Cafeteria workers (who are not Facebook employees) at Facebook’s Menlo Park, California headquarters just ratified their first collective bargaining agreement. In a strange U-turn from current trends, the workers replaced their 401(k) plan with the union’s defined benefit pension plan.
Defined benefit pension plans, once the crux of generous union benefit packages, have been decreasing in popularity since the 1990s. Many of these plans are now underfunded, bankrupt, or on the brink of insolvency. Some have been rescued by the Pension Benefit Guarantee Corporation (like insurance for pension plans), but the PBGC faces insolvency in the near future, as well. A few plans have changed the “defined benefit” part of the plan leaving retired workers – many too old to rejoin the workforce – to receive a fraction of what they thought they would receive after all the years paying into the pension fund.
I have personally withdrawn dozens of companies from their union’s pension plans. Workers at those unions are usually provided with a 401(k) in place of failing pension plans. So it is odd that the cafeteria workers willingly signed up for UNITE HERE’s pension plan. I sure hope the workers didn’t sign up for this version of the plan which is in critical status – a designation for the most underfunded plans. If so, these workers’ contributions may go solely to propping up current retirees’ pensions with no money left over for when they themselves retire.
Matt Austin owns Austin Legal, LLC, a boutique law firm based in Ohio that limits its representation to employers throughout the U.S.A. dealing with labor, employment, and OSHA matters. You can reach Matt at (614) 843-3041 or emailing him at Matt@MattAustinLaborLaw.com.