The federal government is considering whether it will get involved in a case before a U.S. District Court in California that challenges the CalSavers retirement program.
In an Aug. 2 filing, the Department of Justice said it "may have an interest in providing its views" on whether the Employee Retirement Income Security Act preempts the California Secure Choice Act, which established the CalSavers program. The agency did not indicate which side it might take in the case but did ask the court to hold off on deciding whether the case should be dismissed.
The CalSavers program, which officially launched July 1, is a defined contribution plan for private-sector workers in California who do not have access to a retirement plan sponsored by their employers. It is required for all California employers with five or more employees that don't already offer a retirement program, covering an estimated 7.5 million people.
In 2018, the Howard Jarvis Taxpayers Association filed a lawsuit alleging that ERISA preempts the California law. The taxpayer association had sought a permanent injunction banning the program and its board from spending taxpayer money on the CalSavers program.
In a March 28 decision, U.S. District Judge Morrison C. England Jr. dismissed the lawsuit. In his opinion, he wrote that eligible employers "are required to adhere to the administrative requirements of CalSavers, but because the program only applies to employers without existing retirement plans, no ERISA plans are 'governed' or 'interfered' with because of the statute."
"Finding that ERISA preempts CalSavers would be out-of-step with the underlying purposes of the act," the opinion said. "CalSavers does not govern a central matter of an ERISA plan's administration, nor does it interfere with nationally uniform plan administration."
But the court gave the taxpayers association an opportunity to amend its complaint, which it did in April.
CalSavers has asked the court to dismiss the revised complaint and, in a filing Monday, took issue with the federal government asking the court to hold off on reaching a decision. "The United States, which has not decided whether to participate in this case, has not attempted to make the showing required to obtain a stay," the filing stated. "Nor could it."
Laura E. Dougherty, an attorney for the Howard Jarvis Taxpayers Association, in an email pointed to a Department of Labor safe harbor that was used to create CalSavers and similar state programs that was repealed by Congress in 2017. "The United States has a clear interest in determining if that repeal has meaning," she said. "It is better for all if the U.S. speaks sooner than later."
The process for federal government deciding whether to participate involves coordination among multiple agencies and the approval of the DOJ through the assistant attorney general for the civil division, according to the DOJ filing. "This approval process generally takes several weeks, but it can vary depending upon the assistant attorney general's workload and availability," the filing stated. "The United States is aware that defendants' motion to dismiss is fully briefed, and it intends to work expeditiously to complete the process of determining whether to participate in this lawsuit."
The federal government will update the court on the status of its consideration by Aug. 30, according to the filing.