy, 336 U. S. 53, 69 (1949)
(Douglas, J., concurring).
Looking beyond the statute’s text to its history only
compounds BNSF’s problems. To be clear, the statutory
history I have in mind here isn’t the sort of unenacted
legislative history that often is neither truly legislative
(having failed to survive bicameralism and presentment)
nor truly historical (consisting of advocacy aimed at win-
ning in future litigation what couldn’t be won in past
statutes). Instead, I mean here the record of enacted
changes Congress made to the relevant statutory text over
time, the sort of textual evidence everyone agrees can
sometimes shed light on meaning. See United States v.
6 BNSF R. CO. v. LOOS
GORSUCH, J., dissenting
Wong Kim Ark, 169 U. S. 649, 653–654 (1898).
The RRTA’s statutory history is long and instructive.
Beginning in 1937, the statute defined taxable “compensa-
tion” to include remuneration “for services rendered,” but
with the further instruction that this included compensa-
tion “for time lost.” Carriers Taxing Act of 1937, §1(e), 50
Stat. 436. Courts applying the RRTA’s sister statute, the
Railroad Retirement Act (RRA), understood this language
to capture settlement payments for personal injury claims
that would not otherwise qualify as “remuneration . . . for
services rendered.” See, e.g., Jacques v. Railroad Retire-
ment Bd., 736 F. 2d 34, 39–40 (CA2 1984); Grant v. Rail-
road Retirement Bd., 173 F. 2d 385, 386–387 (CA10 1949).
Congress itself seemed to agree, explaining in 1946 that
remuneration for “time lost” includes payments made
“with respect to an . . . absence on account of personal
injury.” §3(f), 60 Stat. 725. But then Congress reversed
field. In 1975, it removed payments “for time lost” from
the RRTA’s definition of “compensation.” §204, 89 Stat.
466. And in 1983, Congress overwrote the last remaining
reference to payments “for time lost” in a nearby section.
§225, 97 Stat. 424–426. To my mind, Congress’s decision
to remove the only language that could have fairly cap-
tured the damages here cannot be easily ignored.
Yet BNSF would have us do exactly that. On its ac-
count, the RRTA’s discussions about compensation for
time lost and personal injuries only ever served to illus-
trate what has qualified all along as remuneration for
“services rendered.” So, on its view, when Congress first
added and then removed language about time lost and
personal injuries, it quite literally wasted its time because
none of its additions and subtractions altered the statute’s
meaning. Put another way, BNSF asks us to read back
into the law words (time lost, personal injury) that Con-
gress deliberately removed on the assumption they were
never really needed in the first place. As I see it, that is
Cite as: 586 U. S. ____ (2019) 7
GORSUCH, J., dissenting
less “ ‘a construction of a statute [than] an enlargement of
it by the court, so that what was omitted, [BNSF] pre-
sum[es] by inadvertence, may be included within its scope.
To supply omissions [like that] transcends the judicial
function.’ ” West Virginia Univ. Hospitals, Inc. v. Casey,
499 U. S. 83, 101 (1991) (quoting Iselin v. United States,
270 U. S. 245, 251 (1926) (Brandeis, J.)).
Looking beyond the text and history of this statute to
compare it with others confirms the conclusion. Where
the RRTA directs the taxation of railroad employee income
to fund retirement benefits, the RRA controls the calcula-
tion of those benefits. And, unlike the RRTA, that statute
continues to include “pay for time lost” in the definition of
“compensation” it uses to calculate benefits. 45 U. S. C.
§231(h)(1). Normally, when Congress chooses to exclude
terms in one statute while introducing or retaining them
in another closely related law, we give effect to rather
than pass a blind eye over the difference. Nor is there any
question that Congress knows exactly how to tax a favor-
able tort judgment when it wants. See, e.g., 26 U. S. C.
§104(a)(2) (punitive damages are not deductible). Its
failure to offer any comparably clear command here
should, once more, tell us something.
