On February 5, 2021, the United States Department of Labor withdrew its amicus brief supporting the Howard Jarvis Taxpayers Association’s (HJTA) appeal of the dismissal of its lawsuit challenging CalSavers as being preempted by ERISA.  See No Fooling HJTA Appeals Dismissal Of CalSavers Preemption Decision.  CalSavers is California’s payroll deduction IRA program requiring employers, who don’t otherwise offer a retirement plan to employees, to automatically deduct amounts from employees’ pay and contribute such amounts to the state-run IRAs.   The notice was filed with the United States Court of Appeals for the Ninth Circuit that is hearing the appeal of the lower court’s dismissal of HJTA’s claim that CalSavers is preempted by ERISA.  See CalSavers Not Preempted By ERISA!   The notice simply says:

“After the change in administration, the acting Secretary of Labor has reconsidered the matter and hereby notifies the court that he no longer wishes to participate as amicus in this case and that he does not support either side.”

In June of last year, the Trump administration’s Labor Department filed the amicus brief supporting the preemption argument.  The move by the Biden administration is not surprising as President Biden voiced support for auto-IRA type programs during the 2020 Presidential race.  Seven states in total have adopted some type of payroll deduction IRA programs.

While the notice says the Labor Department is not taking sides, it is difficult to believe that the withdrawal of support from the federal government agency charged with enforcing ERISA won’t negatively impact HJTA’s chances of prevailing.