Non-union employees excludable?

[Sully]

I have an Employer with 3 different classes of employees:

Salaried Employees

Hourly Union Employees

Hourly Non-Union Employees

The salaried employees are all covered under the Employer's DB and 401(k) Plans.

All of the hourly employees (union and non-union) are covered by a collective bargaining agreement.

When testing for coverage I know we can exclude the hourly union employees. But, how about the hourly non-union employees? I think 1.410(b)-(6)(d)(2)(i) allows us to exclude them but would like confirmation.

Also, I do not know if this matters or not, but this is in Virginia which is a ‘right to work’ state.

Thanks.

[g8r]

I'm a little confused and am not familiar with right to work laws. But, I don't know how an individual is considered non-union but is subject to collective bargaining. You need to look at the actual regulation in 1.410 defining who you can exclude. They don't use the term "union employee." Rather you'll find it's something like "an employee who is subject to collective bargaining that the Secretary of Labor finds ..". So, don't let the term union or non-union confuse you. Use the actual definition in the regulation and see whether the these individuals fall within the actual language.

Please excuse me for being unfamiliar with linking to cites. If I knew how to do it, I'd give you the direct link to the regulation which I know can be accessed through benefitslink.

[GBurns]

Almost all non-federal governmental entities have such a structure with non-union employees still part of the collective bargaining process.

For example, many school districts have clerks and administrators etc who are not union represented. The clerks are usually "lumped" with the instructional staff, paraprofessionals are put with the non-instructionals (usually AFSCME) and the proncipals and administrators have a non-union "Committee".

[g8r]

I'm not pretending to be an expert on labor organizations. Rather, my only point was that the term "union" is meaningless. If you look at the actual language defining the statutorily excludible group under 410(b), you won't see that term used at all. Rather, there is description of employees subject to collective bargaining, etc. (there are various requirements). For example, you can have a union employee who doesn't have "retirement" benefits that were subject to collective bargaining. I don't know if you can have a non-union employee subject to a collective bargaining agreement (but maybe that's possible and that's my point). That's ultimately a labor law issue.

[KJohnson]

In my experience, this is an area where the IRS does not have all that much expertise.

In a right to work state, whether you are a "collectively bargained" employee is not contingent upon union membership. The collective bargaining agreement can cover employees who refuse to join the union. You need to look at the language of the CBA to see who it covers. Those are the indivduals who are in the collective bargaining "unit".

Also, in rare instances there may be people who may appear covered by the CBA and who are union members but may not be in the "bargaining unit" because they do not have a "community of interest" with the other employees. The classic example is the son of a corporate owner who "works with the tools".

Finally (although it does not seem applicable to your situation) there are "bargaining unit alumni" rules in the regulations for multiemployer plans.