Trader Joe’s cut workers’ retirement benefits during the pandemic

Workers at Trader Joe’s discovered in January that pension benefits had been cut in half for many employees. The revelation came on the second page of the company’s internal newsletter, The Bulletin, right after an explanation of the company’s No. 1 value: “Integrity”.

“The definition of integrity is simple…it means you treat others as you would like to be treated,” the newsletter explains.

The change to the company’s 401(k) plan was not described as a cutback, but workers familiar with the pension plan knew that was what it was about. Employees were accustomed to receiving an annual flat-rate contribution from the company equal to 10% of their salary for the previous year. But those with less than a decade of service at Trader Joe’s would only receive 5% for their work done in 2021, according to the newsletter. Assistant managers with the same time would receive 7%, while all store managers would receive 10%.

Workers with 10 years’ tenure could keep their 10% annual contribution, but this stipulation had a catch. They must have worked at least 700 hours in each of those years to qualify for the highest deposit. So long-tenured workers could end up with just 5% if they had taken extended leave or temporarily reduced their work hours years ago, perhaps to deal with personal issues or a work issue. health.

“Cutting people’s pensions during a pandemic? How is this “integrity”? »

– an employee of Trader Joe in Pennsylvania

The Bulletin noted that this was a “discretionary” contribution and not a contractual guarantee, and the company for years offered the same caveat in its handbook for crew members, which is Trader Joe’s lingo for employees. But according to four workers who spoke with HuffPost, employees have felt caught out by the smallest contributions, especially after working nearly two years during a pandemic, dealing with COVID-19, product shortages and angry customers.

“It was really upsetting for a lot of crew members,” said Maeg Yosef, an employee of Trader Joe in Massachusetts.. “I think that’s the trend. The company seems to be moving away from being a place where you can build a career, support your family, and feel relatively secure for a job in the grocery industry.

Yosef is part of a new labor campaign that was first reported by more perfect union.

Trader Joe’s did not respond to numerous emails and phone calls from HuffPost asking for details about the company’s retirement plan.

But earlier copies of the crew handbook mentioned a standard annual contribution of 10%. (In one version, included as an exhibit in the 2016 litigation, the company said everyone would get 10% except workers under 30, who would get 5%.) A more recent copy of the manual obtained by HuffPost, dated March 2021, did not list any amount, saying only that Trader Joe’s “may make a discretionary contribution.”

According to the Bureau of Labor Statistics, about 62% of workers in the private sector are eligible for 401(k)-type defined contribution retirement plans through their jobs. Many employers contribute to these schemes by matching the contributions paid by the worker, up to a certain share of the worker’s salary, often between 3 and 6%.

Trader Joe’s former contribution of 10% of a worker’s salary for the year appears to have been high for a non-union grocer. And unlike quid pro quo systems, workers receive the contribution from the company whether they have contributed or not.

Trader Joe workers said they felt caught off guard by the cut in pension benefits.

Alexi Rosenfeld via Getty Images

But halving the premium equates to a significant reduction in overall compensation, potentially on the order of thousands of dollars, depending on the worker’s expected salary and hours. The evolution of a worker’s retirement savings over time could be significant, especially when taking into account the loss of tax-deferred investment gains. It is unclear whether Trader Joe’s could reinstate the higher contribution for 2022 or later years.

Employees said the change not only angered co-workers, but also energized discussions about a union beyond Massachusetts.

“Cutting people’s pensions during a pandemic? How is this “integrity”? said a store employee in Pennsylvania, who like others spoke on condition of anonymity for fear of reprisal. “I had planned to be here my whole career, I was so happy. But they just nibble on things.

None of the Trader Joe’s stores currently have union representation. The campaign in Massachusetts, called Trader Joe’s United, is independently run and, according to Yosef, is already attracting interest from other stores. Collective bargaining is common in the wider industry, with the United Food and Commercial Workers representing more than 800,000 grocery workers, including at major chains owned by Kroger, Albertsons and other companies .

Work at Trader Joe’s? Email our reporter and share your story. You can remain anonymous if you prefer.

Another Trader Joe worker said past union efforts never seemed to gain much ground in the chain, with the consensus being that “Trader Joe’s is pretty good for its employees.” But the worker said longtime crew members were bothered by the 401(k) change, as well as an increase in the salary floor that didn’t translate into meaningful pay increases for older workers. experienced.

“When you start seeing real backdoor style stuff happening, you get mad and start thinking, ‘Well, other grocery stores are getting unionized,'” they explained.

The worker said he knew two co-workers who thought they were entitled to 10% dues for 2021 because of their terms of office, only to find they were getting 5% because they hadn’t worked enough hours at a certain point. A collective agreement, they said, could avoid such surprises.

“If you have a contract, there’s nothing they can touch,” the worker said.

It would make sense for an employer to cut a 401(k) benefit rather than wages to save money, because some portion of workers are unlikely to notice or care, especially workers. younger people for whom retirement is a distant abstraction. Many grocery store employees would not be able to afford to make regular contributions from their own side, perhaps making it less likely that they would pay close attention to the plan.

“The company seems to be moving away from being a place where you can build a career, support your family, and feel relatively secure for a job in the grocery industry”

– Maeg Yosef, Trader Joe employee

According to the company manual, Trader Joe’s vests its employer contributions gradually over time, so workers are not fully entitled to the money the company put into the plan before they worked there. for six years. Workers who leave Trader Joe’s before that date would leave behind a percentage of company dues. Such vesting schedules are common among workplace pension plans.

A Trader Joe veteran said she only considered the job as a transitional job and didn’t expect to work for the grocer for more than a year or two. But eventually, several years had passed and she had become more dependent on the pension plan than she ever imagined. She is alarmed to see Trader Joe’s contribution reduced.

She said those who think the plan was generous to begin with are missing the point.

“Nobody gives us anything; we are working for that,” she said. “We shouldn’t commend Trader Joe’s for doing the bare minimum. We just live in a place where we’ve normalized not making enough money to survive, and the idea that because you work in retail you don’t deserve to live a normal life.

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