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  • Kevin Cleveland

Mandatory Retirement for Employees

California has already mandated paid sick leave benefits for employees and as of September, 2016, the Governor approved mandated retirement savings plans pursuant to legislation that has been pending for several years. The bills implementation date is currently listed as January 1, 2017 but requires a board (entitled The California Secure Choice Retirement Savings Investment Board) create certain programs for all private employees in the State of California. Note that the law excludes from coverage all governmental employees, the government and all political subdivisions thereunder. Interesting that private employers are mandated to conduct such programs but the government exempts itself again. The new law, entitle the California Secure Choice Retirement Savings Trust Act establishes a retirement savings program administered by the State of California and overseen by the new Board. The law will require the enrollment of private employees unless they opt out and will mandate that they contribute to a mandatory savings plan set up by their employers. This will undoubtedly cost employers money to administer even though the employers are not themselves mandated to contribute to the savings plan . . . YET. Employees may opt out of the plan and employers will have to comply in a phased out series of steps as follows:

Employers with more than 100 eligible employees who do not offer a retirement savings program (such as a 401(k), a simplified employee pension plan, a savings incentive match plan for employees, or an IRA qualified under the Internal Revenue Service Code) will have to establish their plan within 12 months of the Board opening the program for enrollment. Employers with more than 50 eligible employees who do not offer the above referenced plans will have to create their savings plan within 24 months of the program opening for enrollment.

All other employees will have 36 months after the Board opens the program for enrollment to offer a retirement savings program unless one of the other programs is already in place.

As noted above, this legislation has been tinkered with since 2012 and was finally signed by the Governor in late 2016. This, combined with the mandated sick leave and it appears that it will only be a matter of time before the State government begins mandating paid vacation or PTO for private employees.

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