Seasonal Workforces and Retirement Plans: What Wineries Need To Know
Due to its seasonal nature, the winery industry operates on a business cycle fundamentally different from most other industries. From harvest and tourism season workforce spikes, to fluctuating tasting room staffing, wineries manage a highly variable employee base throughout the year.
In addition, many wineries operate across multiple business lines—production, distribution, and retail, for example—often structured as separate legal entities.
Aside from the day-to-day operational complexity these factors imply, they also have important and material implications for a winery’s retirement plan(s), primarily from a federal tax perspective. The complexity inherent in the classification of various employee types introduces unique challenges, which we discuss below.
Seasonal Employees and Their Eligibility to Take Part in a Retirement Plan
Many winery workers are hired on a temporary and / or part-time basis during peak seasons. As their payroll providers know all too well, accurately monitoring those workers’ hours of service can get tricky.
That trickiness spills over into determining which employees are eligible to participate in an employer-sponsored retirement plan. If an employee’s hours are not tracked consistently and accumulated correctly, their eligibility determination could be incorrect. In other words, some employees may be deemed ineligible, when they should be included in the plan (or vice versa)
Another common retirement plan compliance risk for wineries involves this calculation of hours for seasonal employees. . Over time, these errors may result in improper exclusion of eligible employees from the retirement plan, which can trigger required corrective contributions and potential compliance violations under IRS and Department of Labor (DOL) rules.
In the event of a retirement plan audit, these eligibility issues are often closely examined, increasing the likelihood of audit findings and associated remediation costs.
Multiple Entities and Their Impact on Compliance
Many wineries operate through multiple related entities, such as a production company, a tasting room or retail location, and a separate distribution business. While this structure can provide operational and even tax advantages, it also raises important considerations about retirement plan compliance.
If there is overlapping ownership across any of these entities, a concept called controlled group rules may apply. Under these rules, employees of all related entities must be considered together, as one single entity, for purposes of retirement plan coverage and nondiscrimination testing.
Failure to properly identify and apply controlled group status can lead to significant compliance issues, including plan testing failures, missed employee eligibility, and required plan contributions. These risks are particularly common when retirement plan administration is handled separately for each entity, without a coordinated compliance strategy.
Documentation and Other Administrative Gaps for Seasonal Workforces
The cyclical nature of winery hiring practices can also create gaps in retirement plan documentation and other administrative processes. Especially during busy hiring periods, key compliance steps—such as distributing eligibility notices, providing enrollment materials, and maintaining accurate employee records—may be overlooked or inconsistently applied.
These documentation gaps can become problematic during an audit or regulatory review, where plan sponsors are expected to demonstrate consistency when it comes to adherence to plan procedures and compliance requirements.
Establishing and executing on standardized onboarding and documentation processes, even during peak seasons, is critical to maintaining retirement plan compliance.
The Bottom Line: Winery Businesses Need To Be Proactive about Their Retirement Plan Administration
Wineries are best served by a retirement plan administration strategy that is specifically designed to address the realities of seasonal employment and multi-entity operations. This includes implementing reliable systems for tracking employee hours, accurately evaluating controlled group status across related entities, and maintaining consistent documentation practices throughout the year.
Given the inherent workforce volatility in the wine industry, proactive compliance oversight is essential. Without it, seemingly routine operational patterns—such as seasonal hiring or entity structuring—can quietly increase retirement plan risk exposure over time.
By aligning retirement plan design and administration to their operational model, wineries can reduce compliance risk, avoid costly corrections, and ensure their retirement plans remain both effective and compliant.