With so much in the statute’s text, history, and sur-
roundings now pointing for Mr. Loos, BNSF is left to lean
heavily on case law. The company says we must rule its
way primarily because of Social Security Bd. v. Nierotko,
327 U. S. 358 (1946). But I do not see anything in that
case dictating a victory for BNSF. Nierotko concerned a
different statute, a different legal claim, and a different
factual context. There, the plaintiff brought a wrongful
termination claim before the National Labor Relations
Board, claiming that his employer fired him in retaliation
for union activity. The NLRB ordered the employee rein-
stated to his former job and paid as if he had never left.
Under those circumstances, this Court held that for pur-
8 BNSF R. CO. v. LOOS
GORSUCH, J., dissenting
poses of calculating the plaintiff ’s Social Security Act
benefits, his “wages” should include his backpay award,
allocated to the period when he would have been working
but for the employer’s misconduct. Since then, however,
the Court has suggested that at least one of Nierotko’s
holdings was likely motivated more by a policy concern
with protecting the employee’s full retirement to Social
Security benefits than by a careful reading of the Social
Security Act. See United States v. Cleveland Indians
Baseball Co., 532 U. S. 200, 212–213 (2001); id., at 220–
221 (Scalia, J., concurring in judgment). Besides, in this
case we’re simply not faced with a wrongful termination
claim, an award of backpay, or the interpretation of the
Social Security Act—let alone reason to worry that ruling
for Mr. Loos would inequitably shortchange an employee.
So whatever light Nierotko might continue to shed on the
question it faced, and whatever superficial similarities one
might point to here, that decision simply doesn’t dictate an
answer to the question whether a tort victim’s damages for
a physical injury qualify as “compensation for services
rendered” under the RRTA.
By this point BNSF is left with only one argument,
which it treats as no more than a last resort: Chevron
deference. In the past, the briefs and oral argument in
this case likely would have centered on whether we should
defer to the IRS’s administrative interpretation of the
RRTA. After all, the IRS (at least today) agrees with
BNSF’s interpretation that “compensation . . . for services
rendered” includes damages for personal injuries. And the
Chevron doctrine, if it retains any force, would seem to
allow BNSF to parlay any statutory ambiguity into a
colorable argument for judicial deference to the IRS’s view,
regardless of the Court’s best independent understanding
of the law. See Chevron U. S. A. Inc. v. Natural Resources
Defense Council, Inc., 467 U. S. 837 (1984). Of course, any
Chevron analysis here would be complicated by the gov-
Cite as: 586 U. S. ____ (2019) 9
GORSUCH, J., dissenting
ernment’s change of heart. For if Nierotko is as relevant
as BNSF contends, then it must also be relevant that,
back when Nierotko was decided, the IRS took the view
that the term “wages” in the Social Security Act did not
include backpay awards for wrongful termination. See
327 U. S., at 366–367. And if “wages” don’t include back-
pay awards for wrongful terminations, it’s hard to see how
“compensation . . . for services rendered” might include
damages for an act of negligence. Still, even with the
complications that follow from executive agencies’ pench-
ant for changing their views about the law’s meaning
almost as often as they change administrations, a plea for
deference surely would have enjoyed pride of place in
BNSF’s submission not long ago.
But nothing like that happened here. BNSF devoted
scarcely any of its briefing to Chevron. At oral argument,
BNSF’s lawyer didn’t even mention the case until the final
seconds—and even then “hate[d] to cite” it. Tr. of Oral
Arg. 58. No doubt, BNSF proceeded this way well aware
of the mounting criticism of Chevron deference. See, e.g.,
Pereira v. Sessions, 585 U. S. ___, ___–___ (2018) (Kenne-
dy, J., concurring). And no doubt, too, this is all to the
good. Instead of throwing up our hands and letting an
interested party—the federal government’s executive
branch, no less—dictate an inferior interpretation of the
law that may be more the product of politics than a scru-
pulous reading of the statute, the Court today buckles
down to its job of saying what the law is in light of its text,
its context, and our precedent. Though I may disagree
with the result the Court reaches, my colleagues rightly
afford the parties before us an independent judicial inter-
pretation of the law. They deserve no less.