Railroad disability benefits subject of Supreme Court ruling

A recent U.S. Supreme Court decision is likely to impact some Connecticut railroad workers. The issue involved was litigated in two lower courts, and both of those court ruled in favor of workers regarding railroad disability benefits. However, the nation’s highest court has since overturned those rulings.

The court ruled that financial benefits injured railroad workers receive through disability benefits to replace lost wages from time off work in recovery are a form of taxable income.  A BNSF railroad employee who was injured on the job was awarded over $120,000 in a jury verdict, and $30,000 of that was applied as wages for time off work due to injury disability. The railroad company sought to withhold nearly $4,000 of the amount as income tax.

The lower courts both ruled that an award for damages due to worker injury is not taxable under the Railroad Retirement Tax Act. The majority included Justice Ruth Bader Ginsburg and six other justices, holding that such benefits are similar to wages received through the Social Security system. As as result of the court’s ruling, such benefits are taxable income. It remains to be seen whether the U.S. Congress will consider addressing this issue legislatively.

Issues regarding railroad disability benefits can be quite complex. Connecticut workers who suffer injury on the job are wise to consult with attorneys who are experienced in railroad litigation matters if a problem situation arises. The recent court ruling will likely have a significant financial impact on injured railroad workers in this state and throughout the nation.

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