Adding Union Employees to the 401(k) Plan - Audit issue

One of my clients is adding Union employees to the company.  It will take them over the 120 count.  Was wondering is there a way to set a separate plan to avoid this.  Although the same owner will own the company although he doesn't participate, still a controlled group because of it, so I'm thinking no but am I missing a way to avoid this?  BTW it's a plain vanilla 401(k) plan.

One plan for union employees, another for non-union employees?  That's commonly done.

Not only to keep each plan’s count of participants small but also for many business and plan-administration reasons, an employer might prefer to establish and maintain two or more distinct plans.

One kind of distinction is between [PIN 002] “employees who are included in a unit of employees covered by . . . a collective bargaining agreement . . . , if there is evidence that retirement benefits were the subject of good faith bargaining[.]” and [PIN 001] employees not represented by any labor union.

See Internal Revenue Code of 1986 (26 U.S.C) § 410(b)(3)(A)

http://uscode.house.gov/view.xhtml?req=(title:26%20section:410%20edition:prelim)%20OR%20(granuleid:USC-prelim-title26-section410)&f=treesort&edition=prelim&num=0&jumpTo=true

22 hours ago, HarleyBabe said:

Although the same owner will own the company although he doesn't participate, still a controlled group because of it

As others said, it's quite common to have 2 plans in this situation. Employees covered under a collective bargaining agreement aren't required to be included in the testing of your original plan. Still, the sentence above confused me.