Senior U.S. District Court Judge Morrison C. England ruled on March 10 that California’s Cal/Savers program is not pre-empted by the federal Employment Retirement Security Act (ERISA).  Judge England ruled in a lawsuit brought by the Howard Jarvis Taxpayers Association (HJTA) alleging that California’s voluntary/compulsory retirement savings program (its proponents contend it is “voluntary” in that employees can opt out) is not an employer-offered retirement savings option, and therefore not regulated by federal law.  You can read more on Jackson Lewis’ California Workplace Law Blog, “Cal/Savers Not Preempted by ERISA.”

The California legislature created Cal/Savers in 2012 when it passed SB 1234 (DeLeon).  The legislature acted out of concern that many workers do not have adequate retirement savings, and structured the program as a “voluntary” opt-out program, requiring all employers to register their employees and withold retirements savings from employees unless the employees affirmatively elect not to participate.  FELS’ parent organization, California Farm Bureau, expressed concern about the fiscal integrity of the program and that the program is actually an employer-sponsored retirement savings program that should be covered under federal regulation by ERISA.

CFBF remains concerned that further litigation may render Cal/Savers federal pre-empted, leaving thosands of California employers potentially in violation of ERISA.  It is unclear whether HJTA will appeal Judge England’s decision.

California Farm Bureau is partnering with Nationwide Insurance to offer a 401(k) program for farm employer Farm Bureau members; employers offering a retirement savings option to employees are not required to participate in Cal/Savers. (Note that the educational programs mentioned in this article may have been cancelled due to COVID-19 concerns.)