The book does not go into much depth regarding the involvement of the IRS when it comes to the specific financial duties of the organization. Apparently, the IRS has developed its own criteria for determining whether or not a person is an independent contractor or an employee. This has several implications regarding liability of the organization to pay withholdings, past due Social Security, and unemployment taxes. Typically, the determining factor for the IRS is the extent to which the business owner can control the work of the employee in question. If there is a high degree of control exercised by the employer, the worker will likely be regarded as an actual employee. This is the case in the “Tragic Derailment” case.
Because the IRS has already decided that the conductor was technically an employee of ABC Railroad Company, they are subject to pay past due Social Security, withholdings, and unemployment. I am not too familiar with the workings of the tax courts; however, these payments are the responsibility of a typical employer. If ABC were to bring an action in tax court I would rule against them. I do not think they would prevail because they are trying to pass off employees over whom they have a high degree of control as independent contractors. I believe they will be held liable for the past due payments and will take a big hit financially.
In many cases, an organization may be held liable for the actions of a representing agent depending on the context of the action in the scope of their employment under the doctrine of respondeat superior. In this case, the negligent act in question was texting while operating a train. The conductor was so engaged with his telephone that he failed to see a red light and did not stop his train when he should have, resulting in a collision. Basically, a judge would have to determine whether or not the individual employee was liable for his negligence or whether he was acting on behalf of the employer. In this case, I would rule that ABC is not liable for the tort committed by this conductor for several reasons. First of all, the act of texting or using telephones while operating a train filled with passengers is not in the scope of the conductor’s occupational duties. The case even specifies that this was against the rules, and given that this conductor had passed ABC’s training regiment, he would have known this information. Also, the act of texting while operating the train was in the own personal interest of