A California Chamber of Commerce-opposed bill mandating private non-unionized employers that do not offer a retirement plan to enroll their employees in a government-created defined benefits plan will be heard in the Assembly Appropriations Committee on August 8.

SB 1234 (DeLeón and Steinberg) subjects employers to significant cost, fiduciary responsibilities and liability with no commensurate benefit to employees by requiring employers without a retirement plan to enroll their workers in the new “California Secure Choice Retirement Savings Program” or pay a penalty of $250 per employee.

Small Business Burden
The new risks mandated by SB 1234 (which applies to employers with as few as five workers) could be particularly harmful to small businesses that can’t afford the added liability, including the duty to properly educate employees about the retirement options available so the employees can make an informed decision.

Employer Liability
Retirement plans for private sector employees are regulated by the federal Employee Retirement Income Security Act (ERISA), which subjects participants to significant responsibilities and requires every employer participating in the program to file annual reports and actuarial valuations.

According to a recent legal opinion, employers participating in the program would be subject to these ERISA requirements and would incur significant fiduciary responsibilities.

Citing U.S. Department of Labor advisory opinions, the legal opinion concludes that under SB 1234 “each employer sponsor of a plan that participates in the arrangement will be subject to ERISA’s fiduciary provisions.”

Among other responsibilities, California businesses would be personally liable to make good to the plan any losses resulting from any breach of the new fiduciary responsibilities.

Action Needed
The CalChamber and a coalition of businesses, insurers and employer groups argue that the effort, liability and expense of SB 1234 are unnecessary given that California already has a highly competitive retirement savings market. The CalChamber is urging members to contact legislators and ask them to oppose creating the new retirement program in SB 1234.

As the March 15 corporate tax filing deadline approaches, the California Chamber of Commerce is reminding small businesses to take advantage of the small business health care tax credit. The tax credit is part of the federal 2010 Affordable Care Act.

The credit is worth up to 35 percent of a small business's premium costs (25 percent for tax-exempt employers). In 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).

California small businesses can review the Internal Revenue Service (IRS) guidelines to determine eligibility for the tax credit on the new business-oriented website,www.healthlawguideforbusiness.org. The website offers a “tax credit calculator” that helps employers estimate savings available under the law.

Qualifying for the Credit

To qualify, an employer must have fewer than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible). A qualifying employer also must pay average annual wages below $50,000.