Expert: Shirley McAllister, CPP, PHR - 1/2/2009

Question
I recently went to work for a firm in Ohio and received a lot of literature concerning their 401K plan.  I decided that I did not want to participate and did not fill out and return the paperwork.  On my last check they made 2%  deduction for 401K and told me that I had to send back the paper work saying I DIDN'T want to participate or else....an automatic deduction would be taken for the 2%. When I told them that I thought voluntary programs required my signature to approve the deduction they indicated that they did not see the 401K in that way.  It was ASSUMED that eveyone would want to participate and that my not sending back a refusal gave them the right to make the deduction.  However, to discontinue the deductions I will need to fill out a lengthy form and request the return of my vested portion - meaning I will only get back 20%.  Was it legal for them to assume I would involuntarily want to participate and is it legal for them to keep 80% of my deduction? Don't they need to have my approval for voluntary participation in any programs that require a payroll deduction?

Answer
If the program is voluntary it means you have a choice whether or not you wish to sign up for the program.  

Yes, the company should have received your written permission before they deducted the 401K from your check.  

I make sure the employee either signs up for 401K or signs a waiver saying they do not wish to sign up for 401K. That way we are covered.

Look at your employee handbook and see what the policy says. The DOL will go with the policy of the company.  If it is voluntary you have a choice to join, you also have a choice not to join so it could go either way.  Check out the policy and see what it says.

If the policy says that it is voluntary and that you have to sign up in order to be included than go to the company and ask that the whole deduction be returned.

Shirley