The U.S. Supreme Court denied a petition to review a recent ruling by the U.S. Court of Appeals for the Ninth Circuit that upheld the legality of California’s automatic retirement savings program. The case is Howard Jarvis Taxpayers Association et al. v. California Secure Choice Retirement Savings Program et al., case number 21-558.

California created CalSavers in 2012 and required California employers with five or more workers either to offer retirement plans to their employees or join CalSavers by 2022. When employers join CalSavers, their employees have a portion of their paychecks automatically invested into an IRA, unless they opt out of the program. 

Other states have adopted programs similar to CalSavers, including Colorado, Connecticut, Illinois, New Jersey, New York, and Oregon.

Howard Jarvis Taxpayers Association filed suit against the state of California in 2018, challenging the validity of the California Secure Choice Retirement Savings Program, or CalSavers, an auto-IRA program for private-sector workers in the state. In its suit, Howard Jarvis argued that CalSavers, which created IRAs for almost 90,000 workers, was preempted by the Employee Retirement Income Security Act (ERISA). 

A California federal court dismissed the case in 2020, but Howard Jarvis appealed the ruling. The Ninth Circuit agreed with the federal court in upholding the dismissal of the suit, stating that since CalSavers was not an “employee benefit plan” established or maintained by the participants’ employers, ERISA did not preempt CalSavers. 

Howard Jarvis then filed a writ of certiorari to the U.S. Supreme Court in October 2021. The high Court requested a response brief from CalSavers and state Treasurer Fiona Ma, which they filed in January 2022. They argued that the Supreme Court should reject Howard Jarvis’s challenge to the program since the Ninth Circuit correctly ruled that ERISA did not preempt it.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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