Question: My business has 8 employees. Am I required to participate in the CalSavers Program?

Answer:  California law requires certain employers to either offer their own retirement plan or participate in CalSavers, a retirement savings program for private sector workers whose employers do not offer a retirement plan. All California employers with five or more employees must participate in the CalSavers Program (“CalSavers”), unless the employer already has an employer sponsored retirement program. The deadline for businesses with 5-49 employees to sign up and begin the enrollment process is June 30, 2022.

CalSavers is funded completely by employee payroll deductions. To satisfy the CalSavers requirements, employers must first enroll on the CalSavers site and create an account.

After an account is created, employers must take the following steps:

  1. Designate Delegate: The employer must designate someone to be the point person to facilitate the CalSavers account and the employer’s ongoing responsibilities. The delegate is usually a Human Resources or Business Operations Manager but can be anyone the employer wishes to designate.
  2. Add Employees: The employer’s main obligation is to provide CalSavers with eligible employee information, including name, social security number, and address. This is accomplished by completing and uploading an employee roster, which must be completed within 30 days of the employer’s CalSavers registration. CalSavers defines “eligible employees” as employees who are at least age 18, are properly classified as employees under California law, and receive a Form W2 with California wages. The employer will receive an enrollment package, which must be forwarded to employees within 30 days of registration. Employers are required to provide employee information to CalSavers even if an employee informs the employer that the employee does not want to participate in CalSavers.
  3. Opting Out: The program is an automatic enrollment program, meaning the employer is required to give all employee information to CalSavers, and CalSavers enrolls the employees. CalSavers then contacts the employees directly with information on the program. Individual employees may take steps to opt-out and must opt out directly with CalSavers if they do not want to participate.
  4. Contributions:  Participating employees elect how much they want to contribute to their individual CalSavers account. Employers them deduct the contribution from the employee’s pay and remit the contributions within seven days of taking the deduction out of the participating employee’s paycheck. Employers will have access to the contribution amount specified by each participating employee on the employer’s CalSavers account.
  5. Ongoing Obligations: After this initial process, in addition to continuing to deduct and remit the contributions of all participating employees, employers are required to add new employees to the employer account or remove employees who have left the employer’s company. Employees opt-out or opt in at any time, and employee information may need to be updated to reflect employees’ participation status. The employee roster must be updated annually.

Employers are not responsible for enrolling employees, answering questions, or providing advice on deductions or investments. In all communications with employees about the CalSavers program, employers must remain neutral, meaning no communication should sway employees to participate or to opt-out.

Substantial penalties are assessed against employers for noncompliance. Although the enrollment deadline for small employers is June 30, 2022, employers should begin the process as soon as possible. The site to begin enrollment is: https://employer.calsavers.com/californiaertpl/enroll/createEmp/viewCollectEmpPreRegDetails.cs?request_locale=en_US.