Union And Non-union Employees In Same Plan

[Guest mr.pension]

Employer has union plan for union employees. For several years union has allowed non-union employees to participate as non-voting members receiving all benefits (pension, annuity, health insurance, etc.) Union has now decided that this arrangement is not proper and will not allow new employees to join their plan. Employer is now concerned as to propriety of non-union in union plan. Also what to do about new non-union employees, who would have joined the union plan,and how to provide benefits for them. The union has agreed to allow present non-union participants to remain in the union plan.

[IRC401]

The plan document should specify who is eligible to participate (which may be hard to do with a prototype document under your facts and circumstances).

The union and non-union portions of the plan are disaggregated for purposes of testing (which wouldn't be an issue if all participants are non-HCEs).

[Guest ASIRE]

On what basis did the union conclude it wasn't proper to include the non-union employees in the plan? Was it simply because the plan document didn't specifically permit participation in the plan by the non-union or employees or was it related to things other than the plan document?

In general, the employer (not the union) gets to decide who is permitted to participate in the plan, and as previously noted the eligible groups should be described in the plan document. If the document does not specifically exclude non-union employees, then they would generally be eligible to participate. If the document DOES specifically exclude the non-union employees, it needs to be amended before you could allow new non-union employees to participate AND you need legal advice as to what to do with existing non-union employees who were allowed to participate previously, as you would then have a situation of allowing an ineligible group to participate.

[GBurns]

Since you state that it is a union plan, Why did the union allow no-union members in the first place?

Is it really a union plan or is it the employer's plan for the union members?

If it really is a union plan or If the CBA really allows the union to demand the exclusion of non-union employees, simply set up a similar plan for the non-union employees with duplicated benefits and move the non-union participants and new employees into the new plan.

If it is not a union plan but the employer's plan, then just segregate the employees into 2 classes.

It might be possible to get both groups treated as one (controlled group, affiliated group or aggregated group) for purposes of getting better health insurance rates.

[Guest mr.pension]

It is definately a multi-employer union plan. The option of allowing the (non?)union employees, who are non-voting union members, was made prior to the current corporate owners involvement. The non-voting employees get all the benefits that the regular members do (pension,welfare,both health and life group insurance). The ability to match up a plan for a non-union employee (hourly credits, etc.)is almost impossible and (costwise)impractical. Can I leave the non-voting members in the union plan or must I pull them out and set up new plans for all of them ?

[KJohnson]

The union/non-union distinction is really a misnomer. The real disctinction is collectively bargained vs. non-collectively bargained. In a number of "right to work" states, individuals who do not join the union are still covered by the collective bargaining agreement and are still collectively bargained employees. There are also certain "bargaining unit alumni" rules that allow formerly collectively bargained employees to continue to participate as if they were collectively bargained. Finally a number of multiemployer plans let certain categories of non-collectively bargained members into the Plan. Since they are not covered by the CBA, there is typically a separate participation agreement for these employees. However, for this group of employees the multiemployer plan does not get the "pass" that it would ordinarily have for 410(B) and 401(a)(4) testing.