CalSavers ERISA Preemption Lawsuit Appeal Rejected by SCOTUS

The lawsuit, filed by the Howard Jarvis Taxpayers Association, unsuccessfully aimed to block CalSavers on the grounds that the federal Employee Retirement Income Security Act pre-empts it.

The U.S. Supreme Court this week declined to accept an appeal of a lawsuit involving the CalSavers Retirement Savings Program.

Launched in July 2019, CalSavers is available to self-employed individuals and to California workers whose employers don’t offer a workplace retirement plan. Under the program, savers contribute to an individual retirement account that belongs to them, with payroll deferrals being facilitated by their employer. Private-sector employers with five or more employees have to register with CalSavers by June 30, 2022, while employers with more than 50 employees were required to register by June 30, 2021.

The move by the Supreme Court comes after the 9th U.S. Circuit Court of Appeals affirmed a lower court’s dismissal of claims by a group that sought to block the program’s implementation. The lawsuit, filed by the Howard Jarvis Taxpayers Association, aimed to block CalSavers on the grounds that the federal Employee Retirement Income Security Act pre-empts it, thereby invalidating the program.

In its dismissal, the Circuit Court ruled in no uncertain terms that ERISA does not pre-empt CalSavers.

“We hold that the pre-emption challenge fails,” it said in its ruling. “CalSavers is not an ERISA plan because it is established and maintained by the state, not employers; it does not require employers to operate their own ERISA plans; and it does not have an impermissible reference to or connection with ERISA. Nor does CalSavers interfere with ERISA’s core purposes. Accordingly, ERISA does not pre-empt the California law.”

The Supreme Court has effectively endorsed the 9th Circuit’s ruling by declining to itself take up the case.

California State Treasurer Fiona Ma, who chairs the CalSavers Retirement Savings Board, says the Supreme Court’s decision is a victory for her state and its citizens.

“The United States Supreme Court’s denial of review preserves the ability of millions of hard-working Californians to save for their futures through this portable, simple option,” Ma says. “CalSavers is a simple solution to level the playing field for workers who for too long haven’t had effective access to retirement savings plans. Without this program, and programs like it across the country, millions of Americans would be left behind.”

“It’s great that this matter is finally behind us after nearly four years, but we never let it slow us down,” says CalSavers Executive Director Katie Selenski.

Selenski says more than 30,000 employers have registered since the program launched, while more than 233,000 workers are saving with funded accounts amounting to more than $186 million.

“We are laser-focused on bringing on tens of thousands more employers this year leading up to and following the June compliance deadline and supporting hundreds of thousands more savers as they begin their savings journeys,” she adds.

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