A lawsuit that aims to kill a new California state retirement plan launched in July has received the backing of the Justice Department, according to news reports.

The agency says that the plan, which requires firms with five or more workers that don’t have a workplace plan to participate, violates the federal Employee Retirement Income Security Act of 1974, the Wall Street Journal writes citing a brief filed in federal court Sept. 13.

Such state plans — which are also in effect in Oregon and Illinois — lead to “a patchwork of different state laws” creating “exactly the kind of disuniformity [sic] that Erisa was designed to avoid,” the Justice Department argues, according to the paper.

California says around 7.5 million residents without a retirement savings plan can be a part of the state-sponsored plan, dubbed CalSavers, the Journal writes.

Last year, the nonprofit Howard Jarvis Taxpayers Association filed suit in U.S. District Court for the Eastern District of California against CalSavers arguing that states can’t implement such plans because they’re already regulated under Erisa, according to the paper.

U.S. District Judge Morrison England, Jr. dismissed the suit in March but the nonprofit amended its complaint, the Journal writes.

Jon Coupal, president of the Taxpayers Association, tells the paper his group asked for Justice Department support and expects a ruling this fall, according to the paper.

The agency declined comment to the Journal.

So far, CalSavers has attracted $650,000 in assets from 2,150 workers and several thousand more are opening accounts, Katie Selenski, executive director of California’s Secure Choice Retirement Savings Investment Board, which runs the program, tells the paper.

Only about 500 firms of the 250,000 that don’t offer a workplace retirement plan are signing up for the state-sponsored plan, while 70 already started making payroll contributions, she tells the Journal.


Other states working on state-sponsored retirement plans include New York, Vermont, Maryland, and Connecticut, according to the paper.

Pennsylvania is also working on a state-sponsored automatic individual retirement account for private-sector workers.