Under California law, businesses with 5 to 50 California employees must offer retirement savings programs to their employees by June 30, 2022. The law allows employers to either offer their own retirement savings program, such as 401(k) or profit-sharing plan, or to enroll in the CalSavers Retirement Savings Program. Even if an employer already offers its own retirement savings program, it must still register as exempt with CalSavers to avoid being penalized.

CalSavers was enacted in 2016 as a way to allow California employees to save for retirement by deducting money from their paychecks even if their employer did not offer a retirement savings program. CalSavers is an automatic enrollment individual retirement account (IRA) with no employer fees or fiduciary liability. Employers are not required to assist employees with CalSavers and are not responsible for answering questions about the program. Rather, the State Treasurer oversees the program and oversees private financial firms which are responsible for managing the invested funds.

If an employer fails to either register as exempt or enroll in CalSavers, it faces potentially significant financial penalties. Employers who fail to register within 90 days of the June 30, 2022 deadline can be penalized at a rate of $250 per employee. If employers fail to register within 180 days, the penalty increases to $500 per employee.

For purposes of this law, the number of employees is calculated using the average number of employees an employer had in the previous calendar year. While the upcoming deadline is for small businesses, larger employers were previously required to register. Employers with over 100 employees were required to register by September 30, 2020, while employers with over 50 employees had a deadline of June 30, 2021. Larger employers who have not previously registered should do so immediately, so as to avoid any additional penalties.