©2024 Seyfarth Shaw LLP www.seyfarth.com 2024 Cal-Peculiarities | 327 Absent an affirmative investment election, contributions are invested in a capital preservation investment (CalSavers Money Market Fund) for 30 days. After those 30 days have elapsed, unless the employee makes an alternative election, contributions (and earnings) are invested in the applicable target date funds based on the employee’s age and assumed retirement at age 65.61 Employers pay no fees; instead, as of June 1, 2023, participants pay fees based on a combination of a Fixed Account Fee ($4.50 per quarter ($18.00 annually)) and Annualized Asset-Based Fees (ranging from 0.325% to 0.49% of the account balance, depending on the investment choice(s)).62 A challenge to the program as being preempted by ERISA was rejected by the Ninth Circuit.63 Employers that, without good cause, fail to comply with CalSavers may be subject to a penalty of $250 per eligible employee and an additional penalty of $500 per eligible employee if noncompliance continues after notice from the California Franchise Tax Board.64 8.7 Large Group Health Insurance On October 7, 2021, Governor Newsom approved SB 280 requiring large group health insurance policies issued, amended, or renewed on or after July 1, 2022, to cover medically necessary basic health care services, including physician services, hospital inpatient and ambulatory care services, diagnostic laboratory services, diagnostic and therapeutic radiologic services, home health services, preventive health services, emergency health care services, and hospice care services.65 The law prohibits discriminatory benefit designs and marketing practices that have the effect of discouraging the enrollment of individuals in protected classifications.66 Insurers that violate this law are liable for an administrative penalty of up to $2,500 for the first violation, and up to $5,000 for the second.67 The liability increases to $15,000 or $100,000 for the first and second violation, respectively, if the discrimination is a general practice or was knowingly committed.68 On October 8, 2021, Governor Newsom approved SB 255 authorizing an association of employers to offer a large group health care service plan contract or large group health insurance policy consistent with ERISA if certain requirements are met, including: (1) that the association is headquartered in California; (2) has continuously been a Multi-Employer Welfare Arrangement under ERISA (MEWA) since before March 23, 2010; and (3) that the large group health care service plan contract or large group health insurance policy have provided a specified level of coverage since January 1, 2019.69 8.8 Reproductive Health Rights On June 24, 2022, the U.S. Supreme Court in Dobbs v. Jackson Women’s Health Org. 70 overturned long-standing precedent in Roe v. Wade71 and Planned Parenthood v. Casey,72 holding that the U.S. Constitution does not confer a right to abortion and that the authority to regulate abortion lies with individual states. In response, California voters approved Proposition 1 to guarantee the right to abortion and contraception.73 Therefore, California employers may continue to provide coverage for abortion services. 8.9 Commuter Benefits 8.9.1 San Francisco Commuter Benefits Ordinance The San Francisco Commuter Benefits Ordinance applies to employers with 20 or more employees nationwide that have a San Francisco location and San Francisco business registration certificate.74 Under this ordinance, a covered employer must provide at least one of the following programs:
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