WHICH EMPLOYERS ARE AFFECTED?
Employers with at least 5 California-based employees that do not already offer a qualified retirement plan must register with CalSavers by June 30, 2022.
Examples of qualified retirement plans are 401(k) plans, 401(a) plans including profit-sharing plans, and 403(a) plans including qualified annuity plans.
If an employer already has a qualified retirement plan in place, that employer is exempt from registering with CalSavers. Government, religious and tribal employers are also exempt.
Exempt employers are requested, but not required, to certify their exemption with CalSavers. Certifying exemption will help avoid the possibility of incurring improper penalties.
The June 30, 2022 deadline is for employers with between 5 to 50 employees. The deadlines for employers with more than 50 employees have already passed, and enforcement of employer compliance is already underway.
WHAT ARE THE PENALTIES FOR FAILURE TO REGISTER?
There is a penalty of $250 per eligible employee for failing to register within 90 days after receiving a notice of failure to comply. There is an additional penalty of $500 per eligible employee if the employer still hasn’t complied within 180 days after receiving the notice.
WHAT IS THE DEADLINE TO REGISTER?
The deadline to register is June 30,2022. Visit calsavers dot com to register.
HOW DOES AN EMPLOYER ENROLL WITH CALSAVERS AND WHAT IS THE COST?
There is no cost to employers to enroll in CalSavers. Employers must register with CalSavers using the employer identification number or tax identification number. Employers will also have to input basic employee roster information, including employees’ date of births, social security numbers or ITINs, and contact information.
Employers are required to facilitate the appropriate payroll deductions for employee contributions each pay cycle. Employers are also required to maintain their employee roster within the CalSavers system. Employers must upload the information for new employees within 30 days of their hire date.
SHOULD AN EMPLOYER ENCOURAGE THEIR EMPLOYEE TO PARTICIPATE IN CALSAVERS?
Employers must remain neutral about whether their employees should participate or opt out of participating in CalSavers. Employers are not responsible for answering questions about the program, managing investment options, processing distributions, or giving investment/tax advice. Employees must maintain their accounts directly through the CalSavers program.
Employees have 30 days to decide to opt out, if not, they are automatically enrolled. The default contribution percentage is 5 to 8% of take-home pay for employees who do not opt out of CalSavers. CalSavers offers a range of investment types, which allows participating employees to choose their risk tolerance in making investment choices.
What California Employers Need to Know About Calsavers and The June 30, 2022 Registration Deadline
The State of California has enacted a program, called CalSavers, to help employees save for retirement. Employers that do not currently offer a qualifying workplace retirement plan must register for CalSavers by the June 30th deadline and must facilitate their employees’ access to the program.
ABOUT THE AUTHOR: Anna Sweeney
Ms. Sweeney regularly handles discrimination, retaliation, and wage and hour claims and provides advice and counsel to employers to help resolve and prevent disputes, adding value to clients’ businesses while also creating a rewarding workplace for employees and preventing employee claims. In addition to litigation, she also drafts and negotiates employment and settlement agreements.
Ms. Sweeney has extensive experience in case management and all facets of litigation: from a case’s inception through the discovery process, (including taking and defending depositions and preparing witnesses for depositions and trial), mediation and settlement negotiations, pre-trial motion work, trial and post-trial motion work.
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Disclaimer: Every effort has been made to ensure the accuracy of this publication at the time it was written. It is not intended to provide legal advice or suggest a guaranteed outcome as individual situations will differ and the law may have changed since publication. Readers considering legal action should consult with an experienced lawyer to understand current laws and.how they may affect a case. For specific technical or legal advice on the information provided and related topics, please contact the author.