CalSavers Deadline:
The June 30, 2022, deadline for small employers to register with CalSavers is only five weeks away.
What is CalSavers?
CalSavers is a program established by California to assist the estimated 7.5 million California employees without employer retirement savings plans. Mandatory compliance is phased-in over time and depends on the size of the employer. Those employers who are already offering retirement plans to their employees need only certify that they are exempt. An employee’s CalSavers account is a Roth IRA, which contributes sums earned after tax withholdings. The default savings rate is 5% of an employee’s gross pay, and employees can change that rate at any time. Once an employer registers for CalSavers, its employees will be auto enrolled after 30 days and will begin saving through payroll contributions unless they opt out. An employee can opt out or back into the program at any time. An employee’s CalSavers account is portable and will belong to the employee even if they change jobs. California employers are not required to make contributions to the retirement account.
Which employers are covered?
Employers with at least five California-based employees, at least one of whom is age eighteen, and who don’t sponsor a qualified retirement plan, are required to either certify that they are exempt or to register for CalSavers. Whether an employer qualifies as having the minimum number of employees is based on the average number of employees reported to the Employment Development Department on DE9C filings for the previous year.
What do employers have to do?
Eligible employers providing employer-sponsored retirement plans must visit the CalSavers website and either: (1) certify that they are exempt from registration or (2) register for CalSavers. The CalSavers website is here: https://www.calsavers.com
What is the deadline for compliance?
The deadline for employers with more than 100 employees was September 30, 2020. The deadline for employers with 51 to 100 employees was June 30, 2021. The deadline for employers with 5 to 50 employees is June 30, 2022.
What if employers do nothing?
Eligible employers that fail to timely either file an exemption or register for CalSavers will face penalties. If an employer receives notice of its failure to comply, the employer will have to pay $250 per eligible employee if noncompliance extends 90 days or more after the notice, and an additional $500 per eligible employee if found to be in noncompliance 180 days or more after the notice.
Which employees are eligible?
All employees of a participating employer are eligible as long as they are at least age eighteen and have the status of an employee under California law. There are no minimum requirements based on hours worked. Employees are eligible to participate in CalSavers from of the first day they are hired. Participating employers are required to upload them to the portal within 30 days of their hire date.
We have resources to help you: The CalSavers Plan does not offer the host of tax benefits that a private retirement plan can. We have a network of trusted professionals we can refer you to if you would like to discuss which retirement savings plan is most beneficial for your business.
New Ruling on Meal Periods
We have kept you updated on various rulings regarding the thorny subject of meal periods. Unfortunately, most of these have been bad for employers, and the latest is no exception.
On May 23, 2022, in Naranjo v. Spectrum Security Services, Inc., the California Supreme Court held that a premium payment for a meal or rest period violation under Labor Code section 226.7 is a “wage,” not a “penalty.” This means that the failure to make such a premium payment triggers derivative penalties for inaccurate wage statements under Labor Code section 226, and for failure to timely pay wages upon separation of employment under Labor Code section 203.
When an employee separates from your business, if you do not timely pay them their full wages (including these premiums, which are now considered “wages”), it can subject your business to waiting time penalties of up to 30 days at the regular rate of pay for the employee. What was a $15.00 missed lunch premium, could now be $3,600 penalty!
This decision significantly increases exposure for meal period and rest break violations, particularly in currently pending and future class actions and Private Attorney General Act (PAGA) claims. Employers should be even more careful about ensuring that meal and rest periods are properly provided. Further, when a compliant meal period or rest break is not provided and a premium payment is due, employers should ensure that these premiums are paid and are accounted for on wage statements.
If you have questions about whether your meal and rest break periods are compliant and documented correctly, please contact us.
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