California’s Mandatory Retirement Plan Law Upheld by the Ninth Circuit

On May 6, 2021, the Ninth Circuit upheld California’s retirement plan mandate and affirmed that it is not preempted by ERISA. Under California law, all employers must offer their employees some form of retirement plan or if no approved retirement vehicle is offered, must utilize automatic enrollment into the state’s payroll deduction IRA known as “Calsavers.” See, https://www.calsavers.com/. Penalties may apply for non-compliance. This mandate is being phased in over three years, starting in 2020 for employers with 100 or more employees. On June 30, 2021, it will begin to apply to employers with more than 50 employees and when fully phased in as of June 30, 2022 it will apply to employers with 5 or more employees. The number of employees must be determined based on the employers’ entire “controlled group” so persons or entities that have ownership interests in more than one business must aggregate those businesses in determining the number of employees under Calsavers.

See: https://cdn.ca9.uscourts.gov/datastore/opinions/2021/05/06/20-15591.pdf