If you operate a small business in California, you are probably already familiar with employee benefits mandates. However, if you operate outside of California, you may be unaware of these provisions or their impact on your business.
If you’re in the latter camp, let’s recap the California legislation. The state-run benefits program, known as the CalSavers Retirement Savings Program or just “CalSavers,” was designed to provide retirement options to individuals whose employers do not offer such benefits.
The basic premise is simple. Employers were required to enroll in CalSavers by the established deadline. Once enrolled, their employees could access 401(k) retirement plans via their employer.
Business owners will be happy to discover that California does not require employers to pay fees or contribute to the plan. Unfortunately, that does not mean that employers will bear no costs for their participation in CalSavers. Let’s consider what you should know regarding these “hidden” expenses.
Who Must Adhere to Employee Benefits Mandates?
CalSavers is the first program of its kind. As such, California legislators had the freedom to set the standard for future state-run 401(k) programs for private sector employees, and they set a high bar.
According to California news outlets, employers with as few as five employees have to join CalSavers. This stipulation means that the vast majority of businesses in the state are required to enroll in the program and assist with its administration.
Specifically, employers must facilitate a means of having employees’ specific deduction amounts removed from their paychecks. Although this may seem simple and not too challenging, it is actually a big responsibility for small business owners with limited budgets.
Concerns You Need to Address
By far, the biggest concern associated with CalSavers is that it will spike employee management costs. Employers will need to implement protocols for deducting benefits payments from employee checks. Additionally, they are required to provide information on enrollment to new employees and adhere to several other provisions.
If you are not located in California, you are probably wondering how any of this impacts your business. More programs are on the horizon in other states. In fact, Colorado is already launching its own program.
Like CalSavers, the Colorado Secure Savings Plan will not require employers to contribute to the plan. Instead, they will only have to facilitate enrollment into the plan and implement a mechanism for delivering employee contributions to their respective accounts.
Even if you operate in a state that does not have a mandatory 401(k) plan in the works, it could start developing one at any time. On that note, you should reevaluate your current employee management practices to ensure you are fully prepared.
Streamline Your Employee Management Processes
Companies like Simpay offer total business solutions through their Simpay Onboard program that streamlines two key facets of employee management: HR and payrolling.
The technology seamlessly integrates into your workflow to save time and reduce HR administrative expenses. The best part is that our tech is scalable, which means that it provides a good fit for businesses of all sizes.
Preparing for employee benefits mandates will allow you to avoid surprises and stay in control of your employee management costs. Planning ahead will also make it easier to continue operating your business and become more capable of bearing the costs.
