On April 11, 2019, the Howard Jarvis Taxpayer’s Association (HJTA) filed its amended complaint challenging the propriety of California’s new CalSavers retirement program after a federal district court dismissed its first complaint on March 28, 2019 but granted leave to amend the complaint due to the Court’s awareness of the importance of the case. See HJTA Files Amended Complaint Challenging CalSavers Program, See also, CalSavers Saved from ERISA Preemption By District Court. On May 28, 2019, lawyers for CalSavers again filed a motion to dismiss the suit.
The new motion challenges the amended complaint as not presenting any new arguments. It argues that CalSavers is not preempted by ERISA because it is not an employee benefit plan under ERISA nor does it require employers to maintain an ERISA plan. CalSavers establishes IRAs for employees who participate and IRAs are not ERISA plans. The CalSavers law does not require employers to do anything more than they could do on their own with respect to payroll deduction IRAs without maintaining an ERISA plan. Employers are only required to perform ministerial acts under the law and program and have no discretion as to the administration of the program.
CalSavers also argues that the program is not an ERISA plan under the 1975 DOL Safe Harbor because an employee’s participation is “completely voluntary”. Despite the fact that eligible employers must automatically enroll employees, such employees can easily opt out of participating in CalSavers online, via email, telephone, overnight and regular mail. The minimal effort needed to opt out of the automatic enrollment into the program should not prevent an employee’s participation from being “completely voluntary”, CalSavers argued.
CalSavers also argued that neither the individual taxpayer plaintiffs nor HJTA have standing to bring the state law claims because they have no direct injury.
HJTA can file an opposition to the CalSavers motion to dismiss. The court will determine whether oral arguments are necessary.