John Hancock manages our 401k at work, they have under eligability,

Excluded employees: Union employees, Nonresident Aliens, and Leased Employees; 21 years of age and 3 consecutive months

My workplace isn't even unionized. It just shocks me that a 401k can exclude a Union: obviously the Union can negotiate for the members, but can a company say that if you join the union you'll be kicked out of the company's 401k? Also, what happens then if you have a 401k with the company and a union forms and you want to join it?

  • I’m voting to close this question because it belongs on money.stackexchange.com Feb 16 at 18:50
  • 32
    This is clearly on-topic on law.se, even if it might also be on-topic on other stacks. Feb 16 at 21:52
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    My first thought is that being in a union is not a protected class. My second thought is that unions usually have their own pension plan setup. Usually you cannot contribute to a 401k and a union pension under the same employer; I believe for tax reasons. You can however open a 403b.
    – MonkeyZeus
    Feb 17 at 16:34
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    @BlueDogRanch Questions can fit more than one stack. Migrating should only be done when the question is entirely offtopic in the stack it was posted. We need to assume Evan wants a legal, not a financial point of view on the matter.
    – Mindwin
    Feb 17 at 17:18
  • Happens all the time where you're denied a program like a 401K or Social Security because your situation has a parallel but different program (like 403B for nonprofits, or RailRoad Retirement for railroad employees: RRR pre-dates Social Security so was not folded into it). Feb 18 at 23:15

3 Answers 3


This fact sheet on the "Employee Retirement Income Security Act of 1974" or ERISA, published by the United States Department of Labor, includes this quote:

Who can participate in your employer's retirement plan?


Find out if you are within the group of employees covered by your employer's retirement plan. Federal law allows employers to include certain groups of employees and exclude others from a retirement plan. For example, your employer may sponsor one plan for salaried employees and another for union employees.

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    I thought salaried was the opposite of casual, not of unionised?
    – Jontia
    Feb 17 at 10:05
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    @Jontia I believe salaried is the opposite of hourly, i.e. do you get a flat monthly or annual salary, or do you report hours worked and get paid based on that. While not universal, I think unions are commonly associated with hourly employees.
    – Barmar
    Feb 17 at 15:25
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    In the US, there are two main classes of employees: Exempt and Non-Exempt (indeed.com/hire/c/info/exempt-vs-non-exempt-employee). Exempt employees are exempt from overtime rules (they don't get overtime pay). They are generally salaried. Non-exempt are everyone else (generally hourly). It's possible to be unionized and salaried (for example, I believe some government engineers are unionized). (I am not a lawyer)
    – Flydog57
    Feb 17 at 23:52
  • @Barmar: Well, it depends. Basically everyone in Hollywood is unionized, for example, although in the case of the producers, I get the sense that it's more of a formality. OTOH, unions in general are in decline in the US, and there are plenty of non-unionized hourly employees across the country.
    – Kevin
    Feb 18 at 10:27

The reason for that standard boilerplate is that any union members would be covered by the terms of their Collective Bargaining Agreement (often called the Contract). This isn't an attempt to exclude union members, it's just wording that if you are in a union, your CBA takes precedence.

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    It does also kind of get the point across that should you decide to unionize, the union negotiations start from scratch when it comes to benefits. Don't assume that the union will just negotiate more for you, on top of the existing baseline. All aspects of your current relationship with the employer (apart from your jurisdiction's basic employment law, of course) give way to whatever the collective agreement ends up providing. As for 401(k) specifically, unions may provide an alternative, such as a pension. Likewise health benefits, vacation and so forth.
    – CCTO
    Feb 17 at 2:25

As Tiger Guy mentioned, union members have a separate agreement for salary and benefits that typically includes some sort of retirement plan. Your company is offering a 401k for those who aren't covered by the union's retirement plan. An employee will either be eligible for one or the other, but not both. There are all sorts of convoluted tax rules regarding retirement plans that can make it impractical or impossible for an employee to participate in both. For example, there are limits to how much you and your employer can contribute to your 401k accounts each year. If you had two 401k accounts (one through the union and one directly through your employer) the limit wouldn't change, it would just be split across two accounts and you'd have twice as many management fees.

Also, what happens then if you have a 401k with the company and a union forms and you want to join it?

This gets treated more or less the same as if you have a 401k and then switch employers. The 401k account belongs to you. All the money that you contributed (and any gains that money earned) will remain in the account. Your employer's contributions (and the associated gains) will remain in the account based on how fully "vested" you are. Your employer would no longer be able to contribute to that account. However, anything in the account would continue to grow and you are still free to make investment changes (move your money from one stock to another, etc). What many people do with these old 401k accounts is roll them over, either into their current 401k with their new employer or into an IRA. Your accountant and/or financial advisor can help you decide where is the best place to keep your retirement funds in terms of tax consequences, investment options, and management fees. The key takeaway, though, is that a 401k belongs to you, so you won't lose it if you change employers or to a union-sponsored plan.

  • "and you'd have twice as many management fees" Although, if the fees are percentage based, each fee would be smaller. If the fee rates were the same, the total fees should be the same. (If they were different rates, the total fees would be more than if all you money went into the lower-rate plan, but less than if it was all in the higher-rate plan).
    – TripeHound
    Feb 18 at 6:50
  • @TripeHound - I meant the fees that your employer pays to run the program. Those are often per-participant, thus your employer would save a lot by having employees on one plan instead of two.
    – bta
    Feb 24 at 22:02

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