Legislation signed into law on October 21, 2021, will require certain employers to enroll their New York state (NYS) employees in a new state-managed retirement savings program funded by employees. In the absence of a federal requirement, NYS is following in the footsteps of several other states and cities (including the states of Illinois, Oregon, California, Connecticut, Maine, Maryland, New Jersey, Colorado and Virginia; and the cities of New York and Seattle) that in recent years have established similar mandates to promote retirement savings for employees.
The date that covered employers will need to establish the contribution arrangement is not clear. Although the legislation is effective immediately, the arrangement would not need to be established for up to nine months after enrollment is opened by the board that administers the program; however, it is not yet known when the board will open enrollment. Affected employers should begin to consider whether they will be subject to the NYS program, and if so, how they would comply with the new requirements.
It’s also unclear how the NYS program will interact with a similar mandate established by New York City (NYC) earlier in 2021. While the NYC legislation calls for its program to be discontinued in the event the state establishes a mandatory program that covers "a substantial portion of employers" who would be covered by the NYC law, the NYC requirement applies to employers with five or more employees (while the NYS law applies to employers with 10 or more employees). Presumably this will be clarified by future guidance.
In broader national terms, the development of this and similar mandates by some states and cities is arguably indicative of a wider change in employee benefits across the U.S. labor market, under which state and city governments are increasingly enacting laws and regulations that require employers to provide various benefits such as paid sick or maternity leave if they don’t already do so. The trend suggests that the number of state and local mandates will continue to increase in the absence of federal legislation.