The California Secure Choice Retirement Plan: What Your Small Business Needs to Know
Earlier this month, California Governor Jerry Brown signed the California Secure Choice Retirement Plan into law. With that single act, more than 7.5 million workers in the state were given the right to receive access to a retirement savings plan through their employer. What will all this mean for your small business come next year? The following explains.
Why the Law Was Enacted
Statistics from the National Institute on Retirement Security estimate that some 45 percent of private-sector employees do not have access to a retirement account. They do have the option to create their own individualized plan, yet most do not. In fact, AARP estimates that just five percent of all workers who do not have direct access to an employer-based retirement account actually contribute to an individual plan. Considering the current strain on social security, and the lack of saving for most Americans, the numbers are concerning to legislators across the entire country. California took action by signing the Secure Choice Retirement Plan into law. Now other states are considering it as well.
What Does This Mean for Your Small Business?
Under the new law, small businesses with five or more employees will be required to offer their employees the right to contribute a portion of their paycheck to a state-run retirement plan. As of right now, there are no other requirements outside of that. However, some small business owners fear that additional requirements will be imposed as time passes. Among those concerns are whether or not they will be required to provide matching contributions. No plans to move in this direction have been expressed at this time. That does not mean this will not change in the future, however.
Further, the process of meeting yet another deduction, should the employee opt in, could impose additional time and energy constraints on smaller company employees. Those that are required to participate would benefit from having a clear understanding of how they may effectively meet the new requirements, which are set to take effect on January 1, 2017 (small businesses with less than 50 employees will be given more time and leeway).
Is Your Company in Compliance with All Labor Laws and Regulations?
The main issue here is that small businesses, who sometimes struggle with just the day-to-day operations, may be at risk for oversights when trying to comply with the current and constantly evolving labor laws and regulations. This can put them at a severe disadvantage and, in some instances, may even result in costly penalties. As such, each small business should seek assistance from a skilled business law attorney to ensure they are in compliance with all applicable laws.
At the Law Offices of Louis J. Willett, we understand the challenges that small businesses often face, and we are sensitive to their plight. Dedicated and experienced, we can provide your company with personalized and professional representation and guidance. Call 510-791-2244 and schedule your free consultation with our Fremont business law attorney today to learn more.